10. Ceres Power
Ceres Power (CWR) is a clean fuel-cell technology company whose potential can be underlined by the fact that it raised £181m in growth capital from shareholders in March – more than 10 times its half-year revenue.
The equity raise was backed by prominent shareholders Bosch and China’s Weichai Power, with whom it remains in talks about a joint venture or wider strategic partnership.
The company licenses its technology as opposed to manufacturing fuel cells and chief executive Phil Caldwell told investors during an interim results presentation in September that the additional cash would allow it “to potentially double the market applications” for its use. It is developing uses in electrolysers to produce green hydrogen and has received government funding to develop methods for cells to power ships.
The company is not expected to generate a cash profit for the next five years, according to FactSet consensus estimates. It is currently valued at £2.2bn, which broker Panmure Gordon argues is way too cheap. A joint venture with Weichai, an upgrade of its shares to the London Stock Exchange’s main market and potential partnerships for green hydrogen could all spark reratings, it argued. On the other hand, HSBC analysts believe the company is overvalued, warning that technologies other than Ceres’s solid-oxide cells are more advanced in the development of hydrogen electrolysers. Given that Ceres Power expects to invest about 55 per cent of fundraising proceeds in electrolysers, it may be best to wait for evidence of revenue generation from this. Hold. MF
9. ITM Power
The word ‘giga’ gets thrown around a lot these days. Another 2021 financial market trend for which we can thank Elon Musk. ITM Power’s (ITM) latest factory plan, which it calls a gigafactory, does fit the description: the University of Sheffield site, bought for £13m, will have a capacity of 1.5 gigawatts (GW) of hydrogen electrolysers a year. This capacity refers to the combined output of all the units built at the factory. ITM’s largest unit is a 2 megawatt – or 0.002GW – container that puts out 36kg of hydrogen per hour.