November 15th, 2023 | 06:15 CET
Plug Power causes hydrogen tremor - Will dynaCERT and Daimler Truck benefit?
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"[...] We are committed to stay as the number one Canadian and global leader in the Hydrogen-On-Demand diesel technology [...]" Jim Payne, CEO, dynaCERT Inc.
Plug Power - Disastrous figures and prospects
Plug Power's quarterly figures have often disappointed shareholders, but the weak Q3 figures combined with the financial difficulties represent a new negative high point. Once again, losses were significantly higher than analysts' estimates. The net loss amounted to USD 283.5 million or USD 0.47 per share and has widened compared to the previous year. The same applies to the gross margin, which was down 69%. Sales of USD 198.7 million increased by only 5.4%. Even more important than the weak figures, however, is the statement that the Company is unsure whether it will be able to finance operations for longer than 12 months.
CEO Andy Marsh attempted to explain the reasons at the investor presentation following the figures. Above all, the Group had difficulties providing an adequate hydrogen supply. Several plants were unable to produce, which led to a limited supply. This, in turn, led to higher prices and delays in the commissioning of some customer plants. However, Plug has transported hydrogen from the West Coast to the East Coast, reducing core costs. The plant in Tennessee should be back in operation by the end of the year and covers around 20% of production requirements. On a positive note, management expects revenues from new ventures to exceed revenues from traditional business for the first time in Q4.
However, caution is advised when making promises and forecasts. Wall Street analysts see it the same way and have become much more cautious in their assessments, with some analysts slashing their share price targets. Morgan Stanley lowered its target price to USD 3.50. The Company must first prove that it can improve its financial situation. The upcoming quarterly figures could provide some direction here. If expectations are missed again, and no solutions are found, it could be difficult for the largest hydrogen company. The share is currently trading at around USD 3.50.
dynaCERT - CO2 certificates within reach
The roll-out of hydrogen technology appears to be delayed, and the infrastructure for charging stations for electric trucks is still in its infancy. Those wanting to continue driving their diesel trucks and still reduce emissions while saving fuel should take a closer look at dynaCERT's HydraGEN™ technology. The system produces hydrogen and injects it with oxygen through the air intake, significantly improving combustion. A pleasant side effect is the lower maintenance costs due to the longer service life of the particulate filter and fewer oil changes. With the savings, the investment pays off in less than a year.
As sales have recently increased and a follow-up order for 161 HydraGEN™ units from H2 Tek was announced on October 12, the Company needs working capital. To this end, the dynaCERT intends to carry out a private placement of up to 40 million shares at CAD 0.15 per share. The investor will receive half a warrant at CAD 0.20 per share. The aim is to raise a total of CAD 6 million. This will provide enough working capital to process the orders and prepare for the orders that are likely to arrive as soon as dynaCERT has completed the Verra process. Then, the emission and fuel savings will generate CO2 certificates. Like Tesla, they would have a recurring revenue stream. Earthood Services has been engaged to complete the certification process.
They will carry out the final work on the methodology development and verification process. A timeline was announced on October 24. The assessment report should be available by December 31 at the latest. The technical review is set to be completed by mid-November. If successful, the report on the validation of the methodology will be published at the end of November. Obtaining emission credits would be a milestone for the Company. Those interested in a more detailed overview of the Company should note December 5. On that day, Jim Payne will present dynaCERT at the International Investment Forum and outline the latest progress. The share is currently trading at CAD 0.15, the price for the targeted private placement.
Daimler Truck - Analyst expectations missed
Daimler Truck is taking a two-pronged approach when it comes to replacing diesel trucks. Electric trucks are already on sale today, and the Company is on the way to series production in the hydrogen sector, although this is not scheduled to start until 2027. The infrastructure for hydrogen mobility can be built up by then. Currently, however, the eActros 600 is set to shake up the market. The electric truck has a range of 500 km without intermediate charging and a payload of around 22 tons with a standard trailer. The new electric flagship can be purchased as early as this year. However, series production will not start until 2024.
On November 7, the Company presented its figures for the third quarter. Group turnover increased to EUR 13.9 billion compared to EUR 13.5 billion in Q3 2022. Adjusted Group EBIT reached EUR 1.34 billion in the reporting period, compared to EUR 1.27 billion in the same quarter of the previous year. Adjusted EBIT in the Industrial Business amounted to EUR 1.295 billion, also up on the previous year's figure of EUR 1.223 billion. Despite this, analyst expectations were not met. The main reason was supply bottlenecks, as can be seen from the sales figures. In 2022, 134,972 units were sold in the 3rd quarter. This year, only 128,861 vehicles were sold.
Nevertheless, the management maintained its annual sales forecast of between EUR 56-58 billion. Supply chains are expected to stabilize in the 4th quarter. One should keep an eye on order intake, as there was a significant decline of 27% in the past quarter. After the figures, analysts issued 5 Buy recommendations with price targets of between EUR 42 and EUR 53. Investors initially sold their shares after the figures. The Daimler Truck share price currently stands at EUR 28.18.
The news from Plug Power was certainly a setback for the hydrogen sector. The Company must stabilize its financial situation as quickly as possible because the hydrogen market will grow in the future. However, it will likely take longer than anticipated. This will benefit dynaCERT, which already offers an alternative to reduce emissions and fuel consumption. If the Company receives Verra certification, it will also receive CO2 certificates that would otherwise be expensive to buy. Daimler Truck already has its electric trucks on the road. Due to the setback in hydrogen, customers could now turn to electric vehicles after all. However, Daimler Truck must eliminate the delivery bottlenecks as quickly as possible and will then present better figures again.
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