November 14th, 2023 | 07:15 CET
Plug Power with Warning Signals! Should you buy SMA Solar and Altech Advanced Materials shares?
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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.
Altech Advanced Materials again delivers convincing data
The German company Altech Advanced Materials AG wants to revolutionize the energy storage market with a newly developed sodium chloride solid state battery, CERENERGY®. The feasibility study for the planned factory in Saxony is currently being prepared. The latest update from the feasibility study is quite something. In future, CERENERGY® batteries with an output of 120 MW per year could roll off the production line, which is 20% more than initially planned. This increase comes without additional costs but solely due to technical optimization in partnership with the joint venture partner Fraunhofer IKTS and other suppliers. This should enable the plant to be operated even more profitably. The final feasibility study is to be published in the coming months.
Altech CEO Uwe Ahrens expressed great confidence: "We are making good progress with our production plant for CERENERGY®. Through optimized design enhancements, we have succeeded in significantly expanding production capacity without incurring additional investment costs for Altech. We are very pleased to have already achieved a 20% increase in production in the current planning phase. This shows once again that, together with partners such as the Fraunhofer Institute IKTS, we are on the right track to develop and implement a performance-optimized production plant for our innovative sodium chloride solid-state battery, CERENERGY®."
The Altech battery, which consists of common salt, nickel and ceramics, does not require critical raw materials such as graphite, lithium and cobalt. In stationary operation, Altech sees a cost advantage of around 50% compared to lithium-ion batteries, taking into account total costs and daily charging cycles. And demand is increasing, for example, for storing energy from the sun and wind. Experts predict that the market for energy storage systems will grow to USD 15.1 billion by 2027 - in 2022, it was only USD 4.4 billion.
A pilot plant for the production of performance-enhancing anode material (Silumina) for use in electromobility is also currently being built in Saxony. The Altech technology is intended to significantly improve the range and charging speed of current batteries. The preliminary feasibility study is convincing, with an annual EBITDA of USD 65 million and a cash value of over USD 500 million. There may be news on December 5, 2023, when Altech's management is set to present at the virtual investor conference, iif. Other German companies such as K+S, Vectron and aixtron will also be presenting. Click here for free registration.
SMA Solar: Analysts not convinced
SMA Solar's operating performance and share price are also currently going their separate ways. The inverter manufacturer successfully continued its growth in the third quarter of 2023. Overall, Group sales rose by 84.7% to EUR 1.3 billion in the first nine months of 2023. In the Home Solutions segment, sales even more than doubled to EUR 486.2 million. SMA also significantly increased its operating result (EBITDA) by 361% to EUR 231.2 million. Consolidated net income rose significantly from EUR 11 million to EUR 180.4 million in the reporting period.
As of September 30, 2023, the order backlog remained at a very high level of EUR 2.0 billion (September 30, 2022: EUR 1.7 billion). The sales and earnings forecast for the 2023 financial year, which was raised again on October 4, 2023, was also confirmed. Sales are expected to be between EUR 1.8 billion and EUR 1.9 billion, and EBITDA between EUR 285 million and EUR 325 million.
Analysts are nevertheless cautious. Jefferies and Deutsche Bank recently rated the SMA share as a "Hold". Following the disappointing figures from US solar companies such as SolarEdge, experts expect 2024 to be a challenging year for SMA as well.
Plug Power: One shock after another
It is currently impossible to predict when Plug Power will return to positive growth. It is worth noting that the hydrogen pioneer has never celebrated operational success in its corporate history. So far, the US company has gotten by with the hope of a breakthrough in the billion-dollar hydrogen market and rising sales. However, in times of high interest rates, investors seem to be losing patience.
Although Plug Power has recognized the signs of the times and proclaimed the goal of breaking even, there is no trace of this in the quarterly figures. With sales of USD 669 million in the first nine months, the Company is a long way off the forecast of USD 1.2 billion for the year. Worse, the Company simply cannot get to grips with the loss. After Plug Power lost USD 284 million in the third quarter, losses in the first nine months have now totaled USD 863.9 million, exceeding sales. With a cash balance of USD 1.2 billion, the funds would only last until the end of 2024. Therefore, it is unsurprising that even Plug Power has confirmed to the US Securities and Exchange Commission (SEC) that there are "significant doubts about the Company's ability to continue its operations." The share is currently trading at around USD 3. Nevertheless, the Company maintains a hefty USD 2 billion market capitalization.
It is unlikely that Plug Power will be able to raise fresh debt or equity capital. However, the question remains at what price and why a turnaround in operational business should be achieved. In contrast, Altech Advanced Materials offers an exciting newcomer story in the battery market and has a strong parent company in Australia. SMA Solar has also already demonstrated that it can be profitable, although investors should monitor overcapacity in the solar market.
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