October 27th, 2021 | 11:03 CEST
NEL, Clean Logistics, Ballard Power, FuelCell Energy - Hydrogen in the third wave!
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Nel ASA - Finally, higher sales for the Norwegians
The Norwegian Nel ASA is a globally operating company based in Oslo, which supplies solutions for the production of hydrogen from electrical energy and its storage and distribution. Nel is one of the most liquid assets in the hydrogen sector and, at the same time, one of the long best performers in European sustainability indices until the beginning of 2021. Today, hydrogen is undoubtedly one of the energy carriers that can accompany the transformation from fossil fuels to sustainable fuels.
With the latest third-quarter figures, the Norwegians can finally show an operational improvement. Sales increased by 55% to NOK 229.3 million, which is a new record. In the previous year, the Norwegians only managed NOK 147.7 million. However, EBITDA deteriorated from NOK -42.1 to -113.0 million. However, this takes into account the start-up costs for the new plant in Heroya. The operating result of NOK -138.9 million (previous year: NOK -116.3 million) is unfortunately still in the red. However, the order backlog showed a positive increase of 8% to NOK 1.01 billion. Will this be enough for a revival in the share price?
Heroya recently produced the first batches of electrodes. The processing of the orders from Nikola and Everfuel is to start in the fourth quarter, and the green hydrogen now finally seems to be going into production. With the new plant in Heroya, the Company is now well-positioned in the growing market to take advantage of opportunities in the alternative energy market.
The Nel ASA share has already shown a good price jump; the last lows at EUR 1.30 seem to be history. From a chart perspective, the only thing missing now is overcoming the resistance at EUR 1.80, then it can continue to go up. Therefore, keep the hydrogen darling on the watchlist, but if the price should fall below EUR 1.55 again, it will be frosty. Operate with tight stops.
Clean Logistics - Focus on the decarbonization of the transport industry
Road freight transport in Germany is set to increase by a further 19% by 2030. Current political resolutions stipulate that CO2 emissions must be cut by almost half at the same time - ambitious plans, to whose success Clean Logistics SE wants to contribute by decarbonizing freight transport. The Hamburg-based company, which recently successfully went public via a shell company, is converting diesel-powered public transport trucks and buses into zero-emission hydrogen-powered vehicles.
For the transportation industry, energy-saving approaches are not a novelty because, on the manufacturer's side, consumption data have already moved significantly downward in recent years. Diesel engines of the latest generation already need 40% less fuel than 20 years ago at higher power levels. But that is not enough. Now, new drive systems are set to reduce these emissions even further or eliminate them altogether. Clean Logistics is converting conventional 40-ton diesel trucks and buses used in local public transport to an emission-neutral hydrogen drive. In this so-called conversion, the entire diesel powertrain of fleets in operation is exchanged for an emission-free hydrogen drive. It makes sense because action is needed in particular for 40-ton trucks. Although these vehicles account for only 7% of the truck fleet over 3.5 tons on Europe's roads, they are also responsible for around 45% of total emissions from freight transport.
The German government's plan calls for a reduction in transport emissions of around 48% by 2030. To achieve this, at least 1,250 zero-emission buses in local public transport and about 27,000 climate-neutral trucks would have to hit the road each year. They are supported in this by numerous initiatives at state and federal level. The total costs for a conversion process currently amount to around EUR 500,000. This sum is surprising at first, but the German Federal Ministry of Transport subsidizes the acquisition of climate-neutral trucks and buses with 80% cost coverage up to a total of EUR 2.9 billion. The spending plan is budgeted until 2024. The best prospects, therefore, of participating in the government's subsidy pot.
After a rapid rise in the summer of 2021 to EUR 15.20, the share price fell again to around EUR 8.20. With about 13.7 million shares, the Hamburg-based company is currently valued at around EUR 112 million. That leaves room for positive development in the peer group of hydrogen stocks in the coming months.
Ballard Power vs FuelCell Energy - Which hydrogen stock to buy now?
There are clear parallels in the technical analysis of the two hydrogen stocks Ballard Power and FuelCell Energy. Both stocks benefited from the buying spree in the first quarter of 2021, where they multiplied their valuations. Ballard rose a good 100% from EUR 16 to over EUR 34, while FuelCell's share price exploded by 300% from EUR 8 to EUR 24. If calculated from the low base in 2020, there were developments in these values of up to 2000% - so far, the fairy-tale increase.
Both values consolidated neatly after the hype and rebounded from the highs by 50 to 80%. If you want to select the better value today, you have to look at the fundamentals. At Ballard Power, sales will develop to about CAD 120-140 million in 2021, current equity is about CAD 1.7 billion, but debt is almost as high. The stock market values this at a capitalization of CAD 6 billion. For FuelCell, we are talking about USD 70-100 million in revenue in 2021 and net equity of USD 300 million, but the Company has yet to report a profit since it was founded. In terms of capitalization, it is calling for USD 2.6 billion. Thus, both stocks are still costly.
Put side by side, Ballard has a significantly higher price-to-sales ratio of 46 versus 31. However, the Company has more marketable products than FuelCell, and its sales are growing much faster. Both companies are expected to break even in 2024/25. From a chart perspective, the shares are in a narrow trading zone. Due to the high price momentum, the operating reports should therefore be studied closely. With emerging momentum, a speculative positioning can make sense for a few weeks, but in the current revaluation of the sector, it is still too early for long-term investments.
The cleantech sector is filled with well-known stocks. Separating the wheat from the chaff here is a challenging analysis task. We will regularly take a look at the sector. The newcomer Clean Logistics has made a clean start and must now report operational progress, and then the share will truly take off.
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