July 17th, 2023 | 08:15 CEST
Plug Power, First Hydrogen, Daimler Truck - Bringing tomorrow's winners into the portfolio today
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"[...] We can convert buses and trucks to be completely climate neutral. In doing so, we take a modular and incremental approach. That means we can work with all current vehicle types and respond to new technology and innovation [...]" Dirk Graszt, CEO, Clean Logistics SE
Plug Power - Timely turnaround?
Plug Power wants to take care of the infrastructure. The problem with the US company is that it has promised a lot in recent years and has yet to achieve the envisaged goals. Thus, the 1st quarter figures were also not exhilarating, and the set target of USD 1.4 billion with a positive gross margin was far off. Investors sold their shares and caused the share price to plummet to USD 7.44. But it seems the Company is getting its act together just in time. Recently, the Company has been able to announce repeatedly larger orders.
In July, there were two noteworthy orders. One was the order from Countrywide Hydrogen for 2 x 5 MW proton exchange membrane electrolyser systems for green hydrogen projects in Tasmania, Australia. It is to produce up to 4,200 kg of green hydrogen per day. On July 13, the Group received an order for 100 MW of proton exchange membrane electrolysers. The buyer and financial terms were not disclosed, but Plug Power said this is the largest project in the European oil and gas sector. The electrolysers are expected to be delivered and installed in 2024, run on 100% renewable energy, and produce about 43 tons of green hydrogen per day.
Last Friday, Northland Securities upgraded the rating from "Market Perform" to "Outperform," with a price target of USD 22. The analyst believes the Company is on track to generate cash flow. He even thinks it is possible that Plug Power can break even by year-end due to higher revenues from the electrolysis business. Citibank has also issued a buy recommendation with a price target of USD 13. The stock briefly reached that target before subsequently pulling back to USD 12.14.
First Hydrogen - Commitment in Quebec expanded
First Hydrogen Corp. is a Vancouver- and London-based company specializing in zero-emission hydrogen vehicles and the production and distribution of environmentally friendly hydrogen. Together with its partners AVL Powertrain and Ballard Power, the Company has built vans, and light commercial vehicles, with hydrogen fuel cells using its best-of approach. After the vehicles had already convinced Rivus during test drives, the British energy supplier SSE Plc was given the chance to test the vehicles on its premises at the end of June. On July 13, there was positive feedback from these tests. The drivers praised the range of over 500 km, the smooth running and the short refueling time of 5 min. They also noted that the vehicle could transport heavier loads.
In parallel, the Company is working with FEV Consulting GmbH, Aachen, to develop a hydrogen refueling system. In order to cover the entire value chain, option agreements for the purchase of land were concluded on June 28. Up to 35 MW of green hydrogen will be produced there, and up to 25,000 light-duty vehicles per year will be built. The Quebec government supports the transformation to green hydrogen and has planned an Energy Transition Valley innovation zone. On July 10, Sacré-Davey was commissioned to conduct a feasibility study for Shawinigan's green hydrogen production facility and assembly plant.
The market for environmentally friendly hydrogen is estimated at around USD 670 million, but it is expected to grow to USD 7.3 billion by 2027. The light-duty vehicle market is also expected to grow by 5.1% annually, reaching USD 752 billion by 2030. As states have set ambitious targets for zero-emission goals, many fleet operators are forced to swap their existing fleets for zero-emission vehicles. Financial incentives from governments could accelerate growth. The stock has been running sideways between CAD 2.87 and CAD 3.30 since joining Hydrogène Québec on June 14 and is currently trading at CAD 3.03.
Daimler Truck - Raising the annual forecast
Daimler Truck has long focused only on electric trucks and buses. Meanwhile, a rethink has taken place, and from 2025, trucks with hydrogen fuel cells should also be able to be tested by customers. The GenH2 hydrogen truck is already in the test phase and should eventually be able to cover up to 1,000 km on one filling. If the transport industry wants to achieve the climate protection targets set by the EU, alternatives to diesel combustion engines are needed. This strategy change makes sense to sell customers the right vehicle for their specific application.
Irrespective of the hydrogen truck, the operating business is doing splendidly. The Group has raised its full-year guidance and announced a share buyback program. The Company reported a strong Q1 and robust sales of 132,000 vehicles in Q2, thanks to improved supply chains, stronger core markets, higher prices and strong performance in its after-sales business. Daimler Truck has raised its adjusted return on sales (ROS) forecast for its industrial business to a range of 8.5% to 10%. The total unit sales forecast for Daimler Trucks has been raised to 530,000 to 550,000 units.
Although internal combustion engines still account for the majority of sales, by 2030, the majority of trucks and buses sold are expected to be emission-free. Analysts were pleased regarding the new forecasts, and there were 5 buy recommendations from Goldman Sachs, Deutsche Bank, RBC Capital Markets, JPMorgan and Jeffries. The price targets are between EUR 39.00 and EUR 53.00. Only DZ Bank issued a "hold" recommendation and raised the fair value from 32 to 35 euros. The share exited Xetra trading on Friday at EUR 33.02.
Hydrogen will be an energy carrier of the future. This applies to both the energy-hungry industry and the transportation sector. Plug Power covers the entire value chain and can play a leading role in building the infrastructure. First Hydrogen specializes in the light commercial vehicle market - a growing market as more and more packages are shipped. But the portfolio also includes fueling systems and green hydrogen production. Daimler Truck, on the other hand, is focused on large vehicles such as buses and trucks. The market is doing well, and EU pressure will ensure further sales.
Conflict of interest
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