Pareto Securities: HydrogenPro – Attractive Hydrogen Exposure

Fit Investment Ideas

Aug 22

I summarize two interesting hydrogen ideas for this week

Pareto Securities: Hydrogen Pro - Attractive Hydrogen Exposure

Below is a summary of the report published today:

Attractive hydrogen exposure

HydrogenPro will release its Q2'22 figures tomorrow and we look for comments on manufacturing facility opportunities and the order/contract possibilities. With HydrogenPro chosen as provider of electrolysers for the world's first and largest integrated clean hydrogen production and storage hub to have reached full financial close, we find its offering verified. Buy, TP NOK 30.

Q2'22 report 23 August
HydrogenPro will release its Q2'22 financials tomorrow where comments on the manufacturing facility and order/contract opportunities are what we look for. Q2'22 financials in itself will play a lesser role as revenue from the large Mitsubishi order first will come in Q4.

Set for sound growth
HydrogenPro will start to book revenues from the USD >50m order it received from Mitsubishi later this year, but we have pushed it out in time slightly to account for the manufacturing facility taking longer to complete. This also affects the timing of revenue from new potential orders, so we also push some revenue from 2023 out in time (as new manufacturing at the 300 MW Chinese plant beyond the Mitsubishi order first can start in ~H2'23). The company is however set for large growth with the Mitsubishi order and the magnitude of the project is verifying HydrogenPro's offering in our view. The Mitsubishi project in the US is one of the largest renewable hydrogen energy projects and became world's first and largest integrated clean hydrogen production and storage hub to have reached full financial close, following the closing of a USD 504m loan guarantee from the Department of Energy. See page 2 for more comments on the project. The company is working on several FEED studies and FID for the more known DG Fuels and H2V Dunkirk projects is expected before year-end.

Buy, TP NOK 30 reiterated – significant upside longer term
We maintain our TP of NOK 30 and Buy rating as we keep our long-term estimates unchanged. We include a 15% WACC in our DCF for now, but as the company gets orders and the electrode coating technology is proved large scale and in larger systems, we argue that the cost of capital should come down and see further upside. The share trades at a massive discount vs other hydrogen peers which we find unjustified. Buy reiterated.

Fusion Fuel Green

I saw a good article on Fusion Fuel on SeekingAlpha. It specializes in designing and producing solar-powered hydrolysis units meant for green hydrogen production. The production process is now fully price competitive vs hydrogen produced from natural gas.

https://seekingalpha.com/article/4535744-fusion-fuels-eu-has-no-choice-but-to-embrace-hydrogen-economy?mailingid=28784185&messageid=2800&serial=28784185.209&source=email_2800&utm_campaign=rta-stock-article&utm_medium=email&utm_source=seeking_alpha&utm_term=28784185.209

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