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August 14th, 2023 | 07:00 CEST

Plug Power, dynaCERT, Varta - Optimistic about the future

  • Hydrogen
  • GreenTech
  • greenhydrogen
  • renewableenergies
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Amid global efforts to meet climate targets, renewable energy has established itself as the centerpiece of the energy transition. Since the beginning of the decade, listed companies in this sector have felt a tailwind fueled by billions in subsidies from policymakers. But the current horizon is cloudy. Unexpected delays and deep red figures dominate the scene. Nevertheless, drastically lower market valuations could open the door to potential long-term returns for investors.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: PLUG POWER INC. DL-_01 | US72919P2020 , DYNACERT INC. | CA26780A1084 , VARTA AG O.N. | DE000A0TGJ55

Table of contents:

    Varta AG - Postponed is not cancelled

    Varta AG has presented its annual report for the first half of 2023, which clearly shows the difficulties of the battery manufacturer. Revenues came in at EUR 339 million, down 10% compared to the same period last year. Adjusted EBITDA slipped in the red with a loss of minus EUR 6.8 million, in contrast to positive EBITDA of EUR 68.9 million in the same period last year. Despite these results, VARTA is looking to the future with confidence, driven by expectations of increasing demand in specific segments.

    The overall economic challenges have not left the Group untouched. However, the SDAX-listed company is optimistic, supported by seasonal factors, customer projects starting up and progress in restructuring. A significant part of this restructuring is a global reduction of around 800 jobs. The volunteer program at the Ellwangen site is expected to be completed this month.

    Despite the current economic challenges, the Ellwangen-based company has taken steps to correct course. These include cost reductions, working capital optimization and restructuring measures in cooperation with banks and major shareholders. The current challenges are reflected in the sales figures for the first half of the year, but the forecasts for 2024 are ambitious on the part of management. Increasing demand, especially from the Energy Storage Systems segment and lithium-ion products, is expected to generate sales of at least EUR 900 million.

    It remains to be seen how the implementation of the restructuring measures will impact future performance. A capital increase is unlikely to be avoided this year. Due to the lower than expected cash burn, this should only be postponed to the fourth quarter. Although the Varta share exited trading with double-digit gains, caution is still called for.

    dynaCERT - Waiting for news

    dynaCERT CEO Jim Payne was optimistic on the occasion of the 1st Hydrogen Day in mid-June. Thus, he appealed to the audience at that time to "pay attention to the news" at the Canadian hydrogen company. After the publication of the first large order on May 26 for an estimated volume of CAD 12 million, the manager expects further orders. Discussions with potential customers are at an advanced stage, he said.

    In addition to the HG2R series, which goes over the counter at wholesalers for around CAD 4,000, major mining producers are particularly interested in the HG-4C series, which is designed for diesel engines with displacements of between 40 and 60 litres and is used primarily in heavy-duty vehicles in the mining industry. The price of a unit here is around CAD 50,000, and the payback period on acquisition is just 5 months. In addition to other order announcements, investors await the final "go" for Verra's Verified Carbon Standard program, the most widely used greenhouse gas crediting program globally.

    In addition, dynaCERT provided an update on the major contract mentioned above. Thus, although 93 HydraGEN™ HG-2 units with an equivalent value of approximately CAD 370,000 have been paid in full by Guyana-based Bristol & Bristol Incorporated, an oil and gas logistics company, the delivery has had to be postponed for all but 2 units, awaiting clearance from Guyana Customs by a representative of the buyer. dynaCERT is ready to deliver the units as soon as the necessary information is received from the buyer or representative, according to the release.

    After hitting annual highs of CAD 0.31 in mid-June, dynaCERT shares are currently consolidating in the CAD 0.20 range. The market capitalization is CAD 76.10 million.

    Plug Power - Disappointing again!

    It has already become a kind of tradition when the hydrogen company announces its quarterly figures. With the publication of the results for the months of April to June, the US company disappointed again. Although revenue increased from USD 210.30 million to USD 260.18 million compared to the previous quarter, the operating loss also grew further to minus USD 233.84 million. That includes approximately USD 45 million in costs primarily associated with the numerous activities related to scaling.

    The overall gross margin improved from minus 33% in the first three months of the fiscal year to minus 30%, far from management's ambitious claims. The net result also deteriorated from minus USD 173.30 million to currently minus USD 236.40 million.

    However, those who believed that the forecasts for the full year would be revised were once again surprised. CEO Andy Marsh continues to expect sales in a range between USD 1.2 billion and USD 1.4 billion, with a positive gross margin. He said the scaling of production, the expansion of green hydrogen and the vertically integrated business model represented an inflection point in the second quarter, both in terms of revenue and the path to profitability. As a result, Plug Power met its revenue estimates due to rising electrolyser sales in the second half of the year, plus growth in its cryogenics and applications businesses, including material handling, the Company said in a press release.

    Investor reaction, meanwhile, was unequivocal. Plug's stock has lost about 17% since publication to USD 9.11. The low for the year is USD 7.44, not far from the current level.

    Battery manufacturer Varta AG's numbers reflect the current dilemma, but were better than expected. Plug Power disappointed its investors once again but continues to stick to its forecasts. dynaCERT had to halt the delivery of a large order.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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