With the increasingly serious environmental problems, enterprises in various countries are developing new technologies to reduce carbon emissions, and fuel cells emerge as the times require. The field of fuel cell is in the ascendant and is one of the best new energy. at present, due to the limitation of technology, fuel cell can only be used in some special fields. Companies are trying to popularize the technology in the market. in the long run, which company will have the last laugh?
By looking at the financial data of Plug Power and Ballard Power Systems, it is not difficult to find that there is still a problem of fuel cell popularity. Such companies had revenues of only $235 million last year, but new energy technologies are the direction of the future, and both companies are on the rise, but the two companies have slightly different strategies.
Plug Power Corp.
Plug Power specializes in designing portable power systems for handling transportation equipment, such as warehouse forklifts, a technology that is revolutionary. The warehouse forklift does not need as much power as the big truck, and it is also more convenient to refuel, so it can easily go back to the refueling base. It is also widely used in some industries with strict environmental requirements, such as the food industry (even propane-based machines cannot be used), forklift trucks using fuel cells will not emit harmful gases, so it can be used in the food industry.
Goods handling is currently the main market for fuel cells for Plug Power, whose main customers include Walmart Inc and Amazon.Com Inc, and the company's net income rose 20% in 2017 compared with the same period last year. But Plug Power also has a serious problem. Shareholders are dissatisfied with its over-reliance on Walmart Inc and Amazon.Com Inc. It is understood that 72 per cent of the company's total revenue in 2017 came from Walmart Inc and Amazon.Com Inc.
Plug Power is also committed to developing economies of scale and developing more and more products. The company is expected to be profitable in 2018, but it has been losing money in the areas of PPA (electricity purchase Agreement) and fuel transportation. Without two loss-making divisions, Plug Power2017's annual gross profit would have been as high as $15.6 million, but instead, the company's gross profit was just $1.6 million. If the company can streamline its management, its profits will be higher and will be able to meet its full-year revenue expectations of $155 million to $180 million.
Ballard Power Systems Corp.
Ballard Power Systems takes a different approach, focusing on fuel cell packs and providing upstream products for other fuel cell companies, such as Plug Power's core product, GenDrive, a "stack" (stack, a data structure). Ballard Power Systems is increasing its short-term and long-term growth potential, while also using its own technology to develop new products. Providing stacks for other companies is just a form of monetization, and the company's core business is to provide fuel cells, goods handling, grid backup and transportation applications for small portable power supplies. Currently, the company is keeping a close eye on the grid backup and transportation areas, which accounted for 94% of Ballard Power Systems's product revenue in the first quarter of 2018.
Although the company's total revenue fell this year compared with the same period a year ago, and the company revised its EBITDA in 2017, its business growth was strong. As Ballard Power Systems focuses on long-term growth, its revenue growth is likely to stagnate in the short term. In its long-term development plan, the company has deployed 100 commercial trucks in China this year and plans to deploy 40 buses in Germany in 2019. Ballard Power Systems is even developing products that can be carried on unmanned submarines.
However, there are some defects in the development strategy of Ballard Power Systems Company. Most of its collaboration programs are still in the testing stage and there is no guarantee that they will be profitable or promote business growth in the future. And its market will still choose lithium batteries as the main source of energy in the next few years, the company's market will further shrink, and the use of its products may be limited to some special areas.
How to choose
If Plug Power abandons its two loss-making businesses (PPA and fuel distribution), it will take the lead in niche cargo handling. However, these two loss-making businesses involve the businesses of Walmart Inc and Amazon.Com Inc, and given the company's high dependence on Walmart Inc and Amazon.Com Inc, its stock risk will also increase. Compared with other similar companies, Ballard Power Systems has higher business profits. The company specializes in providing fuel cells for portable power such as material processing, commercial trucking and buses, and has more potential in the long run.
The two companies have their own advantages. But since the fuel cell sector is still in its infancy, investors should be more cautious in this area.
This article is produced by Futu Information compilation team (compilation / Wu Nan proofreading / Luo Zhen)