21. April 2021 | 09:17 CET
Verbio, dynaCERT, Total - Which fuel share ignites the price turbo?
Bioethanol, hydrogen, conventional oil & gas. Three different types of combustion fuels, all of which have their reason for being, but also their advantages and disadvantages. Oil & gas have enabled the world to industrialize, but what does the future look like in the face of finite resources and climate change? Bioethanol is a sustainable alternative, but how will relevant quantities be produced in the face of limited arable land and an ever-growing world population? Is hydrogen the solution to all our problems? But where will the enormous amounts of energy needed to produce it come from? Will it ultimately come down to a mix? Which companies will come out on top in the end?
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ISIN: DE000A0JL9W6 , CA26780A1084 , FR0000120271
"[...] 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
Verbio - Taking a breather in bioenergy as an entry opportunity
When the price of the share of Vereinigte Bioenergie AG, Verbio for short, almost halved at the beginning of the Corona pandemic from EUR 13 to below EUR 7, no one could have guessed that the stock would develop into a Turbo 2020 share immediately afterward. While the share price had moved consistently between EUR 5 and EUR 13 over the past five years, it suddenly soared to over EUR 42 in the year. At the beginning of February, this came to an end for the time being. The share price corrected and is currently quoted at around EUR 34. One reason for the subdued performance may have been the news from the Mannheim-based competitor CropEnergies, which had to revise its profit forecast sharply downward due to rising purchase prices.
Although Verbio had only confirmed its forecasts in February (EBITDA of around EUR 130 million compared with EUR 46.1 million in the previous year), the market probably assumes that this cup will not pass the Zörbig biomass specialists without repercussions. However, it should be noted that Verbio had already planned its forecasts conservatively. At that time, analysts believed that Verbio would certainly raise its outlook. Whether this will happen now will only become apparent when the next quarterly results are presented in May. In our opinion, the current share price level offers an attractive entry scenario. If the figures in May confirm the previous forecasts, nothing stands in the way of further share price gains.
dynaCERT - New hydrogen for old drives = share price turbo?
The general price correction of hydrogen stocks did not stop at the Canadian hydrogen specialist dynaCERT. Recently, the share price even dropped below the level of the beginning of the year. And this even though the business model differs significantly from most hydrogen stocks. While other companies want to use hydrogen as an energy storage medium or as a fuel for fuel cells, the engineers at dynaCERT have completely different goals. With their patented technology, they improve the energy efficiency of conventional diesel engines thanks to hydrogen injection while reducing CO2 emissions. The hydrogen required is produced directly through a mobile HydroGen electrolyzer.
The Company demonstrated that the technology works in a recently completed test in Woodstock, Ontario. Consequently, dynaCERT was then appointed as one of the 21 members of the state's Hydrogen Strategy Working Group. The advantages of the technology are obvious: With the help of hydrogen, industries with high emission levels, such as the freight forwarding industry or mining, can be made more environmentally friendly in an instant utilizing cost-effective conversion kits. dynaCERT offers its telematics solution for the transport logistics sector, HydraLytica, which directly measures the CO2 emissions saved and transmits them to the responsible environmental authority. In this way, transport companies can receive tradable credits for CO2 certificates. The initial focus is clearly on the North American logistics market. In the first three months of the current year, 20 units of the HG1 model were placed with new freighting customers. However, the Company has recently turned its attention to the mining sector, which is currently under pressure to limit its CO2 emissions.
As a result of the marketing offensive, the Company succeeded in selling more of its equipment to internationally active mining companies in Brazil, Russia, China and Peru between January and March of the current year. Where do we go from here? We expect that as awareness of the dynaCERT technology grows, there will be strong demand for it, particularly in poorer countries that rely on conventional internal combustion engines as a bridging technology but have difficulty limiting their emissions as a result. At the latest, with the introduction of global certificate trading for CO2 emissions, the low acquisition costs will make the dynaCERT technology inevitable. And when the market finally realizes that dynaCERT is not one of the regular hydrogen stocks, this should also be reflected in the share price. The analysts at GBC, who have taken a closer look at the stock, arrive at a price target of CAD 2.20, while the stock was last traded at CAD 0.52 on the stock exchange. For us, now is the perfect time to get in.
Total - The classic oil & gas multinational focuses on renewable energies
On May 28, Total shareholders are scheduled to make an important decision at the annual general meeting. The Company's management proposes to change the current name from "Total" to "TotalEnergies." In this way, the Group wants to underline its transformation into a broad-based energy company. Even the former oil & gas multinational has to adapt to changing circumstances and reduce emissions. The Group plans to increase its energy production by 30% by 2030. Half of this increase, which would correspond to an increase in the daily oil production of 4 million barrels, is to be achieved by expanding power generation in solar and wind parks and increasing the LNG share (liquefied natural gas).
To achieve this goal, the Company needs to increase its electricity production to 85 gigawatts (GW). In this context, plants with a capacity of 35 GW are currently in the planning or construction stage, which will provide an annual cash inflow of EUR 1.5 billion from 2025 at the latest. These funds are to be used to increase electrical output by a further 10 GW per year. However, the Group's management emphasizes that it will continue to invest in oil & gas production in the future to not leave the field to other, perhaps less considerately producing companies. In any case, analysts are optimistic about these prospects. The US bank JPMorgan, for example, has a target price of EUR 51 for the share, which was last quoted at around EUR 40, while its colleagues at Goldman Sachs put the fair value at EUR 49. We also think that Total's strategy makes sense and consider a price potential of around 20% to be an attractive entry scenario, especially since Total is an excellent dividend stock with a dividend yield of about 7% p.a. most recently.