03.05.2023, Author: Stefan Feulner

Stock news: First Hydrogen - Second chance after the setback — Tests start with heavyweight

  • Hydrogen
  • Electromobility
  • transport

The opportunities are gigantic, as are the forecasts of experts. The consulting firm PricewaterhouseCoopers, for example, sees hydrogen as a key element of the energy transition and expects an increase from 76 to up to 600 Mt worldwide by 2050. Despite the rosy outlook, buoyed by huge subsidy programs from politicians, companies in the sector are undergoing a sharp consolidation phase. For example, industry leaders such as Plug Power and Nel ASA have recently lost over 40% of their stock market valuation. For a long time, newcomer First Hydrogen was able to escape the correction. After outperforming and gaining over 1,600% since August 2021, the share price halved quickly and is now trading at a prominent support zone. The fundamental data remain excellent so that a second long-term entry opportunity could arise at the current level.

Time to read: 5 minutes

On the right track

With the start of test trials under real road conditions, the still-young hydrogen company was able to record another milestone in its corporate history. And these start right away with heavyweight, Rivus, a multi-award-winning fleet management provider. With over 1,300 employees in 78 production facilities, the British company is a workshop partner to 500 customers, including some of the country's largest and most important fleets. In the process, Rivus manages over 120,000 vans, including 85,000 light commercial vehicles, per year.

The Generation I hydrogen-powered fuel cell vehicle with a range of over 500 km was delivered to Rivus' Support Centre in Birmingham following the successful completion of safety and mileage testing. The test runs will extend over several months and take place on different terrains. During these tests, the prototype is equipped with various payloads so that vehicle performance can be analyzed. Here, telematics and onboard instruments record data on vehicle performance, efficiency and fuel consumption, which is then incorporated into First Hydrogen's overall vehicle evaluation and performance recording program. This allows both vehicle optimization and total cost of ownership calculations. In turn, the analysis is elemental for partner Rivus to directly compare the hydrogen-powered fuel cell vehicle to battery electric and internal combustion engine vehicles when tested on the same test track under the same conditions. The final report produced by Rivus will then be available for fleet managers and customers to view to highlight the benefits and practicality of adopting hydrogen-powered mobility solutions.

Prototype testing under real-world road conditions begins with fleet management provider Rivus Source: Refinitiv Eikon, as of May 02, 2023

From testers to customers

Of course, the Vancouver- and London-based company's stated goal is to attract all 16 major fleet operators from industries such as food, delivery, utilities and healthcare that are participating in the test drive as part of the UK "Aggregated Hydrogen Freight Consortium" AHFC as customers. But even if only a fraction of this blue-chip clientele can be wowed, the goal set by CEO Balraj Mann of selling between 10,000 and 20,000 units of the utility van in 2025/2026 should become more than likely.

Balraj Mann, CEO First Hydrogen:

"Over the past weeks and months, we went through and accomplished a very positive development phase. Our dedicated team and partners have worked hard to bring us to where we are today. We are one step closer to a more sustainable future in transportation."

Generation II is taking shape

While the Generation I prototype is rolling on the roads around Birmingham and South Yorkshire, First Hydrogen's plans are already on the development of Generation II. As we previously reported, the EDAG Group, the world's largest independent service provider to the international mobility industry, has been secured as a design partner. With the aim of preparing the vehicles for series production, the successor vehicle is to be modular, allowing the light commercial vehicle to be used for a wide range of applications, such as emergency services, express deliveries or construction work.

The Generation II vehicles are modular and can be optimized for flexible-use large box trucks suitable for fleets in delivery, roadside assistance, food, construction and utility, and healthcare applications. Source: First Hydrogen Corp.

Entering high-growth niche market

Through the modular design of Generation II, First Hydrogen also plans to enter the market for RVs. In this context, the market volume is gigantic. The North American market alone showed a volume of USD 56.29 billion in 2022, which is expected to nearly double to an estimated USD 107.60 billion by 2032. The concept was also designed with EDAG Group mobility experts and clearly demonstrates the advantages of fuel-cell electric vehicles. For example, these can achieve longer ranges and are designed for heavier payloads than corresponding vehicles with electric battery drive. In addition, the refueling process takes only a few minutes, similar to refueling a motorhome with an internal combustion engine. Recharging a battery-powered mobile will likely take hours at the charging stations that are heavily frequented during the vacation season.

After sell-off at striking support

The positive business development is not currently reflected in the chart of the hydrogen specialist; quite the opposite. Due to the industry-wide sell-off and share price halving of global players such as Plug Power, Nel ASA and Ballard Power, the share of the Canadian company was taken into the fold after a significant outperformance in recent months and lost up to 43% of its value at the low since the beginning of April. The break of the upward trend established since March 2021 led to a real sell-off under increased volume. In the process, the price was able to successfully defend the high of the year 2021 at CAD 2.41 and, due to the oversold situation, as can be seen from the RSI, should have the potential to at least reach the upward trend that has been formed in the short term since January 2023 at currently CAD 3.59. Higher prices are, of course, possible should the news situation concerning the successful test series of the prototype and the development of the planned value chain in the hydrogen sector continue to be positive.

Due to the break of the long-term upward trend, there was increased selling under high volume Source: Refinitiv Eikon, as of: 02.05.2023

Interim conclusion

Due to the sell-off of the past four weeks, First Hydrogen lost more than 40% in market value and currently still has a market capitalization of only CAD 127.06 million. The share price does not reflect the positive business development. Should reports regarding the successful test series of the prototype flicker across the stock exchange tickers, there should be little to stand in the way of the rebound that has started. In addition to series production of light commercial vehicles, the Group aims to cover the complete value chain in the hydrogen sector. With regard to both the establishment of a filling station infrastructure and the in-house production and distribution of green hydrogen, further developments should also be expected here in the course of the year. As First Hydrogen is a growth company, volatility could remain high. Thus, setting stop limits is part of the basic toolkit when investing.

The update is based on the initial Report 07/2022

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