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Ceres Power revenues ahead of target as fuel cell production scales up

Ceres Power Holdings PLC (LON:CWR) said revenues in its upcoming results would beat market expectations while its order book heading into 2021 was also very strong.

The AIM-listed fuel cell pioneer said revenue and other operating will come it at around £32-33mln in a trading update ahead of results for the 18 months to end-December.

Orders and the pipeline at the end of the period were £54mln and £44mln respectively, it added, compared to £22mln and £50mln a year ago.

Ceres is in partnership with some of the world’s top engineering groups and said its focus remains on scaling up their production capabilities towards mass-market launches in 2024, which will trigger royalty payments to the company.

A key milestone with German group Bosch was passed in December, it said, while the green bus project with Chinese group Weichai should move to joint venture status in mid-2021 following a successful trial.

Development of solid oxide electrolysis for green hydrogen production for industrial applications is also making good progress, it added.

Phil Caldwell, chief executive, said: “The last 18 months have been one of the most important periods in our history.

” Bosch and Weichai made significant equity investments in the business, underlining their long-term confidence in our technology.

 “On the supply side of our SteelCell® ecosystem we announced the scale up to an aggregate 250MW of manufacturing capacity for 2024, giving us visibility of high margin royalty revenues.

“This was balanced on the OEM systems side with the AVL relationship, which should accelerate our systems licensing opportunities and create additional fuel cell stack demand for our manufacturing partners.”

Broker impressed

German broker Berenberg added that sales for the period have come in 7% ahead of consensus; the order book and pipeline are strong and with a £110mln net cash position the business is well set to capitalise on the exciting growth trajectory ahead.

Several key commercial milestones were hit in 2020 (Bosch/Doosan/AVL) and 2021 should not be short of catalysts either, such as the formation of a joint venture with Weichai Power and further focus and progress on the electrolysis opportunity.

The JV with Weichai will be a key factor in driving both the growth in manufacturing capacity and systems demand.

The second area of focus is electrolysis. The broker noted that management has mentioned plans to “continue the development of solid oxide electrolysis for green hydrogen production targeting industrial applications, following successful initial R&D stage”.

Solid-oxide electrolysis remains in its infancy but these are encouraging comments, Berenberg added, suggesting that further investment could be required to capitalise on this potentially significant opportunity.

The broker’s price target is 1,540p, but this does not include anything for the other end-markets such as maritime and utilityscale that could be at least as big as fuel cells.

Shares were trading at 1,471p today.


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