Ceres Power Holdings PLC (LON:CWR) shares jumped higher on Wednesday as the fuel cells developer announced a strategic collaboration with Weichai Power, one of China’s leading automobile and equipment manufacturing companies, including a potential initial equity investment worth £17mln.
The AIM-listed firm said this agreement provides Ceres Power with access to the Chinese market, the world’s fastest-growing market for fuel cells.
It added that initial plans are for Ceres Power and Weichai to jointly develop and launch a SOFC fuel cell range extender system for China’s fast-growing electric powered bus market.
Ceres Power said in a statement that the agreement potentially provides significant staged revenues to the company through engineering services and technology transfer, licence and royalty payments and a longer-term share in the profits from a proposed manufacturing joint venture.
The group said the agreement also includes a potential initial £17mln equity investment by Weichai in Ceres Power and potential further equity investment of £23.2mln, which is triggered on signing further commercial agreements before 30 November 2018, both subject to approval by the shareholders of the company and by provincial governmental authorities.
Phil Caldwell, Ceres Power's CEO, said: “This is a key milestone for Ceres Power as we continue to deliver on our strategic plan of licensing our technology to a leading OEM which if successful could lead to a high-volume manufacturing JV for the Chinese market with a very strong partner."
In late morning trading, Ceres Power shares gained 7.8% at 13.8p.
German broker Berenberg has reportedly raised its target price for Ceres Power to 20p from 15p, and reiterated a 'buy' rating on the stock.
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