The global attempt to transition to green energy has been a roller coaster ride so far, and Ceres Power shareholders have experienced many of these thrills and spills in recent years.
Ceres develops fuel cells that can be installed almost anywhere and can convert hydrogen and oxygen into electricity. It has also developed technology to produce hydrogen from steam.
But while it holds patents for these technologies, it has no intention of manufacturing them itself, instead relying on partnerships with other companies to earn royalties when manufacturing begins.
Brighter future: After sharp declines, analysts say Ceres will see its revenue rise
We will need clean hydrogen to reach net-zero emissions targets, but Ceres’ share price inflated in 2020 due to over-enthusiasm for the technology, before coming back to earth as investors ran out of gas. At one point Ceres was worth £2.7bn. Today it is worth only ten percent of that.
Midas has been a longtime fan of Ceres, despite a wildly fluctuating stock price, believing its technology has widespread applications.
However, in 2022, those who heeded the Midas call to take some profits at 745p will be grateful they did, as the stock is currently at 140p.
This week’s full-year results were highly anticipated after being delayed by auditors, but in the end they were not as dire as a delay might have suggested. Revenue rose 13 per cent year-on-year, while pre-tax losses rose from £51m to £53m since last year.
Losses were greater than many estimated, due to high operating costs.
There was good news – the recently signed deal with Delta in Taiwan should generate around £20m in sales this year – but also bad news, with production delays within its partnership with Bosch and the three-way joint venture project between Bosch, Weichai and “Ceres in China is unlikely to be completed in its current form.”
CEO Philip Caldwell says licensing revenue from new partners will offset short-term delays in fuel cell royalties and believes Ceres will double revenue in 2024 compared to 2023.
MIDAS VERDICT: Ceres is very much a “morning jam” stock. It remains loss-making and a more lackluster attitude towards green energy of late has hit sentiment. Unless there is a breakthrough, it is unlikely to regain the dizzying heights of the stock market that it reached in 2020. However, as the partnerships it has signed begin to bear fruit, the share price is likely to break out of its current lows. Ceres shareholders should hang in there.
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