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ITM Power announces £52m equity fundraising

The company looks well-placed to benefit from the shift to green energy
ITM Power announces £52m equity fundraising

Fears over climate change are increasingly driving investment mandates. Governments and international organisations are getting on board, with emissions reduction targets set out in the COP21 Paris Agreement on climate change, while pension and sovereign wealth funds are tailoring their investment portfolios in favour of sustainable technologies. ITM Power (ITM) is looking to take advantage of the trend, so alongside its full-year results it announced a new £38m investment from Linde Engineering as a strategic partner, together with a £14m share placing with new and existing shareholders, and an open offer of up to £6.8m. 

IC TIP: Hold at 50p

ITM generates most of its revenue from construction contracts to build full hydrogen systems, with sales over the reported period coming from four build projects to provide electrolysers. Group revenue was up appreciably, while total collective project funding came in at just under £13m, compared with £10.8m in the prior year. The increase in reported losses was due in part to the costs of producing first-of-a-kind large-scale plant and installation in new environments. Costs associated with new projects increased ITM’s cash burn from £9.55m to £15.2m. 

Consensus forecasts are for an adjusted earnings loss of 2.44p a share in FY2020, falling to a loss of 1.7p a share in FY2021.

ITM POWER (ITM)   
ORD PRICE:50pMARKET VALUE:£171m
TOUCH:50-50.2p12-MONTH HIGH:53pLOW: 18p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:7.7pNET CASH:£5.17m
Year to 30 AprTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20151.64-5.71-3.4nil
20161.93-4.36-2.0nil
20172.42-3.55-1.7nil
20183.28-6.48-2.1nil
20194.59-9.32-2.9nil
% change+40---
Ex-div:na   
Payment:na