October 17th, 2022 | 11:19 CEST
Nel ASA, dynaCERT, Plug Power - Hydrogen market booming
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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 - Large order puts short sellers under pressure
Norway's Nel ASA is Europe's flagship hydrogen company. But shareholders only had fun with the stock until the end of January 2021, when the share was above NOK 34. Since then, things have mainly gone downhill. This was partly due to the upward exaggeration because the fundamentals of the loss-making company did not allow for this market capitalization. Even today, after more than 71% consolidation, the Company still has a valuation of NOK 16.6 billion. When sales shrank in the second quarter and losses widened, this ultimately called short-sellers to the scene.
On October 10, Qube Research & Technologies reported they were short 13.1 million shares. But there are 6 more short sellers. In total, the short ratio is 6.3% of all shares. However, with the October 15 announcement, the short sellers may now be getting cold feet because the order from Woodside Energy for alkaline electrolyzers has a volume of NOK 600 million. In comparison, sales for 2021 were NOK 798 million and only NOK 396 million in the first half of the year. Håkon Volldal, CEO of Nel, said, "The market for electrolyzers is developing favorably for Nel. We are now securing high-quality contracts with favorable terms and a manageable risk profile. The contract with Woodside will have a very positive financial impact on the Company."
At the end of the second quarter, the Company recorded the highest order backlog in its history, amounting to NOK 1,439. The new large order means Nel ASA is growing significantly this year. If short-sellers start to smooth out their positions, the stock will begin to jump on October 17. The Norwegian's stock exited trading at NOK 10.66 on October 14. It is likely to be a volatile Monday. In addition, the figures for the third quarter are due on October 20. It promises to be an exciting week.
dynaCERT - IAA Transportation a success
dynaCERT is now almost 20 years old and, during this time, has developed a technology to reduce CO2 emissions from diesel engines. Looking at Germany, the transportation industry needs to reduce its emissions by almost 50% by 2030 compared to 1990. E-trucks are not mature at the moment, and the charging network is also unsuitable with current charging times. Green hydrogen is currently too expensive. The alternative offered by dynaCERT is called HydraGEN. The patented process produces pure hydrogen and oxygen on demand and feeds it into the engine via the air intake. The system is fully computer controlled and ensures optimal combustion. The result is about 50% less emissions, lower fuel consumption and longer engine life.
The Company was present at the Transportation International Motor Show in Hanover, Germany, from September 20 to 25. According to the Company, many discussions were held with fleet operators and OEMs. Ed Cordeiro commented, "We have seen a greater understanding, comfort and enthusiasm in the conversations about our HydraGEN technology, which has led to immediate orders." Accordingly, news of orders is expected in a timely manner. Together with VERRA, dynaCERT is on track to obtain CO2 certificates. Using the HydroLytica software, users can see improved fuel consumption and emissions values in real-time. The investment typically pays for itself within 9 months for customers.
Once the Company is certified with the Verified Carbon Standard seal and gets CO2 certificates, the technology is a must-have for all diesel engines that are used a lot. On September 30, the Company announced that one of its customers, Alectra Utilities, received a coveted "Most Innovative Leader" sustainability award for its use of HydraGEN technology. The deployment on 13 vehicles saved 8,000 kg of CO2 and 10% fuel. Those who want a more detailed picture of the Company can watch the 4th International Investment Forum presentation, available on youtube. After a strong rally in mid-August, the share is in a consolidation phase and is currently quoted at CAD 0.21. As an interested shareholder, one should keep an eye on the news.
Plug Power - Forecast capped
The counterpart to Nel ASA in Europe is Plug Power in the US. North America's leading hydrogen solutions provider is set to secure a piece of the USD 375 billion US climate change package. The package is intended to help reduce emissions by 2030. Among other things, this will involve subsidizing green hydrogen by up to USD 3 per kilogram. This is ideal for Plug Power, which plans to supply Amazon with just under 11,000 metric tons of green hydrogen annually starting in 2025. The green hydrogen will be produced together with its partner Lhyfe, which is considered a specialist in the production of green hydrogen.
However, despite all the good news in recent months, the Company had to report on October 14 that the 2022 revenue forecast cannot be achieved. Revenues are expected to be 5-10% below the target. The reason given by the Company was that some major projects cannot be completed until 2023 due to supply chain issues and associated time delays. Otherwise, the demand for fuel cells and electrolyzers remains high. The Company will hold its Plug Symposium on October 19, where it plans to discuss its forecasts for the future.
For the share, the withdrawal of the forecast was a setback. The share exited Friday trading at USD 18.03, down 6.2%. As recently as October 13, JPMorgan had cut its price target from USD 32 to USD 28. Perhaps the Paris Motor Show, which takes place from October 17 to 23, will bring new impetus. There Hyvia, the joint venture with Renault, will present its Master Van H2-TECH, as well as other prototypes and new products. If the presentation is successful, there could be new orders from this side. The share is likely to remain volatile.
Hydrogen technology will continue to advance with the tailwind of political decisions and associated subsidies. The developments will take time. NEL Asa may have landed a liberating blow with the large order. dynaCERT's technology offers a transitional solution until the development of hydrogen or e-motors is completed and reduces emissions noticeably until then. Plug Power has suffered a setback. Sales are only shifting, but there will be pressure on the stock in the short term.
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