April 5th, 2023 | 20:18 CEST
New hydrogen stars First Hydrogen and SMA Solar - how is the share of Plug Power?
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
First Hydrogen: With milestone and undervaluation
Last year, the First Hydrogen share was among the few bright spots in the hydrogen sector. After tripling in value, the share has recently corrected more significantly. This could be over now. Test drives of the Hydrogen utility vehicle under real road conditions have begun in the UK. The programme, in which at least 15 large fleet companies are participating, was launched by Rivus, a large fleet management provider with around 500 partners. This brings the mass market breakthrough within reach. Investors may already be able to get an interim conclusion on 10 May. Then the Company will present at the 7th edition of the IIF digital investor conference (free registration here).
The opportunity for hydrogen in the commercial vehicle sector is huge. After all, it is a clear requirement of politics: the transport sector must drastically reduce greenhouse gas emissions in the next few years. In Germany, for example, the share of alternative fuels in light and heavy commercial vehicles is likely to remain in the low single-digit percentage range. This is a big opportunity for First Hydrogen. The Company aims to become the leading manufacturer of zero-emission, long-range hydrogen-powered commercial vehicles in the UK, EU and North America.
While the current generation of vehicles are being tested in real-world applications, First Hydrogen has unveiled the concept for a revolutionary next-generation zero-emission vehicle. The light commercial vehicle (LCV) has been developed in collaboration with global mobility experts EDAG Group. It is on schedule to be available as a hydrogen-powered fuel cell electric vehicle (FCEV) model and a battery-electric model. Steve Gill, CEO of Automotive at First Hydrogen, said: "These concept vehicles offer a glimpse into the future of our business and give a clear indication of our brand direction in the light commercial vehicle sector. The spacious and easily accessible cab provides drivers with comfort as well as good visibility of the road. It allows for quick entry and exit, which is essential for express deliveries and time-critical operations where drivers need to make multiple stops. The clean and modern design is flexible and suitable for use in various industries, securing First Hydrogen's position as a developer of functional vehicles that will lead operators to a zero-emission future."
So First Hydrogen is rushing from milestone to milestone, and the experts at researchanalyst.com are very positive about its performance. Compared to the peer group, there is a clear discrepancy in the Company's valuation (to the study).
SMA Solar: Supply chain problems solving themselves, and hydrogen fantasy taking shape
SMA Solar is also currently one of the high-flyers in the cleantech sector. After raising its annual forecast, the share shot up to a new all-time high and is now trading above EUR 98. The Company, known for inverters for photovoltaic systems, expects sales of between EUR 1.45 and 1.6 billion for the current year. EBITDA is expected to increase to between EUR 135 to 175 million. Analysts' expectations so far have averaged EUR 120 million. The Company's optimism is due to continued high demand with easing supply chain problems.
More and more products outside the classic inverters are contributing to growth. SMA Solar has a total of 1,700 patents and utility models. For example, an energy management platform including a battery for the smart home market and industrial customers is in the pipeline. Last year, SMA had already reported on its entry into the hydrogen sector. SMA is developing electrolyzer converters for the production of green hydrogen. The turnkey container solution, including medium-voltage technology, is intended to enable grid-friendly electricity processing for electrolysis.
Analysts lag behind the rapid share price development. Even after the forecast increase, the experts at Jefferies have not changed their "buy" rating. The price target also remains at EUR 85, which is below the current level. Berenberg has not yet published an update. Their latest rating is "hold", with a price target of EUR 60.
Plug Power: Highflyer crashes
Plug Power published positive news yesterday. The American hydrogen pioneer produced 122 MW of the 1 MW electrolyzer stack platform in the first quarter of the current year. This is a new record. The technology group also reported that it had delivered close to 1,000 stacks with a total output of 5.7 MW. Plug CEO Andy Marsh: "Plug is aggressively pursuing every aspect of the green hydrogen economy, including expanding the hydrogen ecosystem and building world-class manufacturing and supply chain capabilities." The Rochester (USA) site is scheduled to expand production capacity to 100 MW per month in the second quarter.
Given the low share price, the stock's muted reaction to the news is surprising. The shock of Monday is likely still deep-rooted among investors. Indeed, analysts at Morgan Stanley had downgraded the share to "hold" and more than halved the price target from USD 35 to USD 15. The analysts are sceptical about whether Plug Power can really improve sales and profit margins as quickly as some expect.
Morgan Stanley's opinion reflects lost confidence in the business models of previous hydrogen darlings like Nel and Plug Power. The prospects are excellent, and the order books are full, but sales are only possible with massive losses.
Hydrogen will have a firm place in the energy mix of the future. But which companies will benefit is anything but straightforward. Since 2022, the wheat has been separated from the chaff. Relying exclusively on the old top dogs Nel, Plug Power, and ITM Power seems risky. The companies are too far away from a profitable business model - despite partly already high sales. In contrast, First Hydrogen is valued low and could conquer the mass market with its commercial vehicles in 2023. With a market capitalization of over EUR 3 billion, SMA Solar is not cheap, but its expansion into new areas, such as hydrogen and battery technology, is exciting.
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