December 11th, 2023 | 07:20 CET
Infineon, First Hydrogen, Plug Power - Opportunities upon opportunities in decarbonization
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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
Infineon Technologies - 30% market share
The publication of the quarterly and annual figures for 2023 marked a turning point for the share price of one of the leading providers of semiconductor solutions. The Company from the Bavarian capital recorded annual sales of EUR 16.31 billion, an increase of 15% compared to the previous year, and annual earnings of EUR 4.399 billion, which was 30% higher than in 2022. For 2024, management expects a slowdown in sales growth but is targeting sales of around EUR 17 billion and an adjusted gross margin of 45%.
The focus for the future is on expanding investments in the areas of electromobility and renewable energies. Investments totalling EUR 3.3 billion are planned, mainly in plants for the production of silicon carbide (SiC) and gallium nitride (GaN)-based products. Third-generation semiconductors are increasingly in demand in electric cars, charging stations and energy storage systems. Infineon aims to achieve a market share of around 30% in the global SiC market with annual sales of EUR 7.6 billion by the end of the decade.
Several analysts are currently positive regarding Infineon. The British investment bank Barclays has reiterated its "Overweight" rating with a price target of EUR 47. Goldman Sachs also maintains its **"Buy" rating with a target price of EUR 47.50.
First Hydrogen - Value chain in focus
Sometimes, the stock market is irrational, as can be seen from the example of the Canadian hydrogen company First Hydrogen. The Company's performance has risen sharply over the past 12 months, but the share price has lost around 72% of its value.
So far, two of sixteen major fleet operators from various sectors, Rivus and SSE, have tested First Hydrogen's first-generation vehicles, which are powered by hydrogen fuel cells, under real road conditions. The initial results were resounding. A range of around 630 km was achieved with a single refuelling, and a remarkably low average consumption of 1.58 kg of hydrogen per 100 km was measured, even at consistently high speeds. In comparison, comparable light commercial vehicles with electric drive can only manage around 240 km**.
But that is not all. In addition to the development of light commercial vehicles, First Hydrogen continues to work on covering the complete hydrogen value chain. A letter of intent has been signed with EV Technologies Inc. for the development of a compact, high-performance battery that will be state of the art and designed explicitly for hydrogen-powered fuel cell vehicles. The new battery system being developed and designed is expected by First Hydrogen's engineering team to have better efficiency and higher performance for its hydrogen-powered fuel cell vehicles.
After a sharp correction, First Hydrogen's chart continues to brighten. After successfully defending the vertical support from September 2021 twice, the chart continues to work on its bottom at a price of CAD 1.70. Overcoming the downward trend established since July at CAD 1.88 would be significant. This would generate a buy signal with a next short-term price target of CAD 2.24.
Plug Power - Prospects remain gloomy
The performance of fuel cell pioneer Plug Power has been a complete disappointment this year, and not just in terms of share price performance. The share price has fallen by over 70% to USD 4.01 since January 1 of the current stock market year. And justifiably so, because the Company led by the bustling CEO Andy Marsh has regularly disappointed with its quarterly figures.
Due to the high cash burn, a capital measure is likely to be carried out in the coming months, which, as often seen in the Company's long history, is likely to result in a dilution of existing shareholders. The US bank Morgan Stanley is pessimistic, downgrading the Company to "Underweight" and lowering the price target from USD 3.50 to USD 3.00.
Additional pressure comes from a leaked draft from the US Treasury Department for hydrogen tax credits under the Biden administration's climate change bill. The draft has raised concerns that these regulations could significantly impair the development of the still-young industry. The American Clean Power Association is quoted as follows:
"If this is true, the Biden Administration's proposed strategy for implementing these regulations will not be sufficient to get this new industry off the ground."
Analysts are clearly optimistic about the semiconductor manufacturer Infineon and see great potential. By contrast, they are giving the fuel cell pioneer Plug Power the thumbs down. First Hydrogen was able to expand its business activities further by signing a letter of intent with EV Technologies Inc.
Conflict of interest
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