August 7th, 2024 | 08:05 CEST
Hydrogen sector receives EU billions: Nel, Plug Power, First Hydrogen share!
Governments love green hydrogen. The EU alone plans to spend over EUR 40 billion by 2030 to decarbonize the energy sector. This includes making steel production, heating operations, and combustion engines CO₂-neutral. Additionally, hydrogen can be used to store surplus renewable energy from solar and wind sources. When the Federal Audit Office recently criticized the slow expansion, the EU reaffirmed its targets. Therefore, the pace of expansion should be stepped up, and companies such as Nel and Plug Power - where tomorrow will be exciting - and First Hydrogen want to benefit from this. While the two heavyweights from Norway and the US are unable to get their losses under control and are still highly valued, the newcomer First Hydrogen may be entering the market at just the right time.
time to read: 3 minutes
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Author:
Fabian Lorenz
ISIN:
First Hydrogen Corp. | CA32057N1042 , NEL ASA NK-_20 | NO0010081235 , PLUG POWER INC. DL-_01 | US72919P2020
Table of contents:
"[...] 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
Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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First Hydrogen: When will Amazon order?
Sometimes timing is everything. While Nel and Plug Power have been generating millions in revenue for years, they also continue to incur millions in losses. Nevertheless, the Norwegians have a market cap of around EUR 800 million, and the Americans, USD 1.8 billion. First Hydrogen, on the other hand, has a market capitalization of just EUR 15 million. Although the Company is not yet generating any significant revenues, it has not yet burned through billions and is now market-ready.
The Company specializes in hydrogen-powered fuel cell commercial vehicles (FCEVs) and intends to supply the refuelling infrastructure in the future. First Hydrogen's FCEVs have successfully undergone real-world testing in the UK with Wales and West Utilities and the giant Amazon over the past few months. Now investors are waiting for concrete orders. In order to be able to deliver quickly, First Hydrogen plans to install its fuel cell powertrain into the tried-and-tested van of a major German vehicle manufacturer. With an estimated selling price of EUR 50,000, annual sales of 10,000 vehicles would amount to EUR 500 million - more than 30 times the current company valuation.
In addition to the UK, other markets are also to be conquered. To this end, the successful fuel cell commercial vehicle is currently being configured with a left-hand drive. This is the prerequisite for tests by customers in important markets such as Europe, the US and Mexico. Besides Europe, California is a particular focus. The economically strongest US state recently opened a new hydrogen center, equipped with USD 1.2 billion in state funding to promote clean hydrogen projects.
Nel: Still deep in the red
Nel and Plug Power are the fallen investor darlings in the hydrogen sector. They were early entrants to the market and impressed with strong revenue growth - but failed to break even. And although the shares have lost over 90% since their highs, they are far from being bargains. As already mentioned, the Norwegians are worth around EUR 800 million, and the Americans are worth USD 1.8 billion on the stock market.
Nel is trying to turn the tide this year by streamlining and partnering. However, even with the spin-off of the refuelling division, Nel is far from being on track. In the second quarter of 2024, the Company reported a 10% decline in revenue from continuing operations to NOK 332 million. The operating loss rose from NOK -112 million to NOK -125 million. At least the net loss was reduced, but at NOK -118 million, the Company is still operating in the red (Q2 2023: NOK -228 million). Although order intake rose to NOK 270 million, the 18% increase was not enough to cause much celebration. Currently, only the partnership with Reliance Industries is generating share price momentum. There is speculation about an investment or even a takeover by the Indian conglomerate.
Plug Power: Tomorrow will be exciting
Tomorrow will be exciting for Plug Power. The American hydrogen pure play will report on its second-quarter performance. Shareholders should expect a strong share price reaction - in either direction.
Shortly before the figures, Plug Power announced a change in top management. While First Hydrogen hopes for orders from Amazon, Plug is helping itself with personnel. Dean Fullerton was introduced as the new Chief Operating Officer (COO). He was previously responsible for technical services for North America, Europe, and emerging markets at Amazon.
As the new COO, Fullerton will be responsible for driving growth and efficiency at Plug, with global responsibility for project execution, manufacturing, supply chain, and hydrogen production. Plug CEO Andy Marsh stated: "The appointment of Dean as COO is a milestone for our company. As our longstanding customer, we have a close working relationship with Dean and look forward to his contributions to expanding our logistics operations as we pioneer and build a vertically integrated green hydrogen ecosystem." Plug and Amazon have a longstanding business relationship characterized by strategic investments and successful collaborations.
As usual, anything can happen with the Plug shares when the quarterly figures are published. For the industry, an increase in revenue and decreasing losses would be a positive sign. First Hydrogen is anything but highly valued and a major order - ideally from Amazon - could trigger a revaluation. There is currently no reason to buy Nel shares. The potential takeover fantasy is not enough.
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