Hydrogen company Nel has big growth plans but deals have failed to materialize in the past six months after renewable energy markets faced difficulties.
Nel is listed on the Oslo Stock Exchange and has a market value of NOK 9.2 billion. Photo: Trond R. Teigen / APP Published: Published:
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The last time Nel reported a contract to Oslo Børs was in July last year, when a delivery of hydrogen equipment worth 11 million euros was signed.
Since then all has been quiet.
– It’s black and white. There have been no orders of any significant size, analyst Andreas Nibe Nygård at Kepler Cheuvreux tells E24.
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Now we need to know if time is running out for the Nel title
Nygård highlights the challenges in the field of renewable energy, where high energy prices and high uncertainty make it “difficult to calculate projects”.
– It is simply more difficult for potential customers to find profitable projects. So it takes more time.
– Very long drying period
Nygård says he initially doesn’t have a very positive view of hydrogen. He has a neutral recommendation on Nel stock.
– But there is a very important political agenda for hydrogen. And in some sectors hydrogen clearly has something to offer. I’m not too worried that sooner or later there will be no more orders.
– But there was a very long drought. It can be assumed that it will affect the business at least into 2025.
Andreas Nibe Nygård, analyst at Kepler Cheuvreux. Photo: Kepler Cheuvreux
Nygård points out that Nel has an upper limit on how large orders must be before they are listed on the exchange. It is therefore possible that there were some small orders, but nothing major, he points out.
– It is obvious that order volume will be low.
Last year it also emerged that a major customer did not pay as he should have. On the eve of 2023, Nel also announced that a customer had canceled a €12 million order.
– They have made it clear that they will expand their production capacity in line with growth in demand. If things continue as they are now, they won’t need to invest in larger manufacturing facilities in the United States, Nygård says.
Nel has unveiled plans to expand in the United States and in September chose a Detroit suburb in Michigan, Plymouth Charter Township, as the site for its large new factory.
However, the company has not made a final investment decision for the project.
In the
- Norwegian company selling hydrogen production technology.
- Nel is listed on the Oslo Stock Exchange and was born from Norsk Hydro, when the first electrolysis plants were built in Notodden in 1927.
- Electrolysis technology was further developed over several cycles, and in 2003 Nel opened the world’s first publicly accessible hydrogen refueling station in Iceland.
- In 2014, it became the first dedicated hydrogen company listed on Oslo Børs.
Sea-view
Nygård points out that the order situation may ease for Nel. He points out that there may be larger projects that, for example, wait for a lower level of interest rates before getting the green light.
– Nel sees what can potentially happen. And this is probably what they will base much of their investment plans on.
Nel’s chief financial officer, Kjell Christian Bjørnsen, says Nel provides “no new comments” and stresses that the company is in the “annual liquidation period.”
It also refers to previous statements in relation to the third quarter report.
Adjust course targets downward
DNB Markets also points out that no orders were announced in the fourth quarter and that the brokerage firm believes that investors will focus on the prospects of new projects and orders upon Nel’s next data release, according to TDN Direkt.
The brokerage lowers its price target for Nel shares to NOK 4 from NOK 4.5 and reiterates a sell recommendation on Tuesday, following estimate cuts and lower valuations of comparable companies, according to the news agency.
Nel shares fell 7.4% on the Oslo Stock Exchange on Tuesday.
Hydrogen is the most common element in the universe, but profiting from it isn’t easy. Nel’s earnings potential lie in the future and the company has lost significant sums in recent years.
Nel stock has rallied sharply in line with the strong interest in growth stocks during the coronavirus pandemic. Over the past two years, the price has returned to lower levels, but several analysts believe that the company still has a high price. Measured in market value divided by measures such as earnings/sales and future earnings/sales.
Nel’s order intake has declined in recent quarters, from a peak of NOK 982 million in the fourth quarter of 2022 to NOK 352 million in the third quarter of last year.
Nel will present fourth-quarter data on February 28.
2024-01-16 16:12:58
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