At the turn of the year, the Biennale Internationale Malerei took place in Hamburg under the patronage of Michael Westhagemann, then economy senator for the Free and Hanseatic City of Hamburg. In Bergedorf Castle from November 8, 2022 to January 31, 2023, 47 paintings created using various techniques were displayed – on the theme “Umwelt im Ökologiediskurs: Wasserstoff” (the environment in ecological discourse: hydrogen). According to Cornelia Schmidt-Hoffmann, leader of the district Bergedorf, the event, which had been postponed several times because of the pandemic, enjoyed an “incredible response.”
The cultural exchange non-profit Hamburg-Übersee e.V., which chooses a new banner every two years, lauded together with its own gallery Galerie KAM (formerly Kunststätte am Michel) “das Supermolekül H2”, as formulated by press speaker Sven Jösting, this year. And so it says for example in the description of the above painting from Alexander Franklin Jagelowitz, translated: “Hydrogen in the eye ‘drops’ of the beholder. Green it will ultimately be, but all the other colors associated with the energy form for the production of hydrogen have their merits. And the water for the production will be gotten mainly through desalination of sea water all around the world… here is the framework for the all-sides-seeing hydrogen eye. Almost Masonic!”
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Jagelowitz, a painter, set designer and graphic artist from Lithuania, said about it, “Chaos is for me the beginning of all things and of my creative work. We know a lot and then nothing at all.” His many-times distinguished works have presence in numerous museums and private collections at home and abroad.
The cover picture of this edition of H2-international also came from this exhibit. It is a mixed media on canvas from Liliane Orlinski and bears the title “Am Ende wird er grün sein – der Wasserstoff” (it will be green in the end – hydrogen). The artist stated, “What an energetic dynamic there is in hydrogen! I’ve chosen here a weighting in the color spectrum of hydrogen, where the proportion of each color corresponds to the future development of the respective type.”
From April 17 to 23 this year, the largest industrial show in the world is taking place in Hannover. In 2023, the Hydrogen + Fuel Cells Europe event, which had started out as a small group stand at Hannover Messe, may be one of the draft horses of this technology show. The fair at the fair has developed over the course of three decades into a highlight of the H2 and FC industry. In an about 10,000 m2 gross area this time, it will offer a comprehensive overview of the newest developments and the greatest variety of technology paths.
The theme of this year’s Hannover Messe is “Industrial Transformation – Making the Difference.” This refers to the changes in the industrial sector that are required in order to noticeably and substantially reduce CO2 emissions on a large scale. Numerous leading international companies from the machine building, electrical and digital industries as well as the energy sector – in total over 4,000 exhibitors – want to respectively show visitors their solutions for resource-efficient, climate-neutral and robust production.
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The chairman of the managing board for trade fair operator Deutsche Messe AG, Dr. Jochen Köckler, stated: “Corporations, smaller companies and startups as well as academia, policymakers and society are all called upon. Only by joining forces can we succeed in sustainably securing industrial production, and thus our prosperity and future, while advancing climate protection.”
Establishing a global H2 economy
In preparation for the industrial show, Deutsche Messe organized for the hydrogen community – like before in 2022 – a networking event in Berlin. On January 23, 3023 in the Vertretung des Landes Niedersachsen beim Bund, ten representatives of different companies presented their current projects and solutions around hydrogen and fuel cells in three-minute pitches. The theme of the 3minutes2talk event was “Building a global hydrogen economy” and was opened by Olaf Lies, the economy minister for the German state Niedersachsen.
Besides Dr. Jochen Köckler as the host, in attendance were, among others, representatives from the FEST Group, from Iberdrola Energie Deutschland, from ThyssenKrupp Nucera and from Ørsted. Furthermore, Indonesian Ambassador to Germany Arif Havas Oegroseno gave a welcoming speech as a representative of this year’s Hannover Messe partner country. The president of Indonesia, Joko Widodo, has confirmed he will personally be a participant at Hannover Messe 2023; he will speak at the opening ceremony on April 16 as well as participate in the walkabout with German chancellor Olaf Scholz on the Messe Monday.
Hydrogen will then be one of the five themes this year – next to CO2-neutral production, artificial intelligence, energy management and industry 4.0 (digitalization of manufacturing). According to information by Deutsche Messe, “more than 500 companies” will be presenting hydrogen and fuel cell technologies at the fairgrounds in Hannover this year. At the specialized fair for it, Hydrogen + Fuel Cells, alone, for which the number of exhibitors as well as the area has expanded by 25 percent, around 270 institutions are expected. This will then occupy about half of hall 13.
H2Eco Award given once more
After the positive response from the previous year, there will also be an H2Eco Award in 2023 – again under the sponsorship of the German economy minister. The German hydrogen and fuel cell association (Deutsche Wasserstoff- und Brennstoffzellen-Verband e.V.) and Deutsche Messe AG will jointly present this award to companies that demonstrate outstanding commitment to an H2 market economy – particularly with regard to economic efficiency, sustainability, security of supply and climate protection.
The ceremonious awarding of this 5,000-euro prize by German economy minister Robert Habeck will occur on April 18, 2023 at the Public Forum in Halle 13.
Strongly represented again will be the electrolyzer business – with likely over 20 companies. The organizer, Tobiaz Renz, is especially pleased that “the Chinese are back again.” From the People’s Republic alone, around 20 industry players, including Refire and several electrolyzer makers, will be represented on the orange carpet. In addition, there will be a 145-m2 Norwegian pavilion with companies like Nel, Teco 2030 and Yara.
Emerson showcasing automation technology
Emerson Electric Co., an American specialist for automation technology, is exhibiting in Hannover – for the second time after 2022 – and will present its entire product portfolio. It includes, among other things, set up of complete production plants for electrolyzers and fuel cells. The company, founded in 1890, is originally from the oil and gas industry, but now devotes itself to more sustainable topics. In Germany alone, the globally active corporation employs over 3,500 people.
Based on information from Tassilo Gast, development manager at Emerson Process Management GmbH & Co. OHG, provided to H2-international, the Langenfeld-based company offers a much more comprehensive range of services than comparable competitors – so Siemens, ABB, Honeywell, etc. – as upstream and downstream production steps are also incorporated, including all of the process documentation.
Free Fachbesucher-Tickets
As a media partner of Deutsche Messe, Hydrogeit Verlag is again offering tickets for industry professionals at no cost so that interested parties can obtain comprehensive information about hydrogen and fuel cells. Tickets for free entry can be ordered via the following link: https://www.hannovermesse.de/de/?open=ticketRegistration&code=4ZkXp
PR-wise, it’s still quiet at Ballard, even though there’s definitely many projects and pilots being worked on there. News I would expect on March 17, 2023, when the figures for fiscal 2022 are published, as the executive board then always also presents a forecast and an outlook. The ramp-up of fuel cells, for example in trucks and buses and on rail, is just at the beginning, where there are already indications. Ballard is right at the forefront.
For example, in the European bus sector: The information source Sustainable Bus recently reported that 4,152 battery-electric buses were newly put into service in Europe in 2022, as well as 370 FC buses. Of these 370 H2 buses, 292 are likely running with technology from Ballard Power, as the company supplies major OEMs with the modules (106 for Van Hool, 104 for Solaris and 82 for Wrightbus). This is a very good indicator for the future.
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Ballard competitor Toyota recently won a contract with German customer DB Regio to supply the fuel cells for its 60 buses from the Portuguese bus manufacturer Caetano. It shows that individual orders are now becoming increasingly larger, as customers like bus fleet operators are counting on scaling effects and are out of the pilot project stage. This market is just now beginning to develop, when the H2 infrastructure is being more intensely addressed in Europe, the USA and Asia. Ballard is very well positioned here and can deliver.
CrossWind chooses Ballard FCs for 1-MW FC system
This project, in my opinion, will become the blueprint for many similar ones: CrossWind is a cooperation between Shell and Eneco. Purpose is a wind farm project on the North Sea called Hollandse Kust Noord Offshore Wind Farm (total capacity: 759 MW, annual capacity: 3.3 TWh per year). After it goes into operation, it should provide 1 million households with green energy.
CrossWind relies on many complementary technologies that make green energy work as efficiently as possible. Surplus electricity is stored in batteries or hydrogen – depending on availability and capacity. Using the fuel cells from Ballard, this hydrogen will then be efficiently converted into electricity for a secure supply. This project has flagship character and should certainly result in further orders in the coming years. Unfortunately, nothing has been said regarding the value of the order.
Short seller attack has no impact on Ballard
Just a few weeks ago, it sounded as if the Indian billionaire Gautam Adani could be interested in a stake in Ballard and put its FC stacks to use in various ways in India (there is an MoU as basis). He has planned, like billionaire colleague Ambani (Reliance Group), to invest 50 billion USD over a period of five to ten years in hydrogen. This is now no longer likely, as Adani and his corporate conglomerate was recently the subject of a devastating article from short seller newsletter Hindenburg Research (see below). Over 100 billion USD loss in value was the consequence. For Ballard, though, this has minor impact, as Adani has a continued interest in putting FCs to use (in commercial vehicles, locomotives, ships, and so on).
Specifically, Adani has chosen as a first project to make a mining truck H2-ready, where the Group itself is the customer for this retrofitting, but Ashok Leyland, a subsidiary of the Hinduja Group, has presented its vehicles as candidates. This is actually the much better news, since Ashok Leyland would be quite an ideal partner for Ballard in India. A joint stack production comparable with the joint venture of Ballard and Weichai Power in China would also be ideal for India. Because Ashok Leyland is #4 in the world for buses and #19 in trucks and #2 in commercial vehicles in India. Viewed this way, the negative news to Adani has almost no bearing on Ballard. However, Adani is of course still interesting as a major customer for Ballard. This shows once again: Everything has two sides.
The case of Adani – The power of short sellers
Hindenburg Research is already known to you: The US investment research firm based in New York City primarily targets publicly traded companies in the hydrogen industry. Hindenburg bets via short selling on falling share prices of the companies concerned and fuels the downward trend with its own negative securities analyses. Desired price drops are the foreseeable consequence. This is a form of price manipulation, as Hindenburg itself participates by carrying out short sales in advance of publishing and establishes short positions in shares as well as bonds of the target company, combined with put options – and all this before the publishing of its own newsletter.
I would label this as front running, as it almost seems like an insider deal. Insiders have special knowledge, but they’re not allowed to make use of it. For me, a clear conflict of interest. Nevertheless, it seems that Hindenburg (the name is supposed to recall the airship), with some research, has every right, even if this is exploited for its own interest and some interpretations are questionable. In this way, companies like Nikola Motors (who showed off a truck that was rolled downhill without a motor) have already been targeted, whereupon its founder had to leave the company.
In the case of Adani, Hindenburg references his “non-transparent” company network, shareholdings and financing (the amount of debt) as well as conceivable advantage through proximity to the Indian prime minister Narendra Modi. The two come from the same province and belong to the same caste. In addition, the awarding of contracts for the construction of airfields or ports may have been made without public tenders, was a conjecture from Hindenburg.
Exactly how Hindenburg here itself profited through the short sale of shares or bonds of the various publicly listed Adani companies has unfortunately been concealed. Clear is that the damage to Adani is not only materially tremendous; it also had a psychological impact on the whole of India and its political structures. At the end of the day, all this naturally leaves marks, even if it can be assumed that Adani, with the right communication strategy, will present information that helps them, as the conglomerate as a whole is vital for the basic functioning of India.
Exactly companies like Adani can and will bring India to the forefront in terms of renewable energies and hydrogen. There may be a contradiction in promoting coal on the one hand and counting on green energies on the other, but a transformation is happening through it as well: The profits from the one area will be reinvested in the other. Fortescue Future Industries of Australian billionaire Forrest also earns its money from ores and raw materials but reinvests the profits in renewable energies. Most oil companies are behaving similarly or plan to do so, and want to increasingly redirect high profits from oil production into renewable energies and hydrogen.
Lucky hand with Forsee Power
Ballard’s participation in French special battery manufacturer Forsee Power, started in 2021, is already paying off. A remarkable 58 percent sales growth was reported by Forsee for fiscal year 2022 (111 million EUR). In just a few years, turnover could become over 500 million EUR. Ballard had invested up to 40 million USD via purchase of IPO stock in the company and holds 10 to 20 percent.
Ballard and Forsee are working very closely together. Forsee is the supplier of the batteries that come with every Ballard bus module delivered and serves the same customer base as Ballard. That’s real synergy. Both are investing in new production facilities in the USA to profit from the IRA (Inflation Reduction Act). Forsee is reporting that the current order volume is commensurate with sales in 2022. In 2023, the batteries for 1,000 buses (hydrogen and battery-electric) are to be delivered. Forsee is also beginning to supply batteries for trains (is Ballard under the patronage of Siemens Mobility here?) and soon also for trucks.
Side note: It’s been said again and again that it will take some time until significant turnovers or even profits can be seen at Ballard. That will all come. Ballard is establishing strategic production sites (in the USA, Canada, Europe and China). The exploitation of the facilities is only a question of time. I expect this starting 2024. In China, important support programs for the hydrogen economy are in the starting blocks. Will these turn out smaller than the US and EU programs? Not a chance. Ballard is building the basis for high growth.
This is comparable to the development of a mine: The first step is to identify the site (geological surveys, test drilling); then, to invest in the infrastructure and, only after this has been completed, to start mining the raw materials. That often takes a year, or two or three, to really get going. With Ballard, the development of the stacks or MEAs is the basis. The construction of production facilities follows and accordingly the scaling of production. Pilot projects are running in parallel. At the end of the day, production will be ramped up, and the company will serve the newly emerging markets and make money from it.
As for buses and trucks, CO2-free (battery- and/or hydrogen-powered) vehicles are just now starting to be produced worldwide. Ballard has the most comprehensive experience in this area, namely through FC buses that are already successfully in use around the world (Ballard inside). Keep this in mind, because the stock market anticipates the future, even if it takes longer until a breakthrough. Use weak phases in the positive sense in the price and buy again step by step to attain a good average price, offers itself as the right strategy.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
The figures for fiscal 2022, but above all an evaluation of the written version of the accompanying conference call with expert analysts from renowned investment banks, suggest a very good future for Bloom Energy and support my extremely optimistic assessment. In it were many self-commendations from the board: “Bloom is now a predictable-growth company. Bloom is ideally positioned in many markets, is developing new complementary technologies, is entering new business fields and is building up and expanding its international engagements (also now strengthening Europe to South Korea link). Quote: “In 2022, we demonstrated record-breaking efficiencies for hydrogen production using our electrolyzers…and our highly promising carbon capture technology.”
My summary: The first stage in establishing the new factory in Fremont, California has been started – Bloom has invested 200 million USD and is producing stacks for the Energy Servers as well as the electrolyzers. Production capacity is still to double within this fiscal year. Federal subsidies from the Inflation Reduction Act (IRA) will surely be used for this. With a 10 billion USD order volume (plus of 1.5 billion USD), the company is on a good path. They address a diversity of markets that primarily supply clean energy and create energy security 24/7.
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A 200-kW microgrid solution from Bloom
Softbank Japan 5710 200kW Microgrid (1).jpg
Source: Bloom
Example: Optimizations such as a power-and-heat approach allow waste heat to be sensibly used. This was not really done in the USA up to now – it has been in Europe. Process and district heating are finding their use and increasing the efficiency of the Energy Servers and FC power plants to a record-breaking 90 percent. Biogas as a basis for hydrogen, relying on waste-to-hydrogen technologies, will also be a very big future topic for Bloom. In addition, the US company is working on carbon capture technologies to reduce CO2 emissions or make e-fuels. With all these topics, Bloom intends to focus in particular on the markets and regions of the world where the highest profit margins can be generated.
It would be conceivable to set up production facilities for the Servers/stacks in Europe at a later point in time, when the domestic demand allows for this and the production capacities in the USA are fully utilized. Should the EU define its own IRA-like program such that producers in Europe must produce for Europe, this could of course incentivize Bloom to establish production in Europe (supply chains). But right now that’s a far-off dream.
Profit margin is expandable
The figures for 2022: Nearly 1.2 billion USD turnover, and a fourth quarter with record sales of 462.8 million USD (at 400 million USD expectation). From the quarter in the previous year, a heavy plus of 41.4%. Although the profit margin according to the non-US GAAP calculation was over 30% in the fourth quarter (23% for the whole year), it was with GAAP accounting however only 15.4% in Q4. Non-GAAP profit here reached 59 million USD – although the operating loss amounted to 40.6 million USD.
The order volume is record-breaking: 10 billion USD (8.5 billion USD in previous year). It should be noted here that the GAAP result also factors in bonus programs for employees and managers (stock option plans, stock compensation), which distorts the result. Meanwhile, non-GAAP accounting is considered even more informative than accounting via GAAP. Because with the former, one-time factors like extraordinary depreciations (non-recurring losses) and stock compensation plans are taken out of the equation.
Bloom therefore earned – before extraordinary expenses – non-GAAP: 0.27 USD per share. The profit margin is set to increase step by step to 30% if these one-time factors turn out to be smaller in the calculation when the next years are included.
Cash and cash equivalents at the end of the last financial year amounted to 500 million USD, and it will shortly (first quarter) rise by another 313 million USD, as the SK Group/SK Ecoplant plans to send the second tranche for its stake in Bloom.
Analysts are divided but positive
The one side of analysts is evaluating the situation as it is (current quarterly figures, profit margins); the other, the prospects according to the existing fundamentals and corporate forecasts. It could therefore be heard that analyst Mark Strouse at J.P. Morgan has lowered the share price potential after the publication of the fourth-quarter figures with a price target of 29 to 27 USD. His rating: from outperform to neutral.
Strouse sees profit margins as not yet at the level forecast by the company itself, while his colleague at Morgan Stanley in turn raised his rating to Outperform. His price target for the share: 35 USD. Bloom is very well positioned in all important areas of its market and has a high sustainable growth potential.
In other words: The one sees a half-empty glass and the other, a half-full one. Important to me are, above all, the prospects and not a single quarter’s indication or a single fiscal year. All must be considered.
Critical considerations
The share price rose on the day of the publication of the figures to nearly ten percent intraday, but then fell again in the following days. This is owed to, in my view, the opinion of some market participants and analysts that the profit margin does not yet meet the targets and forecasts. Furthermore, the high order volume must be taken into perspective, as it includes long-term service contracts totaling 7.2 to 10 billion USD.
The area of electrolysis, against expectations, will not be able to generate really noteworthy revenue before year 2024. There were already high expectations for this for 2023. The high amount of short interest, expressed in the shares sold short, must also not be overlooked, as short sellers have no interest in increasing prices and will maintain influence over the price development via trading (basis for increased price fluctuations). Good news (orders placed, technological breakthroughs) is the basis for potentially rising prices and particularly for the returns (profit margins) from here.
The outlook is positive
Bloom is massively expanding production capacity for stacks for Energy Servers and electrolyzers. After doubling it for the Servers from 300 MW to 600 MW annually, the same will be done for the electrolyzers. Production is running behind demand for the FC power plants (Energy Servers), suggesting a strong long-term growth. The transition to the profit zone (sustained and strongly increasing) we think will appear starting 2024, as that is when the electrolyzers from the newly established capacities will also come to market. Bloom could then also itself become an H2 producer and profit from IRA subsidies of 3 USD per kg H2.
Through constant optimization and through the leveraging of cost reduction potentials (scaling), this development at Bloom will have an impact on earnings in a positive sense. Bloom is expecting 40 percent of turnover in the first half of 2023 and 60 percent in the second half (approval process-related influences). Turnover in the running fiscal year is to lie at 1.4 to 1.5 billion USD, which corresponds to a growth of 17 to 25 percent and unfortunately not the more than 30 percent originally envisaged. But with this, one could also live well. In the medium to long term, however, growth is expected to reach 30 percent and more.
Looking at the whole picture with all the developments (global energy security and demand, hydrogen, climate issues, support programs like the IRA), Bloom is among the winners, which is reflected in the sharp rise in order intake and eventually also in reports of profit. New topics such as the use of SOFC Energy Servers in ships, carbon capture, power & heat, and waste-to-hydrogen are being technologically addressed by Bloom. From these, potential for new orders can be expected.
Important for the investment: time and patience. Temporarily weak share prices are suitable points to buy again. A, and my, key investment in the topic hydrogen and fuel cells. The reasons for great share expectations are manifold, so one can assume a good risk/reward ratio.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
The integration of wind subsidiary Gamesa will still need time until synergies (supply chains, joint purchasing power) and cost reduction potentials become visible in good, or initially at least better, figures. Nothing else is to be expected. The increased loss in the first quarter (Sep. 30, 2022) of fiscal year 2022/23 (fiscal 2023) of 598 million EUR (−246 million EUR in Q1 2022) seems to be owed to the transition phase, but we think will be able to improve over the course of the year.
Remarkable is the order intake totaling 12.7 billion EUR in the first quarter of the fiscal year, which allowed a plus of over 50 percent from the same period the previous year, so we assume that only new such orders will be taken, from which a reasonable return or profit margin is possible.
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In the USA, the Inflation Reduction Act (IRA) is providing positive incentives, as green hydrogen is be subsidized with 3 USD per kg and certain projects can become worth starting. Since Siemens Energy operates production facilities in the USA, the company benefits from or can participate in IRA programs. Siemens Energy is represented in the USA with 84 locations and 26 production facilities with a total of 9,600 employees, so there are a large number of support opportunities in the IRA that Siemens Energy can take advantage of. Similar programs will soon be ready for implementation in Europe, so the company can also expect some support there.
Now, it is first a matter of creating an inflow of capital by issuing new shares. Up to 363.3 million new shares could be placed, to generate more than 2 billion EUR in new capital. For this, Siemens Energy is likely bargaining with various big sovereign wealth funds, according to an article in Handelsblatt.
The financing via new issuance of shares should not be a problem, as many institutional investors want to more strongly invest exactly in companies like Siemens Energy in the future. The story is a story of growth and, at the same time, of recovery from a speculation (Gamesa). At the end of the day, Siemens Energy will be a success story – accompanied by rising prices. The stock market will anticipate the future. Analysts see the share at 25 EUR – I see it at over 30 EUR in two years – a good 50 percent chance.
I am often asked to include other companies in this analysis and to discuss securities like Nel ASA, SFC, ITM Power, Powercell, and many others. For me, however, subjectively, many of these players unfortunately do not possess the charm of those discussed here.
The concentration on just a few players in the H2 cosmos is also necessary in view of the abundance of information, which is not only about performance indicators and growth prospects. As a whole, they all will benefit from the megatrend that is hydrogen – including in the development of their share prices.
Allow me to point out that investors can acquire or invest in all these securities together with those of big companies, such as those from the gas industry (Linde, Air Products, Air Liquide), via funds and ETFs. Most investors would do well to invest in hydrogen in the form of funds, instead of speculating with individual shares (risk tolerance). The cost averaging system is greatly suited for this, as for example one can invest fixed monthly amounts and thereby attain a good average rate and earn good money from the hydrogen megatrend in the medium to long term, and achieve a high return. Every bank offers suitable funds for this or brokers them.
My analysis has yielded that many H2 funds hold the same H2 shares and in the same ratio in the portfolio, since there are not yet so many listed companies in this industry anyway. My own Wikifolio BZVision (BZ is the German abbreviation for fuel cells) at www.wikifolio.com, in contrast, is very concentrated, highly speculative and has only the three securities Bloom Energy, Ballard Power and Nikola Motors in the portfolio.
The reason for this speculative asset allocation: These three companies together cover hydrogen and hydrogen-related areas perfectly. This refers to the different markets, applications and H2 production. These shares possess for me – subjectively – the greatest potential in the coming years.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
Written by author Sven Jösting, March 5th, 2023
Scheme of a future energy supplySource: Siemens Energy
Could Cummins Engine develop into a one-stop shop for hydrogen matters? The company is working on a series of products and applications that should lead to zero emissions, so for example on engines for e-fuels or hydrogen, in the area of electrolysis as well as stack production for trucks/commercial vehicles, and on rail vehicles and ships.
Cummins’ 135-kW fuel cell system for commercial vehicles
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Cummins-DSC_0433.jpg
With electrolysis, Cummins was able to triple the order volume in 2022 to 300 million USD. Cummins is supplying a PEM electrolyzer for a 35-MW project for Linde in the USA at Niagara Falls. The company is well positioned. It counts on a variety of technological developments, which can be seen from the fact that Cummins offers all electrolysis variants – so from PEM to SOFC to alkaline – according to customer and project requirements.
The 26.2 billion USD turnover and 2.2 billion USD net earnings (15.12 USD per share) for 2022 speaks for itself. The projected annual growth is 10 to 15 percent on average. The business of the unit New Power is still small, but will substantially gain in size in the future, was a takeaway from the latest earnings press conference. Very probably Cummins is also making strategic acquisitions in this area, as it’s already doing in other segments of the company. The over 2 billion USD annual profit provides a basis for many fantastic developments.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
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