May 28, 2022

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Analyst not impressed with Neil: - Weak quarter

Analyst not impressed with Neil: – Weak quarter

Sparebank 1 Markets analyst Thomas Dowling Næss forecast more hydrogen company Nel in the first quarter. On Wednesday, the company presented its first-quarter results.

Overall, Neil delivers a weaker-than-expected performance, in another quarter. Especially in light of the fact that they disappoint in the reported numbers, and have only a slight increase in the order book, this is a weak quarter, says Ness.

Ten times more capacity

In the first quarter, Neil’s turnover was 213 million NOK. This is a 36 per cent increase over the same period last year, but down from the previous quarter when trading volume was NOK 248 million.

Ness believes the reported revenue is disappointing, and notes that the company has expanded its capacity significantly over the past year.

Revenue is declining quarter by quarter, but increasing compared to the first quarter of 2021. Then one must remember that the company’s capacity is now nearly ten times greater than it was last year when the plant at Heroya was not completed.

Neil also reported that the company secured an order of NOK 283 million in the quarter. This brings the total backlog of applications to 1.3 billion NOK.

Now Næss, which currently has a sell recommendation on Nel stock with a target price of NOK 7.5, is unsure if the company can meet the expectations.

– Neal is priced based on expectations of significant growth. The order book barely covers our estimates for 2022. This means that there is a very high degree of uncertainty in our future estimates, which are experiencing strong growth after 2022, which does not justify current pricing, says Ness and adds:

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– With their cost base, the company will not make money with just 500MW of Herøya. Then they rely on increasing the capacity. We are also not sure what capacity increase will be sufficient. We believe the competition will be in heaven.

On the weak side

Despite the poor revenue development, the company generated a profit of NOK 84 million in the quarter. It’s solid from the previous quarter when the company incurred a loss of NOK 269 million.

However, operating profit in the first quarter of 2022 ended at minus 187 million DKK. The positive result is therefore due to the financial income of 279 million NOK. Neil’s financial income from the first quarter is partly due to Everfuel’s market value, in which the company has equity stakes, which increases during the quarter.

But Jared Arvik, an analyst at Barreto, is also not thrilled with today’s quarterly presentation from Neil.

– Basically, we think the development of the top line is a bit weak. Although there was good speed in the electrolysis segment, the refueling segment was a disappointment. In short, it was a more weak report, Arvik says.

1.5 billion recovered.

We remain committed to our growth strategy and are confident in the long-term potential of the industry. Both the order book and pipeline are growing, and we continue to see strong prospects for green hydrogen, Nel CEO Jean-Andre Luc says in a stock exchange announcement regarding today’s report.

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Nell's outgoing senior manager, Jean-Andre Luc.

Nell’s outgoing senior manager, Jean-Andre Luc. (Photo: Gunnar Lear)

When the stock exchange opened on Tuesday, the stock was down more than five percent, but a few hours later at 12:00 the stock was up about 4.5 percent.

At the end of March, Neil raised 1.5 billion NOK in new capital. The money raised by Neal will be used to increase production capacity, to expand the organization in terms of order taking and giving activity, according to the company.

After the capital increase, the company considered issuing ten million new shares at the same price of NOK 15.3 to other shareholders, but in the meantime the price of Nel fell to NOK 14.93 and the company retracted a new round.

The first quarter report states that the company’s cash balance is close to NOK 4 billion.

Earlier this year, it was also announced that coach Jean-Andre Luc would resign at the end of the second quarter. Løkke continues at the board, while Q-Free president Haakon Voldal takes charge.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.