Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
I'm happy to take the other side of your trade Investhome. ITM may appear stalled, as their sales and marketing strategy seems ill-judged, but until the entire market shows signs of abandoning green hydrogen I think writing off ITM is premature. If your short position is a relatively short term trade then there's a good chance you will be given an opportunity to cash in a profit as the company results are unlikely to pick up with a 12 month outlook. I am though still confident as a long term prospect I can bank another 10x from the prices I'm being offered thanks to nonthusiasts such as your good self. Two sides make a market. Best of luck with your short.
bilbs, there's a problem with your theory that economics is pretty much understood. If that were the case then surely economists would typically be in constant agreement. Evidence shows that economists don't seem to agree on a) the problem, b) the cause of the problem, c) the solution, or d) the future outcome. I like the old joke that economists have predicted 9 out of the last 5 recessions.
Why haven't we heard anything from Snam? (Or have I missed it)
It's coming up to 2 years since Snam made an investment into ITM and announced the 'preferred supplier' for first 100MW of electrolysers.
It also took a while before we recognised the first real order from Linde, but I can't remember whether that was after 1 year or 2. If it was also a 2 year wait, maybe we've got a decent order from Snam just around the corner.
I applaud the bravery. I also happen to think it's a reasonable target (not necessarily a 12 month one though). I still maintain that a 1GW full factory is worth £5bn market cap. Even if you think that's optimistic, what ITM effectively restated yesterday is that a 1GW factory isn't big enough. So an extra 50% capacity would surely be worth £5bn market cap. Whichever way you cut it that's about 7-fold increase on where we are today and should be operating at (new) capacity within 3-5 years. You can never satisfy the nay-sayers who think the whole thing's worthless, but if they can fill it then why not £6 a share.
My conclusion is that really not much has changed. A case of over-promising and under-delivering perhaps? The whole sector seems to have been over-optimistic about how quickly everything would happen. Now that a dose of reality has sunk in we can get back to a 10+ year growth story which should see ITM (and others) fulfill their potential...as long as the new CEO can push for sales.
I'm certainly picking some up. We haven't been offered these prices since April 2020. I considered it a good price back then for a long term hold and I still believe that. I think we need to look through the bubble in stocks during the Covid money-printing episode and take a position on a long term green energy future.
We discussed the hype cycle a couple of years ago. I guess this is what they call the "Trough of Disillusionment".
https://en.wikipedia.org/wiki/Gartner_hype_cycle
I hope you didn't miss by far Bellers. I think, though, if it approaches the £1 level I will rebuild my position back up to my original long term holding target. With any luck the current issues will look like a blip in the rear-view mirror. I still believe the long-term market is out there and that it is only short-term issues that the company is navigating its way through poorly.
Mark, there was a similar point with Plug Power recently. Their market cap was not much higher than their cash balance. Interesting that it more than doubled in the following weeks (due to Inflation Act and some large sales announcements). I hope that ITM doesn't become a takeover, instead they should take a leaf out of Plug Power's book and go out and secure the sort of sales that prove they can compete.
bilbs, we have assumed for some time that the relationship with ITM-Linde is that the ITM-Linde outfit is responsible for sales and site installation whilst ITM is responsible for electrolyser manufacture. To me it would make sense for ITM to be allowed to go after some smaller sales (circa 10MW) in order to provide exactly the continuous work you mentioned. Having a huge pile of orders to fulfill in 2025 is not providing any short term benefit.
Will be interesting to see if the initial price drop reverses later on as people recognise the positive turn the company is taking i.e. CEO recognises a new skill set is required and spending on 2.5GW factory is too early. The fact they still talk about needing to expand to 1.5GW is still very positive. They've added significantly to the contracts backlog, it's just that the delivery dates are so far into the future they won't be in the results for 18+ months.
I suspect that the joint venture with Linde was the wrong thing to do at that time. It effectively puts Linde in the driving seat which sounded like a good idea at the time. It could however be like cannibalising Linde's exisiting business - stealing business from their own hydrogen stream whilst also turning some customers almost into competitors as they can make their own hydrogen. It must be really difficult to manage and no real sense of urgency from Linde as they already sell hydrogen. If this is going to work out for ITM then it's going to have to be straight into large scale as the 10MW-20MW-50MW-100MW ramp, I think we were all expecting, doesn't seem to have happened (judging by the lack of RNS order announcements). In that case maybe the share price jumps to reflect that when it happens. If we're still on the slow ramp then we've definitely fallen behind. It'll be interesting to hear what they've got to say on Wednesday.
I'm sure our country will take the lead as soon as its finished its trials of hydrogen vs electrification, then a set of trials on hydrogen storage and delevery, followed no doubt by trials of hydrogen produced from small modular reactors (once we've built them of course). We should be finished all the trials by about 2050, and then we'll be ready to lead. (Yes, sarcasm. No matter which party, we have a rinse and repeat format for industry and its applications. And I too blame the non-manufacturing, non-engineering, non-mathematical background of the majority of our politicians and civil servants. I keep voting and hoping for better, but still waiting).