Nel ASA, Klimat X Developments, Nordex - Climate Neutral: The Business Booster

Nel ASA - Once again, light and shadows

Hydrogen offers a promising solution for storing renewable energy and reducing the negative impact of fossil fuels, as it has a high energy density and is a sustainable energy source that enables the conversion of water and electricity. Electrolysers are needed to produce green hydrogen, and this is where Nel ASA's expertise lies. Nel is also involved in expanding the infrastructure for green hydrogen mobility. However, the Company is highly loss-making, especially when it comes to hydrogen filling stations. Profitability is the Company's main problem because even if it is in a better financial position than Plug Power, investors at least expect to see a break-even scenario.

The year began on a positive note. Nel ASA signed a contract for 10 megawatts (MW) of alkaline electrolyser equipment worth around EUR 5 million with Samsung C&T Corporation Engineering & Construction Group for a green hydrogen project in South Korea. On February 2, the Company announced that a new contract had been agreed with Nikola and that Nel ASA would receive USD 9 million for the adjustments to the old contract. As Nikola's Phoenix Hydrogen Hub has been acquired by Fortescue, there is now also a relationship with Fortescue. Nel ASA will also receive around USD 11 million for the updated guarantees and changes to the scope of supply.

The Norwegians could possibly make good use of this money. The Iwatani Corporation of America has filed a lawsuit against Nel ASA in the US for damages of an undisclosed amount, claiming that the hydrogen filling stations supplied by Nel are defective. Nel ASA has rejected these claims in an initial statement and intends to defend itself vigorously against the allegations. This announcement caused the previously good news to fizzle out and led to a new low for the year at NOK 4.665. One share is currently available for NOK 5.07.

Klimat X Developments - Joint venture for Yucatan project

In today's world, where protecting our planet and reducing carbon emissions are more crucial than ever, the market for carbon credits has emerged as a key element in the fight against climate change. These credits, developed through targeted projects in terrestrial and marine ecosystems, offer an innovative tool to promote sustainability and environmental protection. Klimat X Developments specializes in the development of these nature and climate protection projects. The Company sets up the projects under contract and has the reforestation and renaturation work financed by its clients, which include a Fortune 100 company.

Through these advance purchase agreements, the customers secure CO2 credits, Klimat X has financed its operations, the plots are either replanted or reforested and the smallholders who lease their land are also compensated. A win-win situation at all levels. The Company currently has projects in Sierra Leone, Suriname, Yucatan and Guyana, which together cover more than 35,000 hectares. In addition, there is potential for the restoration of 70,000 to 150,000 hectares. Each project is designed for a term of 30 to 50 years and will generate recurring income with rising carbon prices in the coming years.

After recently advancing the project in Sierra Leone, progress is now also underway in Yucatan. On February 12, the Company announced a joint venture with Imperative Global Projects for the almost 100,000-hectare mangrove project. The mangroves are to be reforested, and upon completion, they have the potential to generate more than 10 million tons of CO2 certificates over 30 years. Anyone interested in learning more about the Company should make a note of February 21. On this day, CEO James Tansey will present the Company at the 10th International Investment Forum. With a current share price of CAD 0.07, the Company has a market capitalization of just CAD 6.1 million, which is considered quite favorable. This is also the conclusion of the Hannam & Partners study, which sees a target price of CAD 0.32 by the end of the year.

Nordex - Return to profit

Wind power is an alternative to fossil fuels. Wind energy is regarded as a clean, renewable, and now economically competitive solution. In Germany, the wind turbine manufacturer Nordex is one of the leading companies in this field. Here, the Company managed to increase its order intake in 2023 by a whopping 36%. In addition, the Company successfully participated in auction rounds with more than 1.8 gigawatts (GW) of projects. In 2023, as a whole, the Company recorded an order intake of 7.4 GW, with 86% coming from Europe and 14% from North and South America.

On February 12, the Nordex Group presented its preliminary financial results for 2023, achieving its targets for the year. Sales climbed to just under EUR 6.5 billion, exceeding not only the previous year's figure of EUR 5.7 billion but also the Company's own sales forecast of a maximum of EUR 6.1 billion. In terms of earnings before interest, taxes, depreciation and amortization (EBITDA), Nordex achieved a precision landing on the break-even point with EUR 2 million for the full year, compared to a loss of EUR 244 million in the previous year. That brings us to Nordex's challenge. The profit margin remains too low.

Furthermore, Nordex has improved its working capital ratio from minus 10.2% in the previous year to minus 11.5%. The initial expectation was minus 9%. At EUR 131 million, capital expenditure was lower than expected and well below the previous year's figure of EUR 205 million. The final figures are to be presented on February 29. The numbers were well received, and the share was able to establish an upward trend. The share is currently trading at EUR 10.43.

While Nel ASA is finding it difficult to get into the profit zone and thus to obtain new financing, the outlook for Klimat X Developments is much brighter. The Company can sell its projects to customers in advance and thus finance its long-term projects. This helps not only the environment but also everyone else involved. Nordex has also successfully managed to work its way out of the red. While it will close the past year at breakeven, things are set to improve in the coming year.