A high order backlog and rising tender opportunity pipeline has put ITM Power PLC (LON:ITM) on course to break even by 2022, according to new investment research.
ITM is a leading supplier of hydrogen production plants, so-called electrolysers, including complete hydrogen refuelling stations, and looks set to be a prime beneficiary of rising demand for green/low carbon hydrogen, says research house First Berlin.
The Hydrogen Council expects demand to grow around tenfold from 2015 to 2050, which corresponds to compound annual growth of almost 7%.
“Hydrogen is an excellent all-round fuel and suitable for all three energy applications: power, heat, and mobility,” added First Berlin.
“Furthermore, it is needed as feedstock in the chemicals and refining industries.
“ITM is focusing on the most promising markets: mobility (hydrogen refuelling stations for fuel cell electric vehicles (FCEVs)), power-to-gas applications to store cheap solar & wind power in the form of hydrogen, and renewable chemistry.”
Over the next three years, the researcher is forecasting ITM’s revenues to rise to £28.7mln from £3.3mln in 2018, which should pave the way for ITM to break-even at the EBIT (earnings before interest and tax) level in 2022.
In February, ITM had £23.2mln of projects under contract and £12.5mln in the final stages of negotiation, making a total order backlog of £35.7mln.
The tender opportunity pipeline amounted to £240mln as of January 2019.
ITM had £15.6mln cash at the end of its latest half year to finance rising working capital requirements and capex for a larger production site.
'Buy' is the First Berlin investment view with a 43p target compared with 23.5p in the market currently.