CSR FC-tram (Source: Xinhua)

At first glance, the figures from some of the North American fuel cell companies by the end of March 2015 have proved to be disappointing. The reason that Ballard Power, Hydrogenics and Plug Power have come up with figures which failed to correspond to expectations are the high quarterly variations in relation to the accounting of orders which are complete as well as ones which are still being processed and settled. On the second glance, therefore, things look very good, and will continue to develop positively over the course of the year and/or be expressed in good to very good company figures – as a consequence of previously announced order processing, incoming orders and product innovations.

Ballard Power (BLDP, US-$ 2.10)
Ballard Power has reported the successful integration of an FC system in a tram/suburban rail system together with the Chinese trains manufacturer CSR Sifang (the oldest rail manufacturing firm in China, established in 1900, also manufactures fast trains that travel at up to 500 km/h), and before a selected public audience, it has presented the first prototypes of this kind in the world. In the Chinese city of Foshan (Guangdong province, location of the headquarters of, approx. 8 million inhabitants) an FC suburban train is set to enter operations in 2016 (narration of Ballard-CEO MacEwan: “Possible commercial use in the FC tram project in the city of Foshan in 2016,” also see HZwei July issue page 34). For Ballard, this can form the basis for an exceptionally wide-ranging, long term, and in my opinion, high yield cooperation, which could, starting from the completion of the licenses and a research partnership, eventually lead to a strong flow of revenue – and, of course, to potential customers in other world markets. The same applies to the area of FC buses, where the Canadians recently received an order for eight FC systems from an as yet unknown Chinese bus manufacturer. This constitutes a nationwide Chinese initiative in which 48 major cities are involved, and in which each of these regions will purchase a minimum of 1,000 E-buses (battery/hybrid/FC). Ballard is playing a leading role here, in the context of which the as yet unknown partner will be revealed over the further course of the year, since Ballard is then planning to enter into a partnership. According to the executive team, the negotiations are already underway – with the goal of a contractual arrangement in 2015. Note: there are three Chinese bus manufacturers each of which makes 30,000 to over 40,000 buses per year. China sends its regards – and I believe them to be positive!

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Another piece of good news is the order from a subsidiary company of the major Indian company Reliance (RJIL) for over 100 backup systems for telecommunications masts. It is necessary to bear in mind: there are more than 300,000 towers of this kind in India and every month, there are a further 10 million new customers in the area of telecommunications. With FC backup power systems it is possible to replace old, diesel-powered units, which is also supported by a law from the responsible authorities. After a long testing phase of twelve months and in competition with many competitive systems, Ballard’s offer was chosen as the best and the initial order was issued – this speaks for itself and for Ballard, which opens up a further important market for the company.

The bottom line: Ballard is becoming better and better positioned, and is gaining in impetus with orders and research projects. The company will also benefit from the positive development at the customer Plug Power for the foreseeable future. It is possible that they will try to gain an additional partner in the international environment for the risk spreading. In view of the prospects and standing of the company, this year I am expecting to see an appreciably higher valuation on the stock exchange. And: US$29m. from VW has increased the company’s cash holdings in the first quarter to over US$53m., to which US $ 9 m. is to be added in the first quarter of 2016: A very healthy balance sheet.

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Note on risk
Every investor should always be aware of their own risk assessment when investing in shares and pay due consideration to an appropriate spreading of risk. The FC companies and/or shares which are stated here come from the area of Small and MidCaps, which means these are not large caps and that their volatility is also significantly higher than such large caps. This report does not constitute purchasing recommendations – without guarantee. All of the data revolves around publicly accessible sources and in terms of the assessment only represent the personal opinion of the author.

This analysis was written June 1st 2015.

Author: Sven Joesting