July 3rd, 2023 | 08:25 CEST
Nel ASA, dynaCERT, Nikola - Stopping climate change with hydrogen
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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
Nel ASA - Major order for hydrogen filling stations
Nel ASA is one of the best-known hydrogen stocks in the European region. From 2017 to the beginning of 2021, the value on the stock market went almost exclusively upwards. Subsequently, it went down by more than 70% at the peak. The valuation was simply too high for a company that was still making losses. However, the conditions have greatly improved since the outbreak of the Ukraine conflict and the increased climate protection efforts of Western countries; thus, the course has been set for the breakthrough of the technology. The Company specializes in electrolysers and hydrogen filling stations.
For the latter, Nel ASA received a contract worth USD 24 million on June 29. A total of 16 refueling stations are to be installed in California. The first delivery is scheduled for the 4th quarter - further orders are possible. However, this project also shows the difficulties hydrogen suppliers are facing. The refueling stations were reserved more than half a year ago. In some cases, several months pass before the orders are placed. Nevertheless, the order has a positive signal effect for the Company. Most recently, the Fueling segment had weakened considerably.
The bottom line is that the order books are fuller than ever. That is certainly positive. On the other hand, you have to break even in the foreseeable future before you run out of money. In this regard, Nel ASA is in a much better position than Plug Power. The analysts of the share are divided on how to proceed. Recently, however, there were buy recommendations from Bernstein Research and the Royal Bank of Canada (RBC). The average price target of all analysts is around NOK 16. Last Friday, the stock exited trading at NOK 12.59.
dynaCERT - Large order only a first step
There is still a lack of infrastructure, and the price for green hydrogen is too high for a shift towards hydrogen powertrains to be possible without problems. Nevertheless, decarbonization is the focus of many corporate strategies. Here, dynaCERT offers a patented solution called HydraGEN. This technology is designed for all types of diesel engines and can be retrofitted at any time. Due to the optimization of combustion by oxygen and hydrogen, both emissions and consumption of the engines are reduced. These savings are to be rewarded with CO2 certificates in the future. According to the Company, a corresponding certification by Verra is imminent.
The Corona pandemic significantly impacted sales. However, they are now slowly starting to roll in - the first large order for 3,000 HydraGEN units was reported at the end of May. According to researchanalyst.com, this will generate sales of around CAD 12 million for the Company. Progress was also made in the cooperation with Cipher Neutron, with whom the Company is developing, among other things, AAM electrolysers. After presenting its 5-kilowatt AEM electrolyser at the Canadian Hydrogen Convention, a cooperation agreement was signed with Ionomr Innovations on June 13. Together, they plan to develop North America's 1st 250-kilowatt AEM electrolyser.
On June 21, a memorandum of understanding was signed with Technomak Process Systems. Cipher Neutron is to manufacture its AEM hydrogen electrolysers for Technomak's onshore and offshore wind turbines and its global customers. As dynaCERT holds rights to the AEM Green Hydrogen Technology, they will also benefit from the collaboration. Jean-Pierre Colin, Executive Vice President and Director of dynaCERT, said, "dynaCERT is pleased to support Technomak and Cipher Neutron in the global commercialization of AEM Green Hydrogen Electrolysers." The stock, which had jumped sharply to CAD 0.315 following the large order, has since consolidated and is currently trading at CAD 0.22.
Nikola - Focus on North America
When Nikola was founded in 2015 by Trevor Milton, the goal was to develop alternative propulsion systems for trucks. The fuel was to be electricity and hydrogen. But more was promised than could be delivered. Nevertheless, the Company was valued at around USD 30 billion on May 9, 2020. The all-time high since then has been USD 93.99. It has been downhill since then. Chief executive Milton threw in the towel in 2020 and had to explain himself in court. Meanwhile, the Company has both electric and hydrogen trucks.
In Q1, it took orders for 140 hydrogen trucks and sold 33 electric trucks, generating USD 11.1 million in revenue. The bottom line was a loss of USD 0.26 per share. The Company is still in a difficult financial situation, as operations cannot be sustained like this in the long run. Recently, additional shares were issued to increase liquidity. In addition to the outflow of liquid funds, short-term liabilities are pressing. It is not for nothing that the Company has cut jobs in order to save costs.
That also explains why Nikola sold its shares in the Nikola Iveco Europe joint venture to Iveco. In exchange, the Company received USD 35 million, a license for Iveco's S-Way technology, including the necessary components, and shares in the intellectual property of the jointly developed E-axle. If the Company manages to break even by focusing on North America and cutting costs, it could continue. The former high-flyer has at least managed to secure its listing on NASDAQ, as the share price of USD 1.38 has been above the required USD 1 mark for some time. Only risk-conscious investors should enter here.
The plan to convert the transportation system to sustainable drive systems is worthy of all honor. But there is still a long way to go. Nel ASA generates green hydrogen with its electrolysers and provides the infrastructure with its filling stations. Until then, environmentally conscious companies can reduce their emissions with dynaCERT's HydraGEN technology and may soon even receive CO2 certificates. Nikola has long been committed to alternative propulsion. However, the financial situation is tight. Caution is advised here.
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