Klippet fra Carsleberger på Shareville.

NORNE SECURITIES:
------------------------------------------
NEL - BUY NOK 6 (prev. BUY 5) - The first one-billion-dollar order is signed

NEL received a signed order for over $ 1bn in Hydrogen making and fuelling equipment from the hydrogen truck maker Nikola Motor Company at the end of June. Nikola’s value proposition when oil was $ 50 per barrel was to lower the total cost of truck ownership by around 1/3rd with 7-year leases with 1m miles including hydrogen. The order from Nikola provides NEL with the proof of its business case: buying its hydrogen equipment adds value in the largest economy in the world where diesel prices are closest to market prices.

The US economy is strong, but last data out, shows miles driven in the US fell by 0.2% in April (ytd +0.2%). The spike in oil prices after April is likely to slow miles driven further and Hydrogen trucks will look even better compared to Diesel Trucks. Oil’s competitive advantages has historically been that it was cheap, easy to move and easy to store. When fossil fuels no longer are cheap, several energy intensive uses are best served by Hydrogen. There is a cost to switch, but it also comes with benefits of cleaner air and water.

Conclusion: NEL signed its first billion-dollar contract at the same time as the US is threatening all countries with a trade war. NEL is likely to keep winning large orders for hydrogen equipment making and fuelling solutions because its module-based solutions are in a league of its own on costs and pricing. On balance, we lift our 12-month target price from NOK 5 to NOK 6 per share which is at a 20% discount to peers on P/B.