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Thank you NI.
What was the target price given in the broker note?
I'll post something new every couple of hours. Some good stuff here IMO which will give you all plenty to digest tonight :)
H-Power™: Proven tech, first sales imminent
Competitive advantages of H-Power systems
We believe the core competitive advantage of AFC Energy’s H-Power systems are as
follows:
1. They do not generate greenhouse gas emissions. In comparison, other fuel cells such as solid oxide fuel cells do emit carbon dioxide. For reference, certain of the leaders in fuel cell technology, such as Ceres Power, commercialise solid oxide
fuel cells.
2. They can operate reliably with Hydrogen that is less pure and substantially less costly than hydrogen of a greater purity required by other fuel cells. Hydrogen costs increase exponentially with increased purity; however the gains in energy
content from increased purity are ever diminishing.
3. They can support trace molecules of ammonia, which other fuel cells cannot tolerate. This makes it possible to convert or “crack” ammonia into hydrogen which can then be fed into AFC Energy fuel cells (with trace levels of ammonia).
Ammonia costs circa 1/7th the cost of hydrogen due in part to its significantly increased density, which makes it more efficient to transport and store.
4. They have been proven to be reliable over the long-term under a broad set of conditions. AFC Energy’s liquid alkaline fuel cells are expected to have a utility of at least 4 years based on extrapolating actual performance from over 1 year.
The technology behind AFC Energy’s liquid alkaline fuel cells (and underlying the H-Power systems), which have been developed and patented by the company consists amongst other things of:
1. The critical components of the fuel cells including the cathode and anode;
2. The fuel cell design such that gases and fluids enter and exit the fuel cell
efficiently;
3. Manufacturing processes;
4. Testing and monitoring equipment.
Alkaline Fuel Cell Economics, relevant for H-Power™
The bulk of costs related to owning and running an AFC Energy liquid alkaline fuel cell relate to fuel costs, consisting of either ammonia or hydrogen. AFC Energy estimates that its H-Power™ system can produce energy from a full lifecycle perspective (including capital and operating expenditures) for a targeted cost of 30p/kWh, of which circa
26p/kWh would be attributable to the cost of ammonia as a fuel source. This assumes a targeted cost of circa £5,000 per unit (installed) a four-year utility per unit and a cost of ammonia of 46p/kg (which does not include any bulk purchase discount)
Great work Nickel.
I was interested to see that the note attributes no value to Alkamem as yet (although accepts considerable potential upside) as I think the potential for early revenue from Alkamem could be very significant.
What value did the note attribute to AFC at present ....did they give an overall MCap figure or a target share price.
many thanks for all of this
The seller(s) persistent!
What is the target price on the broker note NI?
Very ! what is their target price ?
Popping out, will get more out later. Hope useful to the investors amongst you
Continued...
Pursuant to this AFC Energy and Rolec Services are planning to present the market with an initial off-grid hydrogen fuelled
EV charger imminently. A key benefit of working with Rolec Services is that AFC Energy stands to benefit from
that entities distribution network. Upside relative to our focus on UK EV car uptake: Our valuation is based on the uptake of electrical cars in the UK; however, there is also pressure on other vehicles to become electric, inclusive of delivery, specialty and unregistered vehicles. For perspective, at year end 2018, there were 38.2 million licensed vehicles in Great Britain of which 31.5 million were cars. The increase in the number of vehicles from the prior year was 1.2%. As an indicator of current industry trends, JCB has publicly stated that its new electric excavator is “taking the industry by storm” suggesting that electric solutions may become widespread wherever internal combustion engines are currently used.
These market dynamics might i) increase the number of required EV charge points relative to our expectations and ii) increase stresses on distribution networks and thereby increase the need for off-grid solutions such as that offered by AFC Energy.
Continued...
Fleets first?:
Our valuation is based on a steady growth estimate in EV utilisation and public EV charging points in the UK (as detailed in the valuation section). However, a likely outcome is that pinch-points in the distribution system are experienced
firstly by entities which are planning on having large EV fleets. The commercial dynamics of fleets make rapid EV charging solutions such as that offered by AFC Energy particularly attractive because fleet operators want 24 hour utilisation of
their vehicles. For fleet operators longer charging times translate to a need to have more vehicles in the fleet. Therefore, we expect that large fleet operators will pay a premium to get their vehicles on the road. It is also noteworthy that Norway, which represents the global EV success story, was able to make considerable impact on fleets and company cars via specifically targeted incentives. Such incentives tend to be highly effective due to the commercial decision
making framework of businesses. Therefore it is possible that similar policies and impacts take hold in the UK.
For this reason, we believe our forecasts are at the conservative range of demand.
Decision Making Parameters H-Power™ Systems for EV Charging:
We expect H-Power™ EV charging systems to be in demand where there is insufficient on-grid power to satisfactorily provide rapid EV charging. We also see very little in the way of competition that can supply emissions-free, reliable off-grid power that is easy to install and scale. From this perspective, in our opinion, the suitability of AFC Energy’s HPower™ charging system for a specific application is binary. We believe, that based on currently competing technologies, AFC Energy’s H-Power™ charging systems will be suitable for most situations where there is demand for rapid EV charging which cannot be
met by the grid. This straightforward logic, in our opinion, can be confounded by cost per kW analysis, which may be misleading. For example, a battery-only solution may appear to be price competitive, but completely ignore the fundamental problem that there is insufficient power to charge it adequately. In our opinion, there are very few technologies that can provide emissions free, scalable, reliable and easily installed off-grid power at rates sufficient to rapidly charge EVs. Therefore we anticipate that AFC Energy’s H-Power™ EV charging systems will be a dominant solution for off-grid EV charging.
Key collaboration agreement: Rolec Services
Rolec Services is one of the world’s leading specialists in outdoor EV charging equipment. The company was established in 1990 and has distribution networks in 40 countries. In July 2019 the company hit the milestone of having manufactured 150,000 charge points (source: Rolec Services). AFC Energy has entered a collaboration agreement with Rolec Services for the design and distribution of integrated EV charging fuel cell systems. Pursuant to this AFC Energy and
Rolec S
Think that could be the most recommendations I have seen on one post. Good stuff.
Thanks Nickel Investor, this is brilliant.
Yes please if you have any more.
Nickle Investor, very many thanks for such a great post(s).....More posts? yes please whenever you can
Yes please :-)
guys, got quite a lot more which happy to post. If any of this is useful , just click recommend or thumbs up so can gauge otherwise won't bother. Ta.
Thank-you Nickel.
Continued...
Upside: HydroX-Cell(S)™ In addition, to its liquid alkaline fuel cell technology AFC Energy has developed a solid
alkaline fuel cell, HydroX-Cell(S)™, which has a materially higher (4-5 times higher) power density, meaning that for any given surface area of fuel cell it stands to produce considerably more power than is possible with a liquid fuel cell. Essentially this allows for compact fuel cell systems. The solid alkaline fuel cell is in other respects comparable to
the company’s liquid alkaline fuel cell. In addition to its potential application for EV charging, its high density nature opens up other key markets. In particular, the high power to weight and volume ratios of the company’s solid alkaline fuel cell should make it suitable for use in hydrogen powered fuel vehicles. For now, we have ascribed no value to the potential for AFC Energy’s solid alkaline fuel cell, HydroX-Cell(S)™, but recognise it could represent material upside to our valuation.
The HydroX-Cell(S)™ fuel cell uses AlkaMem™ as its electrolyte, one of the core components of a fuel cell.
Upside: AlkaMem™: AlkaMem™ is a solid anionic exchange membrane, which means that it lets hydrogen anions (which consist atoms with one proton and no electrons) pass through it but blocks hydrogen atoms (which consist of one proton and one electron). This product is directly comparable to existing products which are referred to as Proton Exchange Membranes (“PEMs”). Such membranes are used globally in chemical processes usually involving the purification
of chemicals to a very high standard and in electro chemical processes. Applications include desalination, water treatment, battery membranes, acid remediation, electrolysis, electrodialysis, chlorine and alkali production and a host of specialised niche markets. The currently leading product in the PEM market is commercialised under the trade name
Nafion™, which was estimated to have a market of $1.2 billion globally in 2018 (source: MarketWatch 7 March 2019).
For now, we have ascribed no value to the potential for AFC Energy’s AlkaMem™ product, but believe it has potential to provide material upside relative to our valuation.
Continued.... In particular, all of AFC Energy’s products support trace amounts of ammonia, which would cause most fuel cells to degrade. This has important commercial implications because ammonia costs a fraction of the cost of hydrogen and it is much more energy dense allowing it to be transported at less cost. Ammonia can be easily cracked on site
into hydrogen and used with all of AFC Energy’s products.
H-Power demonstrations will set the scene for commercialisation
AFC Energy intends to commence a national customer roadshow before the end of 2019 whereat it will demonstrate its H-Power™ systems EV charging application. This will represent an important milestone for the company because it will indicate to its core UK customers that the AFC Energy liquid alkaline fuel cell (relevant for the H-Power™ and
HydroX-Cell(L)™ products) has completed its development and testing and that it is now ready to be commercialised.
Through its many manufacturing and auxiliary equipment partnerships AFC Energy can also communicate that it is ready to distribute its product and meet customer demand. First sales will represent a major catalyst for the company.
AFC Energy’s liquid alkaline fuel cell technology is proven In August 2019, the company surpassed the 1-year milestone of continuous testing of its liquid alkaline fuel cell, which is relevant for the company’s HydroX-Cell(L)™ and HPower™ products. By extrapolating forward the rate of electrode degradation the company is confident that its liquid alkaline fuel cells will have a useful economic lifespan of at least four years. The fuel cell being tested remains in constant use and the company remains confident in its longevity. The company has proven that its liquid alkaline fuel cells can reliably produce electricity with hydrogen that contains trace amounts of ammonia. This is a key advantage because ammonia costs significantly less than hydrogen and can be readily cracked into hydrogen before being introduced as fuel into the company’s fuel cells.
Upside: H-Power™: global market. Currently, AFC Energy is focusing its sales efforts for its H-Power systems exclusively on
the UK because the company does not intend to fund a global sales force, it is based in the UK and the UK has some of the most stringent green policies amongst developed countries. However, in our opinion, AFC Energy’s fuel cells should also have a global appeal after being adopted in the UK. This would represent tremendous upside for the company relative to our projections and valuation.
Broker 'Core Investment' thesis:
The company is focusing its commercial efforts on its H-Power™ product in EV charging applications, because there are few embedded competitors offering off-grid high quality (high-power) charging, the UK government is mandating a transformational change away from conventional vehicles and thereby creating a tremendous growth outlook for EVs
and EV charging with H-Power™ which has compelling competitive advantages in this market. H-Power™ and the associated HydroX-Cell(L)™ fuel cell technology is also fully tested and ready to be commercialised, whereas testing is ongoing for the company’s HydroX-Cell(S)™ and the related AlkaMem™ technologies.
AFC Energy’s H-Power™ system and auxiliary equipment will be sold in containerised units allowing for easy transportation and installation. Each unit will have a minimum power rating of 20 kW (circa 27 horse power). Power output is scalable simply by adding more fuel cell stacks to the unit or using multiple units together. The company intends to increase the power rating of its units by circa 8x in 2020 and a further 3x in 2021. Scaling up is mainly a commercial consideration as opposed to a technical challenge.
We believe there will be demand for premium quality zero emission EV charging with an associated premium price. The full life-cycle cost of electrical power from the units is expected to be profitable for premium priced fast and rapid charging. Importantly the company’s units are reliable, allow for high power (quicker) charging and they are not reliant on the grid, which is expected to become strained due to increased peak demand resulting from fast EV charging.
The UK government has confirmed it intends to implement a ban on new gasoline and diesel cars by 2040 and has committed to a “net-zero” carbon emissions level by 2050. In comparison, today EV’s make up only 2.2% of vehicle sales (2018) and accounted for only 0.5% of all licenced vehicles at year-end 2018 (source: Department of Transport).
Without large scale and timely investments in infrastructure, the UK’s distribution network is unlikely to cope with increased peak demand from EV chargers, particularly as the need for high-power will increase as demand for rapid charging increases. We believe that AFC Energy’s fuel cells can be readily deployed and fill gaps in the distribution
network.
We believe high quality charging may become a service that attracts EV users to car parks and retailers and that AFC Energy’s fuel cells are well adapted for providing high power (fast) charging such that EV users can be assured that at such locations they can get a charge.
All the company’s products are capable of using relatively impure hydrogen, which translates to a less costly feedstock. This is because they are all alkaline based. AFC stands for “Alkaline Fuel Cells”. The company’s products also support trace gases of chemicals that harm most fuel cells such as those based on proton exchange membranes
Ok thanks Nickel and TheOldBee, I am with HL and IG. I use L2 and DMA. But RSP is a new one on me. Cheers, YM
Yachtmaster,
This might help https://www.barclays.co.uk/smart-investor/news-and-research/investing-for-beginners/the-story-of-a-trade/
unlike L2, it shows you the real size of orders and where mms are really sitting. Speak to your broker about it or switch to one that can provide it.
Nickel, what does RSP stand for and how do I get it? Cheers, YM
buys and sells drive all price action.
You can have the best of news but if there's a seller it's going to weigh down on the price action. AFC needed to clear a seller on the books, that's now done so it can rise freely again
And two delayed buys of circa 200K shares have just popped up too (judging by the price at the time they defo look like buys!).
As I say, this looks primed for a move back up to near 20p - unless someone can clarify why it fell from this level (other than the sells).
Thank you mate. Is the identity of the seller known as this looks like it is primed for a move back up...once the selling stops!