ITM Power, Saturn Oil + Gas, Aixtron - Setting the course for the long term

ITM Power - Capacities secured

The shares of electrolysis specialist ITM Power shot up by over 15% to GBP 58. The technical chart constellation is interesting here. Following a bottoming phase that has been ongoing since the beginning of the year, the British company was able to cut through the EMA 50 at GBP 52.15 like butter amid high volumes. The EMA 200 is already waiting at GBP 60.73. Should this also be breached, the next hurdle would be the high for the year at GBP 71.80. The share is receiving a tailwind from the RSI and MACD indicators, both of which have turned green.

The reason for the run on Monday was the signing of a contract with an unnamed global industrial customer for a capacity reservation of 500 MW, which secures future production capacity for ITM Power for the manufacture of its electrolyser stacks. According to the Company, the agreement covers the period until the end of 2028 and provides for call-offs for future projects in Europe and the United States.

A capacity reservation agreement was signed with Shell Germany at the end of last year, which includes the production of 100 MW of TRIDENT electrolyser stacks between 2025 and 2026 for the REFHYNE 2 project at Shell's energy and chemical plant in Rhineland, Germany. For 2024, Hygen Energy has selected ITM Power as a preferred supplier for PEM electrolysers to be used in hydrogen projects in the UK and across Europe.

Saturn Oil & Gas - Further leap in growth

The growth story of the Calgary-based oil and gas producer continues unabated. With the acquisition of further drilling fields directly adjacent to those already in its possession, Saturn Oil & Gas is increasing its daily production capacity by around 13,000 barrels per day (BOE/d). In total, this is now between 38,000 and 40,000 BOE/d. In the medium term, the Company, headed by CEO John Jeffrey, intends to increase output to up to 50,000 BOE by expanding the drilling programs on the fields it owns.

The properties were financed with an equity increase of CAD 100 million and a CAD 885 million bond with an interest rate of 9.625% p.a. for the next five years. This is a clever move, as the construction between debt and equity replaces the previous loans with high interest rates of 16-17%. Thanks to the improved debt structure and the liquidity released, Saturn Oil & Gas can further accelerate its drilling programs for the coming quarters or use the cash flow released to carry out share buybacks or pay dividends to shareholders.

Following the completion of the transaction, analyst firm Eight Capital commented and praised the improved outlook for free cash flow and the debt structure. The price target was raised from CAD 4.45 to CAD 7.35. Saturn shares are currently trading at CAD 2.69, corresponding to a price potential of 173,23%.

Aixtron - Euphoria after the figures

Sometimes, things happen in the stock market that are hard to understand with normal reasoning. The Aixtron share, for example, exploded by around 20% at the end of last week after the Herzogenrath-based company announced a significant reduction in its annual forecast for revenue and operating margin following the publication of its preliminary figures for the second quarter. According to market participants, the reasons for the increase were that the cat was finally out of the bag, and the community had likely expected even worse results.

The MDAX company revised its revenue forecast for 2024 to EUR 620 to 660 million after previously expecting EUR 630 to 720 million. The earnings margin before interest and taxes is expected to be in a corridor between 22% and 25%, in contrast to the previously forecast 24% to 26%.

Revenue and the operating margin have already fallen significantly in the past quarter. According to preliminary figures, revenues fell by almost a quarter to around EUR 132 million compared to the strong prior-year period, in which Aixtron benefited from numerous export licenses granted and was able to reduce a delivery backlog. The preliminary operating result amounted to EUR 13 million, compared to EUR 44.6 million in the previous year, which corresponds to a margin of around 10%.

Following the strong increase, the Aixtron share fell by around 4% to EUR 21.42 yesterday. Deutsche Bank Research subsequently lowered its price target from EUR 33 to EUR 31, maintaining its "Buy" rating.

Despite a revenue and profit warning, Aixtron's share price rose by around 20%. ITM secured its product capacities by signing a contract with a global industrial customer. According to the analysts at Eight Capital, the oil and gas producer Saturn Oil & Gas has multiplication potential.