August 26th, 2024 | 07:00 CEST
Plug Power, First Hydrogen, thyssenkrupp nucera - Could multiples like in the dot-com era be possible?
The current hydrogen industry is strongly reminiscent of the dot-com era: back then, many internet stocks were considered temporary flops, but some survived and prospered, with Amazon being a prime example. When the dot-com bubble burst, Amazon emerged stronger and became a global economic giant. Similarly, just as there were skeptics about the long-term success of early internet companies, today there are doubts about the long-term viability of hydrogen technology. However, history teaches us that in the midst of many failures, some standout players can emerge that revolutionize the industry and create long-term value. We look at three possible candidates.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
THYSSENKRUPP NUCERA AG & CO KGAA | DE000NCA0001 , First Hydrogen Corp. | CA32057N1042 , PLUG POWER INC. DL-_01 | US72919P2020
Table of contents:
"[...] dynaCERT's HydraGEN™ device offers a retrofit solution for diesel engines designed to protect the environment while providing economic benefits. [...]" Bernd Krueper, President & Director, dynaCERT Inc.
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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Plug Power - Financial performance and market prospects
The US is investing heavily in the hydrogen sector, which is boosting companies like Plug Power. Nevertheless, the Q2 financials of one of the leading hydrogen fuel cell technology providers are disappointing. The Company achieved sales of USD 143.4 million but fell short of analysts' expectations of USD 186 million. Plug Power also reported a net loss of USD 0.36 per share, significantly exceeding the expected loss of USD 0.30. To improve its liquidity, Plug Power recently raised capital.
Despite missing revenue and earnings forecasts, Plug Power shows improvement in other key areas. Of particular note is the reduction in gross margin losses on fuel sales, which were reduced from 220% in the first quarter to 95% in the second quarter. This shows that the Company has achieved efficiency gains in this segment. At the same time, Plug Power made significant progress in the electrolysis business. Revenues in this area rose to USD 15 million in the second quarter, a significant increase compared to USD 7 million in the same period of the previous year. Plug Power is therefore also optimistic about future market opportunities.
The Company forecasts that it will achieve revenue of USD 320 million in the electrolyser segment in the next one to two years. This positive outlook is supported by ambitious projects, including the opening of a new green hydrogen plant in Louisiana by the end of the year and additional plants in Texas and New York. Analysts also expect Plug Power to reach revenue of USD 1.25 billion next year, indicating strong growth potential despite the current financial challenges. Plug Power remains a key player in the growing market for green hydrogen technology, even if the share price of USD 2.20 is a disappointment.
First Hydrogen - Hydrogen propulsion for light commercial vehicles
First Hydrogen, an innovative company based in Canada and the UK, specializes in the development and production of hydrogen-powered fuel cell commercial vehicles (FCEVs) using the best-of approach. In addition to vehicle production, the Company plans to expand the refueling station infrastructure for green hydrogen. Following successful everyday tests in the UK, including with Wales and West Utilities and Amazon, First Hydrogen now faces the challenge of securing its first large orders. By installing its drivetrains in tried-and-tested German vans, the aim is to ensure a rapid market launch. Prices in this segment have also risen significantly recently and start at around EUR 35,000. Around 1.9 million vans were purchased in Europe alone in 2023.
In order to conquer Europe and the international market, First Hydrogen's successful FCEV model is currently being converted to left-hand drive. This adaptation gives potential customers in key markets such as Europe, the US, and Mexico the opportunity to test the vehicles. California, which recently opened a new hydrogen center with state funding of USD 1.2 billion, is a particular focus. The implementation of left-hand drive is a strategic step to increase the Company's global reach and to adapt to the growing demand for green hydrogen technology.
The future prospects for First Hydrogen are promising in light of global efforts to reduce CO2 emissions. The recent announcement by the UK Prime Minister to promote renewable energy and a green hydrogen sector further strengthens the Company. Furthermore, studies predict an increased demand for green hydrogen, especially in Germany. The current market capitalization is only CAD 29.5 million. Due to the low valuation and the positive test results, the Company could become the focus of major car manufacturers. The share is currently trading at CAD 0.41.
thyssenkrupp nucera - Remains profitable
thyssenkrupp nucera has received substantial funding from the federal government and other government agencies. The US Department of Energy is providing USD 50 million to advance the production of clean hydrogen and electrolysers. This initiative is aimed at strengthening the Company's presence in the North American hydrogen market and developing an automated pilot assembly line. In addition, Thyssenkrupp Steel, a sister company, will receive around EUR 2 billion for the decarbonization project "tkH2Steel". European funding of up to EUR 6.9 billion for hydrogen projects** could also include significant funds for the Company.
In Q3 2023/24, thyssenkrupp nucera recorded strong growth despite a challenging market environment. Order intake increased by 12% to EUR 271.3 million, with water electrolysis technology making a significant contribution. Sales increased by 26% to EUR 235.7 million, mainly due to the successful implementation of chlor-alkali and water electrolysis projects. However, EBITDA fell by 78%. Nevertheless, the Company remained profitable. One of the reasons for the decline is the investment in research and development to strengthen its competitive position. Despite high up-front costs, financial stability remains assured, and the sales forecast for the current financial year has been confirmed.
At the beginning of August, the Company was commissioned by TA'ZIZ to build a large-scale chlor-alkali plant in Al Ruwais Industrial City, Abu Dhabi. The project, which comprises one of the largest plants of its kind in the world, is intended to meet the growing demand for chlorine, caustic soda, and PVC. The plant is expected to produce 500,000 tons of PVC and 796,000 tons of caustic soda annually. This partnership underlines thyssenkrupp nucera's market leadership in electrolysis technology and could position the UAE as a significant player in the global PVC market. The share benefited only slightly from the latest news and closed at EUR 9.175 in Xetra trading on Friday.
In the fascinating world of hydrogen technology, Plug Power, First Hydrogen, and thyssenkrupp nucera show promising approaches, despite current challenges. Plug Power has made significant progress in electrolysis and is planning a strong expansion, although the financial key figures are currently disappointing. First Hydrogen is successfully focusing on innovative hydrogen-powered commercial vehicles and extending its market reach through strategic adjustments. thyssenkrupp nucera remains profitable and benefits from important government funding, with major projects such as in Abu Dhabi strengthening its international presence. Overall, there is considerable potential for sustainable growth in the hydrogen economy.
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.
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