September 14th, 2022 | 11:55 CEST
First Hydrogen, Nel, Thyssenkrupp - Watch out: Stock gains with green hydrogen!
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"[...] We can convert buses and trucks to be completely climate neutral. In doing so, we take a modular and incremental approach. That means we can work with all current vehicle types and respond to new technology and innovation [...]" Dirk Graszt, CEO, Clean Logistics SE
First Hydrogen - Pole position
Hydrogen is produced when an electric current is passed through water, separating hydrogen from oxygen. If the electricity used comes from renewable energy sources, it is referred to as green hydrogen. Given the positive general conditions, First Hydrogen recently announced its intention to exploit the potential in the US market.
To this end, the Canadians have founded the companies First Hydrogen Energy Inc. and First Hydrogen Automotive Inc. in the United States. The recent passage of the Inflation Reduction Act authorized USD 369 billion in investments for energy and climate change.
No less significant than the development in the US is the declaration of intent by Germany and Canada to invest in hydrogen and establish a transatlantic supply corridor between the two countries. That puts First Hydrogen in pole position to benefit from this development.
In the future, the Canadians want to cover the complete hydrogen value chain. Together with globally established partners such as Ballard Power and AVL Powertrain UK, as well as a "best-of strategy," the Company is working on developing and producing zero-emission, hydrogen-powered commercial vehicles.
In addition, the Company is working to build a "Hydrogen-as-a-Service Model," which is a zero-emission, global ecosystem solution. Company representative Robert Campbell will present First Hydrogen live via Zoom at the 4th IIF - International Investment Forum on September 27, 2022. Attendance is free by registering via the website: ii-forum.com.
Nel - Top but expensive
The hydrogen specialist Nel ASA is one of the leading companies in solutions for producing, storing and distributing hydrogen from renewable energies. The Norwegians cover the entire value chain, i.e. from hydrogen production to the construction of hydrogen filling stations. From the highs in January 2021 in the range of NOK 35, the share price is now only around NOK 14, which still values the Company at the equivalent of around EUR 2.2 billion.
The latest quarterly figures did not trigger any euphoria among market participants. Many analysts reduced their price targets for the shares. Credit Suisse formulated a target of NOK 10, while analysts at Bank of America consider NOK 11 an appropriate valuation level. The general tone is similar: although the future prospects of the industries look good, the analysts are skeptical that high volume growth will also be reflected on the profit side as strongly as the market forecasts and the Company valuation suggest.
Recently, the Norwegians were able to land another forward-looking order. For the American ethanol producer LanzaJet, Nel will produce a container electrolyzer for the production of green aviation fuel. While this order, worth around USD 3 million, is a success story, investors should not forget that the Company is valued at 15 times 2023 sales and will be loss-making for many years to come.
Thyssenkrupp - Equity story will change
Sharply rising energy prices and the weakening economy have weighed on the share price in recent months. However, many analysts believe the shares are undervalued at their current level. With a target price of EUR 13.80, the experts at Jefferies believe that the stock can more than double in value within the next 12 months.
The share price could soon gain momentum because, according to media reports, the Group is working on an IPO of its hydrogen subsidiary Nucera. An IPO is the preferred option for the Germans to exploit the potential of the business with facilities for the production of green hydrogen.
The Company recently announced plans to build a hydrogen-based blast furnace in Duisburg, Germany, subject to government funding. The investments total more than EUR 2 billion. Group CEO Martina Merz thus emphasized "making a decisive and, above all, rapid contribution to the green transformation in steel as well."
The energy transition is opening up huge potential. Green hydrogen could soon experience a special boom due to subsidy measures. According to analysts, Nel is overvalued. Stock market plans for the hydrogen subsidiary could revive Thyssenkrupp's stock. The favorite in the sector is clearly First Hydrogen.
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