March 29th, 2023 | 07:50 CEST
Nel ASA and Varta continue to decline: dynaCERT convinces analysts during an on-site visit
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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
dynaCERT: Strong turnaround expected in 2023
For the experts at Researchanalyst.com, dynaCERT is a turnaround candidate for the current year. Prior to their recent research update, the analysts had visited the Canadian Greentech company's headquarters and talked to CEO Jim Payne on-site. The conclusion of the visit was positive. In particular, the demand from large mining companies regarding the HydraGEN HG4C series should continue to fill the order books and ensure another record quarter. In addition, the long-awaited inclusion in Verra's Verified Carbon Standard is finally expected to materialize. If the innovative AAM electrolyzers are successfully launched, dynaCERT's stock could enter a new league in the longer term. With a market capitalization of around CAD 70 million, a revaluation would be on the cards.
What is the basis for the analysts' optimism? The Company specializes in reducing CO2 emissions from vehicles. In more than 10 years of research and development work, dynaCERT has invested around CAD 90 million and developed the patented HydraGEN technology. It reduces fuel consumption and CO2 emissions, as well as NOx emissions (nitrogen oxides) and CO and THC emissions. In addition, engine power and torque are increased, resulting in longer engine and oil life. The four HydraGEN product lines address numerous industries, from mining and transportation to construction and agriculture. The product for heavy-duty vehicles, for example, costs around CAD 50,000 and is expected to pay for itself after just 5 months, according to dynaCERT. Commercialization finally began in the fourth quarter of 2022.
In the three months, 137 units were sold to companies such as Codelco, Vale, Nexa Resources and Antamina. The trend is expected to continue upward in the current quarter. In addition to the rising order volume, Researchanalyst.com (click here for the update researchanalyst.com/en/updates/stock-news-dynacert-strong-turnaround-expected) points to two further share price drivers: Firstly, the long-awaited inclusion in the Verra Verified Carbon Standard, the most widespread global program for offsetting saved greenhouse gases, is expected in April. Secondly, the already-announced cooperation with Cipher Neutron could create an important player in the production of cheap, green hydrogen.
Varta: Will the share lose more than 20% again?
Unfortunately, Varta can only dream of positive prospects at the moment. After its rapid rise to become the leading manufacturer of micro-batteries for Apple's Airpods & Co, the Company has fallen deep. It is losing market share in its core market, and its margins are shrinking. In addition, it has yet to manage to position itself in the field of batteries for e-cars. This was followed by several profit warnings and hectic management changes. And the situation has worsened. In recent weeks, for example, a capital increase had to be implemented well below the stock market price, and an agreement had to be reached with the banks on a restructuring concept. Based on an IDW S6 report and the fresh equity capital, the banks have agreed to an extension of financing and changes to the credit terms.
This shows how difficult the situation is at Varta. And there is virtually no strategic outlook at the moment. Therefore, the analysts at Warburg Research also see no light at the end of the tunnel and have confirmed their "Sell" recommendation. The price target is EUR 18.50. Currently, the share is trading at EUR 23.20. The measures are a solid step to stabilize Varta financially. But that is all: the situation in the core business of lithium-ion button cells is difficult to predict, and profitability is weak.
Nel ASA: Share in a downward trend
There was a slide in the price of the Nel ASA share yesterday - once again, it has to be said unfortunately. The hydrogen specialist is battered. This applies to the share chart and confidence in the business model. The share is now quoted again at below EUR 1.20 and has thus given back all the price gains from the current year.
At the same time, Nel CEO Håkon Volldal had recently spoken positively about the latest initiatives of the European Union to promote green hydrogen. The installation target for electrolysers from European production is positive, Volldal said. According to the plan, 40% of the EU's annual demand for electrolyzers should come from European production by 2030. Uniform rules are to be introduced across the EU to simplify and speed up approval procedures for electrolyzer manufacturers. But the framework conditions are not currently the problem at Nel. Instead, investors increasingly lack faith that Nel - and other companies in the sector - will be able to operate their business model profitably in the foreseeable future.
The energy transition is in full swing. But not everyone is benefiting from it. dynaCERT has spent a long time researching and developing, and in 2023 the operational knot could finally be broken. At Varta, a positive outlook is currently lacking. After the share price debacle, a countermovement is possible, but sustained price increases are rather unlikely. The Nel share is also not a buy at the moment.
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