ITM Power Plc designs, manufactures, and sells hydrogen energy systems for energy storage, transportation, and industrial sectors in the United Kingdom, Germany, Australia, rest of Europe, and the United States. It offers HGas1SP, HGas3SP, 3MEP CUBE, and 2GEP Skid. The company is also involved in the development and manufacture of prototype products; and sale of electrolysis equipment, automotive fuel, hydrogen, electrolyser solutions, and hydrogen storage solutions. ITM Power Plc was founded in 2001 and is headquartered in Sheffield, the United Kingdom.

ITM Power Plc

Industrials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

IJ8.DE reported revenue of GBP 17mn in the last 12 months, up 16% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 43% from FY23 to GBP -0.04. Market expects EPS to reach GBP -0.06 in FY24.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 32ppts over six months and grown 2ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.1 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

IJ8.DE has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, negligible return on capital, weak debt servicing capacity, inadequate interest coverage, and poor cash flow generation. We note resilient historical revenue growth, low margin volatility, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, IJ8.DE is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, IJ8.DE is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. In particular, the stock is 'cheap' on EV/EBITDA. 

ITM Power Plc

€ 0.34

3

ITM Power Plc

€ 0.34

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

€ 0.34

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