May 26th, 2022 | 11:07 CEST
Nel ASA and Siemens Energy - buy or underweight? dynaCERT with sales partner
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
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.
dynaCERT launches sales offensive
dynaCERT offers a patented electrolysis system "HydraGEN" for commercial vehicles. It enables fleet companies to improve the efficiency of diesel engines and reduce their pollutant emissions without high conversion costs. After the Corona pandemic had a significant negative impact on the Canadian company's growth, it now sees itself back on track. CEO Jim Payne said at last week's iif virtual investor conference (watch the full presentation here ), "We have taken advantage of the pandemic and upgraded our production facilities and can now produce at up to 2,000 units in a single shift. In addition, we have a production line for individualized products. Now we are pushing sales." Canadian mining companies, among others, are currently being targeted intensively, he said. Payne expects positive news here in the coming weeks.
A new distribution partner should also contribute to this. They are Simply Green Distributors Inc, a distributor of green technology. Simply Green will specifically target the Canadian oil and gas market and will be able to supply dynaCERT's HydraGEN products immediately. The hydrogen units are retrofit products installed in existing equipment or machinery. The units are ready to operate immediately after installation by using distilled water. James Pearce, CEO of Simply Green, said, "Our customers want to do something for the environment, but they also want to save on fuel costs in a market that is constantly fluctuating." Simply Green has already informed dynaCERT that several major transportation and oil and gas companies in Western Canada are testing the HydraGEN technology.
According to Jim Payne, "James Pearce and his passionate team at Simply Green are extremely important to dynaCERT's strategy to penetrate the oil and gas industry - not only across Canada but also internationally. dynaCERT is pleased to offer a readily available solution to oil and gas industry participants, as well as producers and operators looking to meet their greenhouse gas emissions reduction goals." If there is a sales success, dynaCERT could rebound. It is currently trading at around EUR 0.09 on the Frankfurt Stock Exchange, well below its all-time high of around EUR 0.80 in early 2020.
Nel ASA shares Underweight or Buy?
Recently, it has become quiet around Nel ASA. Positive news came instead from competitors such as Plug Power - with a major order in Europe - and ITM Power. JPMorgan is also skeptical at the moment. The analysts of the major US bank have lowered the price target for the Nel share from NOK 11.40 to 11.10 and rate it only as "Underweight". Currently, Nel shares are trading at around NOK 14. Due to the weak first-quarter results from JPMorgan's point of view, the estimates of the hydrogen pure-play were reduced. Bernstein Research is somewhat more optimistic. There, Nel was evaluated within an industry study on "Green Hydrogen" for the first time. The first recommendation of the US analysts is "Outperform", with a price target of NOK 17. Nel is Bernstein's favourite alongside ITM Power. They say the entire industry is benefiting from the growing zero-emission ambitions worldwide. The cost of green hydrogen - electrolysis from renewable energy sources - is currently falling sharply. Moreover, green hydrogen has more and more advantages over fossil electrolysis. Therefore, analysts say now is an excellent time to invest in Nel and ITM Power.
Siemens Energy: Analysts give warning
Bernstein Research is much more cautious about Siemens Energy. The analysts warn of high inventories at the MDAX group - incidentally also at Kion and Knorr-Bremse. The analysts rate the Siemens Energy share as "Underperform" with a price target of EUR 17. The share is currently trading just below this level. With a target price of EUR 30, UBS is much more optimistic. At the Capital Markets Day, Siemens Energy confirmed the margins for the Gas & Power division, and so far, management has also delivered what was forecast. Therefore, the analysts recommend buying the shares of the energy technology group.
Overall, a lot is currently going on at Siemens Energy. The wind power subsidiary Gamesa is to be completely taken over. In addition, the Group wants to reorganize its structure. The former Gas & Power segment is to be split into three parts. With current annual sales of around EUR 9 billion, Gas Services will be the Group's largest segment. It will be followed by "Grid Technologies" and "Transformation of Industry". These two areas are to become the growth drivers in the Group in the future. The new structure is intended to reduce hierarchies and speed up decision-making processes.
There is no question that renewable energies will continue their triumphant advance. Which companies can profit from this is another question. dynaCERT must finally achieve a breakthrough in the commercialization of its technology, then significantly higher share prices would seem possible. In the hydrogen sector, there appears to be no getting around Nel. However, the Norwegians need to land major orders again to justify the already high valuation. Siemens Energy is facing significant restructuring.
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