Turnaround within reach; invest in hydrogen 3.0 now? Nel ASA, Plug Power, dynaCERT and Daimler Truck

Daimler Truck - Hydrogen truck manages 1000 km

Daimler Truck has successfully demonstrated that hydrogen fuel cell technology can be an important solution for the decarbonization of flexible and demanding long-distance road transport. A prototype of the Mercedes-Benz GenH2 Truck approved for public road traffic covered a distance of 1,047 km on one tank of liquid hydrogen as part of the Daimler Truck "HydrogenRecordRun." This is not only in test mode but also in different driving and charging situations. However, development at Daimler Benz is also moving towards electromobility in the alternative drive sector, particularly for buses.

Despite a high level of innovation and good sales figures, CEO Martin Daum is not entirely satisfied with the first quarter, as fewer vehicles were sold in all major markets. From January to March, the DAX-listed company's sales fell by 13% to just under 109,000 units compared to the same period last year. Still, experts see this as an expected normalization of the global truck markets. While Europe and North America performed satisfactorily, the environment in Asia was weak. A full 29% fewer commercial vehicles were sold there. In contrast, the bus business recorded a small increase of 1%.

Daimler Truck shares reached their high of EUR 47.85 in March and are currently around 15% lower. Analysts on the Refinitiv Eikon platform expect a slight decline in sales of 2% to around EUR 54.5 billion for the current year. However, this is expected to rise again to EUR 62.7 billion by 2026. The current P/E ratio of around 9.1 would fall to around 7.5 in 2 years. It is not expensive for a global technology market leader who also offers a dividend of just under 5%.

dynaCERT - Into a new era

The Canadian company dynaCERT is a technology supplier for the transport industry in all segments. With the sophisticated hydrogen add-on HydraGEN™ (HG1), diesel combustion processes can be optimized to such an extent that, depending on the type of use, fuel savings of between 8% and 20% can be achieved. In addition, the soot and nitrogen content is reduced, making the exhaust gases cleaner. The technology is particularly well-suited for public transport companies, freight forwarders, and the mining industry to meet environmental regulations and reduce the carbon footprint of entire fleets.

The Company is collaborating with the organization VERRA to enable the issuance of CO2 credits for the use of the technology in the future. Once VERRA certifies dynaCERT solutions, there will be tradable pollution rights in addition to the economic incentive provided by fuel savings. This benefits both the Company's and others' environmental records. Solutions of this kind directly contribute to the active climate policies of Western governments. Investors have become somewhat impatient due to the long wait for certification. A large number of shares are currently changing hands, indicating increased attention on the share. Since certification by VERRA could be announced any day now, long-term investors, in particular, should take advantage of the opportunity to get in.

Nel ASA and Plug Power - Consolidated?

Nel ASA and Plug Power are currently experiencing interesting daily movements. There are often 10% swings upwards, but they are quickly neutralized. Technical observers are offered recovery attempts by traders who want to set the "hydrogen" momentum in motion again. The headwind for this action often comes in the form of operating figures, which have not been particularly inspiring for months.

What is missing across the board are public contracts such as this one from Nel ASA. In the US, for example, the Norwegians are cooperating very prominently with hydrogen project developer Hy Stor Energy on the Mississippi Clean Hydrogen Hub (MCHH) project. As part of the cooperation, a volume of more than 1 GW in the form of alkaline electrolysers has been reserved at Nel. Subject to the final investment decision, production at the plant on Herøya in Norway is scheduled to take place between 2025 and 2027. So far, however, it is only a letter of intent, which Nel will not consider as an order intake or order backlog until a firm order has been received.

Opinions are divided when it comes to Plug Power, with the share price already falling to USD 2.14 this year when management announced a USD 1 billion financing via the stock exchange. The shares were not offered to existing shareholders but were placed on the market by investment banks "at the best price". Although the capital increase has now been completed, the share price is barely budging at USD 2.42. Nevertheless, the hydrogen company, which has run into financial difficulties, has some promising news to report. Plug Power has succeeded in signing further contracts for the delivery of so-called Basic Engineering and Design Packages (BEDP) for projects in Europe and the US with a total capacity of up to 350 MW of PEM electrolysers. Since the introduction of the BEDP offer just two years ago, Plug Power's electrolysis business has experienced continuous growth, but investors are not yet able to benefit from this.

Plug Power provides technical buy signals above the USD 2.75 mark, while Nel ASA should first cross the EUR 0.52 line. Although this is only 15 to 20% away in both cases, investors are still too scared to call for a turnaround after a price loss of over 85% in the last two years.

While Daimler Truck's truck and bus business continues to boom, the hydrogen sector is currently just managing to keep its feet on the ground. The major producers of electrolysers, such as Nel ASA and Plug Power, are still waiting for public orders, while dynaCERT, on the other hand, continues to land international orders. Nevertheless, the markets are waiting impatiently for the expected VERRA certification for the issue of emission rights. If it comes soon, the valuation is likely to rise faster.