Ballard [Nasdaq: BLDP] is quietly moving forward with forging new alliances around the world. Or, more specifically, the company is building prototypes that are sure to lead to joint ventures and partnerships to commercialize stacks and modules and components for parts suppliers. I previously covered Ballard’s business relationship with Mahle. Now, Ballard has teamed up with compressor manufacturer Chart Industries, as well as Linamar, a Canadian automotive supplier with sales of USD 7.5 billion and over 26,000 employees. The aim of Ballard’s partnership with Linamar is to develop fuel cell powertrains for light commercial vehicles weighing up to 5 tons and for SUVs, and maybe other kinds of passenger cars in the future. Ballard might even consider forming a joint venture with a company such as Honeywell, to which the fuel cell maker sold its former subsidiary Protonex’ fuel cell drone program – but not before indicating plans for some type of future collaboration.
The highs and lows of hydrogen and fuel cell stocks in recent weeks can be best described as a bumpy ride following a significant and rapid increase in prices. It seems to me that the market has entered a major consolidation phase. Yet this is no reason to lose faith, especially as the wild fluctuations that have been raging since early December 2020 – with some stocks climbing more than 50 percent inside a month – begged a correction. A process which is now in full swing. At the end of the day, it’s the future of the industry that counts and so here I stand by the old stock market maxim: The trend is your friend.
The company Weichai Power, which I’ve so far only mentioned in this column as partnering Ballard, has a revenue around the EUR 20 billion mark and a stock market valuation of the same order. In 2020, a good EUR 1 billion was marked up as profit, with dividends also paid out. Weichai Power has several bus brands to its name and is the nation’s largest diesel engine manufacturer; it has clearly recognized the potential offered by fuel cells in the commercial vehicle sector and, in its own words, is intent on becoming the market leader.
In what is known as a bought deal, an underwriter syndicate co-led by investment bank Raymond James has offered Ballard Power [Nasdaq: BLDP] fresh capital for shares. The offer was so popular, the initial USD 250 million target was quickly raised to USD 402.5 million: In late November 2020, the companies agreed on USD 350 million in stock, with an option on another USD 52.5 million, all selling at USD 19.25 per share. Ballard has since exhausted those resources, though more could be on the way soon.
Fuel cell and hydrogen stocks are riding a wave of popularity as a new megatrend sweeps the market. So far, every single one of these stocks has exceeded expectations. But how long will the love affair between investors and the industry last? Will analysts and shareholders use new methods to evaluate business models, prospects, backlogs, submarkets and revenues, and, above all, the potential for profit? And will the market separate the wheat from the chaff? I’d say yes, that will definitely happen.
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