New EU initiative boosts the hydrogen market! Pure Hydrogen, Nel, and SFC Energy stand to benefit!

Pure Hydrogen – An underestimated all-rounder

The Australian company Pure Hydrogen is broadly positioned in the hydrogen sector. The Company's goal is to play a leading role in the development of zero-emission vehicles and energy projects by building an ecosystem. The approach is promising and technology-neutral. Pure Hydrogen focuses on the production of green hydrogen from renewable energy, but also offers products along the downstream value chain. This includes the manufacture of zero-emission commercial vehicles, the marketing of electrolysers and storage systems, and the associated service and maintenance.

In recent months, Pure Hydrogen has reported encouraging orders in the millions, including the delivery of trucks to Heidelberg Materials, Scott Lovat Transport, Barwon Water, and TOLL Transport in its home market of Australia. These orders highlight the potential in the commercial vehicle sector. Hydrogen Diesel Electric Australia could ensure further sales success in the domestic market. An agreement has been signed with the Company to distribute hydrogen fuel cell trucks and battery electric buses in Western Australia and Queensland.

The deal with the US company Riverview International shows that the Australian company's solutions are also gaining international recognition. Riverview International's expression of interest includes the delivery of refuse collection vehicles for the US market, particularly California. The Australian company has also entered into a distribution agreement with the local GTS Group in California.

Interest is also emerging from markets. In Argentina, a distribution agreement has been signed with the local FRN Enterprise to expand the Company's presence in South America. An exclusive distribution agreement has also been signed with GreenH2 LATAM for the Mexican and Colombian markets. Through partnerships with H₂ and Botala Energy, the Australians have access to the African continent.

Pure Hydrogen's global footprint has expanded significantly to date. Now, Europe could gain greater importance thanks to the new EU platform for hydrogen. The ecosystem approach is strategically convincing. With further orders coming in, the stock should regain significant momentum.

Nel – Commercialization is gradually increasing, and operating losses are declining

The Norwegian company manufactures electrolysers for hydrogen production and builds hydrogen filling stations. The Company is one of the world's best-known names in both areas. Nel is currently valued at around USD 400 million, which is roughly four times its expected annual revenue for the current and next fiscal year.

Even though analysts are forecasting significant revenue growth from 2027 onwards, Nel is unlikely to become profitable for many years. Against this backdrop, most experts consider the shares to be overvalued. Although the latest quarterly figures show a decline in sales, the operating loss has been reduced significantly – a positive development overall. In addition, the Company has an order backlog of almost USD 100 million and cash reserves of around USD 175 million, which will enable the Norwegians to finance growth and absorb losses for several years.

SFC Energy – Share price jump after defense sector order

SFC produces hydrogen fuel cells that are used to generate mobile and stationary electricity. The Company thus plays a vital role in the value chain for the use of hydrogen as a clean, decentralized energy source.

The share price has lost around half of its value since its high in May, but could have recovered following the latest company announcement. SFC has concluded a maintenance contract worth EUR 3.2 million for tactical fuel cell solutions for the Indian Ministry of Defense through its Indian partner.

Cavendish analysts are very bullish on the stock. When they initiated coverage in September, the experts set a price target of EUR 26 – double the current price! The experts emphasized the successful M&A strategy of the southern German company. Acquisitions such as those of the Dutch PBF Group and Ballard Power Europe's stationary hydrogen fuel cell business demonstrated management's ability to successfully integrate companies and technologies in a way that increases profitability.

The experts' statements are certainly correct from a forward-looking perspective; however, the recently published quarterly figures paint a somewhat different picture. The annual forecast had to be lowered in the summer, and after nine months, revenue is slightly below the previous year's level. The losses in operating profit are significantly worse – adjusted EBIT slumped to EUR 5.0 million after EUR 13.7 million in the previous year. Cost savings, the prospect of a strong final quarter, and rising order intake, including from the defense sector, make it tempting to start building up positions.

The EU's new Hydrogen Mechanism has the potential to provide the hydrogen market with a positive boost quickly. Smaller companies in particular are likely to benefit disproportionately from this. Pure Hydrogen's stock, with a manageable market capitalization of AUD 31 million, could therefore quickly gain momentum. The Australians' ecosystem approach is strategically convincing. Nel and SFC should also benefit from a general market upturn. Analysts believe SFC could double in value.