November 10th, 2022 | 12:26 CET
Plug Power after the horror numbers, and what are Varta and Altech Advanced Materials doing?
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"[...] Boron is one of the most versatile elements in the whole world! Everyone reading this text regularly uses hundreds of products that depend on boron. [...]" Tim Daniels, CEO, Erin Ventures
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
Plug Power: Analysts remain confident
Plug Power continues to post losses. The hydrogen specialist's third-quarter 2022 revenue increased to USD 188.63 million from USD 143.9 million in the same period of last year. However, it also expanded significantly. This resulted in USD 170.8 million in Q3. This figure was "only" USD 106.67 million in the same quarter of the previous year. That corresponds to a loss per share (basic) of USD 0.30 (previous year: USD 0.19). Things do not look much better for the first nine months of the year. Revenue of USD 480.7 million was offset by a net loss of USD 500.5 million. The Company continues to be troubled by supply chain issues. Accordingly, the stock initially fell sharply in after-hours trading in the US after the figures were announced. However, it held up well in regular trading yesterday. Investors continue to believe in the future prospects.
The US company emphasized that it is currently not a demand problem but is largely due to delays in the supply chain and the timing of some large projects. Accordingly, the Company is optimistic about the coming year. In 2023, sales are expected to increase to USD 1.4 billion, and margins are expected to improve. As a first reaction, the analysts at RBC Capital are satisfied. At least, they continue to recommend the Plug Power share as a buy. However, the price target was reduced from USD 24 to 20. Currently, the stock is trading just above USD 16. The market capitalization is a proud USD 8.3 billion.
Altech: With Fraunhofer to the new battery standard?
Altech Advanced Materials AG is still a long way from a valuation in the billions. But if the Company were to achieve its goals, this would not be impossible in the future. After all, the Heidelberg-based company wants to set a new standard for lithium-ion batteries for electromobility. A new coating technology is to be used to prevent the loss of battery capacity that has been common until now as a result of charging. Construction of the pilot plant in Saxony is already underway, and patent applications for the Silumina AnodeT technology have also been filed in the core markets. In the future, Altech also wants to get involved in the field of solid-state batteries for stationary battery use.
A battery joint venture has been established with Fraunhofer to produce battery packs specifically for use in the renewable energy and grid infrastructure sectors. In the meantime, Altech has held discussions with potential major customers and established a requirements profile for its CERENERGY solid-state sodium-alumina batteries. The ABS60 (60kWh) battery packs will have a voltage of 620 volts and 100 ampere-hours (Ah), meeting the exact requirements of a high-performance industrial grid storage system. CERENERGY batteries are fire- and explosion-proof, have a lifespan of more than 15 years, and operate efficiently in extremely cold and desert climates without additional cooling or heat. CERENERGY battery technology uses common salt and is free of lithium, cobalt, graphite and copper, eliminating dependence on metal prices and supply chain issues of critical and increasingly scarce raw materials. Altech expects the market for grid storage to grow by approximately 28% annually over the coming decades, reaching USD 15.1 billion by 2027 and continuing to grow. The plant in Saxony is expected to have an annual capacity of 100 MWh, and the ABS60 battery packs are expected to become the standard product for the European grid storage market, specifically with renewables. Fraunhofer estimates that the cost of manufacturing CERENERGY batteries will be around 40% lower than the current lithium-ion batteries.
Varta: Target price EUR 21?
Varta is certainly one of the disappointments of the year. The much-praised battery specialist is not making any real progress in its expansion into the field of electromobility, and meanwhile its core business with micro-batteries is also weakening. Accordingly, the share has crashed from around EUR 120 at the beginning of the year to below EUR 30. It is currently bottoming out at just under EUR 30. But the analysts at Warburg do not hold out much hope for a quick recovery. Quite the opposite. Even at the current level, they recommend selling the Varta share. Their price target is EUR 21. They say the company needs substantial liquid funds for the necessary investments to build up capacity for the production of its V4Drive batteries for electric cars. At the same time, this area is fraught with numerous uncertainties, they said. There are still neither new customers nor a partner. And how profitable this area will be for Varta is also uncertain. On November 15, Varta will publish its interim report on the third quarter. Whether there will be a more concrete outlook then would be desirable, but is questionable.
With shares in the renewable energy sector, investors are betting on the future. Plug Power is currently demonstrating that it is possible to achieve high losses even when demand is high. In the coming year, however, the Company must finally get its losses under control. Should Altech Advanced Materials successfully reach the pilot plant and convince customers, the current valuation of EUR 10 million would be anything but high. Even at the current level, there is no reason to buy Varta. The Company has disappointed too often for that.
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