July 5th, 2021 | 12:31 CEST
Nel ASA, Royal Helium, Siemens Energy - In the fast lane
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"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
Every small investor knows the stocks of the booming hydrogen sector like Nel ASA or Plug Power. Hydrogen is the most abundant element in the universe, followed by helium. But most people do not know helium from the stock market but rather from fairs and the colorful balloons that rise into the air when you let them go. But this gas can do much more and is irreplaceable in many technical applications. The magnetic resonance imaging (MRI) scanners that are important in medical diagnostics cannot be operated without helium.
A sharp increase in demand has been observed in the healthcare sector, chip manufacturing, and quantum computers production in recent years. There is also strong demand in the rapidly growing space business; it is not for nothing that NASA is the world's largest purchaser of helium. According to experts at the German Federal Institute for Geosciences and Natural Resources (BGR), a helium crisis is looming due to a supply shortage. The European Union has also defined helium as a strategically important raw material.
Pioneer on the stock exchange
Companies of helium producers are rare on the stock exchange and receive little attention. Royal Helium is the second-largest helium landowner in North America and has access to around 400,000 hectares of promising helium land in southern Saskatchewan, Canada. The projects have world-class infrastructure and are located near highways, roads, cities and existing oil and gas infrastructure.
Royal Helium's development in recent months has been more than promising. Test drilling at the Climax I to III projects have confirmed commercially viable helium concentrations, allowing Royal Helium to move directly into production and generate cash flow. Compared to gold production, helium allows a drilled hole to be put into production immediately. In June, a significant CAD 17.2 million financing round was completed to accelerate extensive drilling and development work, with seven new holes planned for the Regolith zone. The accompanying warrants have an exercise price of CAD 0.75 and run for 24 months.
In the course of the capital measure, the price of Royal Helium shares slipped back from the high at CAD 0.54 to the support area at CAD 0.35. Thus, there is a second chance to participate in this topic, which has received little attention from the capital market. Should the Company again report successful exploration work in the new drill holes, the share price should return relatively quickly to the high for the year. Currently, the Company has a market capitalization of EUR 39.10 million.
Compared to Royal Helium, hydrogen specialist Nel ASA is a giant, at least when it comes to market capitalization. EUR 2.87 billion is the stock market value of the Norwegian Company, and this after a correction of almost 50%. After the share formed a bottom in the area around EUR 1.70, the breakout above the resistance at EUR 1.83 occurred recently. The movement catapulted the price to EUR 2.10, where it stopped at the 200-day line and trended south again. Due to the fast and strong movement, a setback to the breakout area would be possible once again.
The Company's vision of offering sustainable hydrogen at a low price has now been strengthened with the signing of a contract with gas expert Howden. In the process, the British are to supply cost-efficient hydrogen compressors. Overall, Nel ASA aims to push the cost of green hydrogen down to USD 1.50 per kilogram. The Company seeks to achieve this with larger cooperation partners.
The performance of Siemens Energy shares looks interesting. After reaching a high for the year at EUR 34.50, the shares of the Munich-based electrical and power engineering Company corrected back to last year's breakout level at around EUR 25. A breakout above the resistance at EUR 26.80 would offer a short-term price potential of around 20%. The analysts at investment bank JP Morgan set Siemens Energy at "overweight" with a price target of EUR 30. Jefferies is much more positive with a "buy" rating and a price target of EUR 37.
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