First Berlin – ITM Power Plc Research Update (09/06/2020)

First Berlin Equity Research has published a research update on ITM Power Plc (ISIN: GB00B0130H42). Analyst Dr Karsten von Blumenthal did not rate the stock and did not provide a price target.

Abstract
Despite the pandemic and the unfolding global recession, which looks set to be the most severe since World War II, the share price of ITM Power has rocketed to new highs. The market capitalisation has reached GBP 1.4bn, which is certainly eye-popping for a company with sales of GBP 3m in FY 2020. Investors expect government stimulus packages at the national and EU level to support green hydrogen technologies and infrastructure. This could accelerate the establishment of a decarbonised energy system based on green power and hydrogen. Green hydrogen and hydrogen-based fuels can jump in where green power is viewed as an insufficient solution, be it in heavy transport, heat, or industrial processes. The German government is leading the pack and, as part of its stimulus program, has announced a national hydrogen strategy to build 5 GW in hydrogen production capacity by 2030. It also plans to forge partnerships with other countries with favourable hydrogen production conditions to establish local ?made in Germany? hydrogen production capacities to export hydrogen to Germany. The German government plans to spend €9bn to implement its hydrogen strategy. ITM looks set to be one of the prime beneficiaries of the emerging hydrogen economy. The company's newsflow in recent months has been very positive with many new projects announced. The order backlog has reached a record level of GBP 52.4m (27 January 2020: GBP 42.4m), comprising GBP 21.8m of projects under contract and GBP 30.6m of awards in the final stages of negotiation. The tender opportunity pipeline increased to GBP 263m (27 January: GBP 248m), comprising 32 active commercial tender responses over the last 12 months. Preliminary FY 2020 figures were below our forecasts due to covid-19-related delays and lower grants. The pandemic is also delaying the completion of the new production site, which is now scheduled for Q4 instead of August. We continue to believe that ITM is well on track to become a global leader in the rapidly growing hydrogen economy. In the past, we used a DCF model to value ITM. We now refrain from rating the company and do not provide a price target. (p.t.o.)