What are the recent developments made by ITM Power on its world’s first Hydrogen Gigafactory?

Summary

• ITM Power Plc had reported a revenue decline of 92% during H1 FY21 ended on 31 October 2020.
• The Company had a cash balance of  £25.9 million as of 31 October 2020.
• The Company had entered into a partnership with the Optimal Group to support sales activity in Australia on 12 January 2021.
• The Company had announced the sale of a 24MW electrolyser to Linde on 13 January 2021.

ITM Power Plc (LON:ITM) is the FTSE AIM UK 50 Index listed energy stock. The Company is the manufacturer of green hydrogen through various joint ventures. ITM’s shares have generated a return of about 459.81% in the last 12 months. The Company has been listed on AIM since 2004.

Business Model

The Company is engaged into manufacturing of  integrated hydrogen energy solutions for grid balancing, energy storage and the production of renewable hydrogen for transport, renewable heat and chemicals. The Company had collaborated with Linde since October 2019 to concentrate on delivering renewable hydrogen to large-scale industrial projects worldwide. The Company had entered into a strategic partnership with various companies like –

• Linde
• Snam
• Shell
• Scottish Power (part of the Iberdrola Group)
• Orsted
• Philips 66
• Siemens Gamesa

Recent News

On 13 January 2021, the Company had announced the sale of a 24MW electrolyser to Linde. It would be installed at the Leuna Chemical Complex in Germany where Linde would build, own and operate world's largest PEM Electrolyzer for Green Hydrogen.

On 12 January 2021, ITM had entered into a partnership with the Optimal Group to support sales activity in Australia. The Company had also received a a purchase order from Optimal for the provision of its 0.7MW Hydrogen electrolyser system for use in a hydrogen microgrid project in Tasmania supported by the Federal Government's Blue Economy CRC programme. The Optimal Group is the one of the largest sustainable energy solutions provider in Australia.

H1 FY21 Financial Highlights (for six months period ended 31 October 2020, as on 28 January 2021)

(Source: Company result)

• The Company’s revenue had dropped by 92% to £0.2 million during H1 FY21 due to postponement in the installation of projects arising from Covid-19 pandemic.
• The revenue would have been £3.1 million higher without Covid-19 related restrictions.
• The loss from operations was weakened to negative £11.69 million during H1 FY21, while it was negative £9.83 million during H1 FY20. Similarly, the adjusted EBITDA loss had also worsened by 28% during the period compared to an equivalent period of the prior year due to the inflated cost and an increase in headcounts.
• The Company had a cash balance of  £25.9 million as of 31 October 2020.
• The Company had reported cash burn of £14.0 million, including £5.7 million incurred on Bessemer Park and £1.7 million on inventory.

Operational Highlights (for six months period ended 31 October 2020, as on 28 January 2021)

• The Company had partially completed the ITM Gigafactory at Bessemer Park in January 2021.
• The ITM Motive segment has entered into a fuel contract with National Express for 20 buses in Birmingham.
• The ITM Support division has collaborated with Optimal in Australia.
• The backlog had witnessed a significant rise to £124 million consisted of a £36 million of contracted backlog and £88 million in advanced stages of negotiation.
• The Company had a total tender pipeline of £434 million, and it had shown an increase of 34% during the last three months.
• The Company had appointed Katherine Roe as a non-executive director in May 2020.

Share Price Performance Analysis of ITM Power Plc

(Source: Refinitiv, chart created by Kalkine group)

Shares of ITM Power Plc were trading at GBX 562.00 and were down by close to 3.93% against the previous closing price as on 29 January 2021, (before the market close at 10:10 AM GMT). ITM's 52-week Low and High were GBX 82.56 and GBX 724.00, respectively. ITM Power Plc had a market capitalization of around £3.22 billion.

Business Outlook

The Company had a bright outlook reflected by an encouraging development backlog and tender pipeline. The Global Energy markets had realized the importance of utilization of green hydrogen and considering its value by making pandemic related strategies. The Group had highlighted that several companies would be considering hydrogen as the most feasible future energy option in the reformulation of their strategy. The Green Hydrogen demand would sustain for a longer period as the various government bodies has set a target of achieving a certain extent of green hydrogen produced by electrolysis.

The European Commission had a goal of achieving at least 40GW of green electrolysis by 2030. The Governments of Germany, the Netherlands and Portugal had set a target of producing at least 10GW of green hydrogen. Other prominent European nations like Italy, Poland, Chile, Denmark and France have also formulated the national strategies to utilize more of green hydrogen.

The Company is well-positioned to cater to the market needs for green hydrogen required by various industries. The Company had reinforced its financial position to capitalize on this opportunity of delivering to higher market demand by collaborating with Linde to raise the production capacity at Bessemer Park and EPC delivery. The Company had also strengthened its balance sheet by doing a fundraising activity during November 2020 to fund the development of innovative products and boost up the process further.