August 25th, 2021 | 11:40 CEST
Nel ASA, dynaCERT, Steinhoff - Boost for the portfolio with turnaround candidates
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
Nel ASA - Waiting for a breakthrough
Nel ASA is undoubtedly operating in a market of the future. However, this has brought the share far too quickly into spheres where only a crash could follow. Until the end of January, hydrogen was the hype topic par excellence. The valuations of many hydrogen stocks were astronomically high, even though the companies were posting losses across the board. All investors who jumped on the hydrogen bandwagon too late and did not make the jump off are now complaining about very high losses. Here, investors did not look at the fundamentals when they bought the stock and are now paying the price.
The figures for the second quarter were weak. While sales of 163.7 million Norwegian kroner (NOK) were achieved, the loss was almost as high at NOK 149.1 million. The Company has secured several big-name partners such as Wood, First Solar, Kvaerner, and SFC Energy. However, these are mostly pilot projects that certainly have the potential for something big but are not yet proven products that can be offered to the market. Partner Wood recently secured a EUR 500 million loan from the UK government to expand its hydrogen business. Nel ASA could benefit from this.
The stock came under renewed pressure as new shares were issued, taking the papers to a support line at NOK 13.27. This support held, but the downward trend is currently fully intact. Only a closing price above NOK 15.95 would brighten the chart picture. In contrast to competitors such as Plug Power, Nel ASA has formed a new low for the year. As an investor, one waits for new momentum for the share.
dynaCERT - Good sales figures in the second quarter
According to its statements, dynaCERT has suffered massively from the Corona pandemic. The Company aims to install its HydraGEN technology in all diesel vehicles because it uses less fuel, the engine lives longer, and there are fewer emissions, which ultimately benefits the environment and the owner's wallet. Even though the pandemic has brought sales to a significant halt, management has not been idle and has used the time to obtain CO2 certificates that could be sold at a profit.
It is not yet there, but with HydraLytica, there is already a solution that can capture the CO2 savings. Sales have been rising again significantly since the Corona situation slowly improved towards the summer. In the second quarter of 2020, sales of around CAD 20,000 were generated, but this year they have risen to over CAD 414,000. It remains to be seen whether the development will continue in this way. New distribution partners have been acquired so that dynaCERT products are now available in 38 countries.
First, there was trouble from Corona, and then the stock was dragged down by the poor sentiment in the hydrogen market. The share has closed the open gap from July 2019 and is currently trending sideways. A close above CAD 0.40 is needed to break the downtrend. If it is confirmed that carbon credits are received for the installation of the HydraGEN technology, this would be a booster for the Company.
Steinhoff - Numbers and creditor meetings are getting closer
Steinhoff has been fighting insolvency since 2017 and the situation is slowly coming to a head. Before the creditors' meeting in Amsterdam on September 3, the Group plans to publish quarterly figures on August 27. These should be looked at closely, as they could indicate how successful the restructuring is. In any case, the last quarterly figures were positive for the Company. If the hurdle in Amsterdam is cleared and the creditors are prepared to make concessions, the Group's continued existence is not yet assured. First, the creditors' meeting in South Africa must also approve the plans.
To increase the chances of a positive outcome, the Company increased its settlement offer by around EUR 186 million to EUR 1.34 billion at the end of July. This appears to have appeased one of the toughest opponents, the Hamilton Group. In addition, there are still court battles to be settled, which makes the current situation very confusing. Among other things, there is the question of who is entitled to vote at the meetings. If a settlement can be reached, the oppressive EUR 11.18 billion debt will mostly vanish into thin air.
With an increase in the offer to creditors, the share has already moved to almost EUR 0.134. At the moment, anything is possible, but one should wait for the news about the two creditor meetings before getting in. With this starting position, an investment would be like a coin toss. One should instead have the share on the watchlist and keep an eye on the news.
For every turnaround, a spark is needed to start the rocket. Then big profits are possible. At Nel ASA, the road is currently a bit further, as hydrogen is simply too expensive at the moment. At the cleantech Company dynaCERT, one should keep an eye on the upcoming figures and watch out for news regarding CO2 certificates. Steinhoff could start up at short notice if the Company's creditors approve the restructuring plans. Here, too, one should follow the news closely.
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