Hello dear community,

In view of the fact that there are now a lot of newcomers on the platform, I've created a graphic, typical of social media, to give you an overview of stocks that not everyone may have on their radar. It goes without saying that you can't know your way around every sector. But we have come together here in the community for a solid exchange.

But since we're here on Getquin and not on Instagram, here's some input for the inquisitive.

What do the companies do anyway?

Service providers:

On the service provider side, there are some rather atypical companies for the sector.

Here I have Friedrich Vorwerk $VH2 (-3 %) Vinci $DG (-0,09 %) , Ferrovial $FER , Bilfinger $GBF (-0,46 %) and Jacobs Solutions $J (-0,81 %) are listed here.

Their main focus is the background work on the properties themselves. They support the companies in planning, realization, construction and maintenance. They work decentrally in regional working groups to cover the breadth of the industry. They offer almost every service for an industrial company.

The established elite

If you want to invest in the hydrogen sector, all roads lead to the giants Linde $LIN (-0,84 %) Air Products $APD (-1 %) and Air Liquide $AI (+4,21 %) . Their market power in the field of industrial gases and in today's market environment of commercial hydrogen production seems irrefutable. Their know-how in the gaseous material production segment has been tried and tested for decades and the processes are almost perfectly optimized. Each company also has its own engineering divisions, making them perfectly positioned for the future in electrolyzer development.

The established newcomers

With plenty of money in their pockets, the oil companies Shell $SHEL (-1,69 %) Total $TTE (-1,26 %) and BP $BP. (-1,13 %) are also entering the segment. Oil is finite, but the business should not be. These companies are also experienced in dealing with hydrogen. Hydrogen is an essential component in the refinery process. In order to become less dependent on the big 3, new market areas are also being explored here. Will they be able to prove themselves?

Speculative titles

Never anything but expenses. Years of hype and yet a harsh reality hit the small fish in the shark tank surrounding the segment. Nel $NEL (-3,27 %) Plug Power $PLUG (-4,22 %) and Ballard $BLDP (-3,6 %) are long-suffering. They have never been able to deliver even remotely profitable figures. On the contrary, things seem to be getting worse quarter after quarter. Only turnover is increasing. Can that ever be good?

Plant engineering and equipment

Of course, in a globalized world, you no longer take care of the entire value chain from A-Z. Every company specializes in its own segment. The long-term beneficiaries of the industry are therefore the equipment suppliers, because they have to develop the technical foundations for every innovation in order to survive in the vastness of globalization.

The plant manufacturers

They manufacture the physical parts for the process plants.

Examples of this are Voestalpine $VOE (-0,28 %) , Atlas Copco $ATCO B or Sulzer $SUNE .

The suppliers

The transportation of substances is also part of this. Material transport in industry, but also at home, for example in water pipes, is ensured by pumps (for liquids) or compressors (for gases). Established brands here are KSB $KSB (+1,42 %) , Xylem $XYL (-1,46 %) , Gorrman-Rupp $GRC (-1,06 %) but also as a complete supplier Chart Industries $GTLS (-4,54 %) or SKF $SKF B (+0,1 %) or for specialized tools Stanley B&D $SWK (-1,82 %) .

Process control is also indispensable. Brands such as Siemens $SIE (-0,45 %) ABB $ABBN (-0,07 %) or Rockwell $ROK (-2,25 %) and Parker $PH (-3,71 %) have established themselves here. They not only supply the electronic equipment for the process systems. They also offer their software services as safety services so that safety in process control can always be guaranteed.

I hope I have given you a little insight into the industry and would be delighted to receive constructive feedback.

#wasserstoff
#h2
#hydrogen

But there is "lithium" in the name ...

Hello dear community,

In the following also times a contribution about lithium and the product types, which are literally floated on the stock market.

My last post was about the alternative "ammonia". Click here for the post:

https://getqu.in/2A360BDV8GYN/5eFN2FjPbr/

How will the general investor know what's behind the lithium companies?

I hope to enlighten you a little bit.

1. deposits

Lithium has a share of about 0,006% on earth (Q: "PSE in facts and figures"). Lithium occurs mostly as salt in nature, which always shimmers so great on the pretty stock market photos. But this is lithium carbonate. But it is also deposited in various minerals. However, these are so-called "complex" compounds that cannot be separated easily without further energy input.

A second high occurrence results from salt lakes. This is again lithium chloride.

What is the significance of this?

Subsequently, the salts or minerals of lithium are useless. We have to extract lithium in its pure form from it. Adding to our difficulty is the fact that pure lithium is very reactive and could therefore quickly recombine with all sorts of components in the environment, rendering it useless again. Because this is exactly the reason why lithium has to be treated in clean rooms or high-purity rooms.

But how do we get from mining or from the lake to the clean room?

This is where the much sought after "converters" come into play and this is where the controversy in the lithium value chain begins.

Lithium conversion is done by conducting the salt, be it lithium carbonate or chloride into concentrated hydrochloric acid.

Incidentally, this produces a significant amount of CO2, which is why e-car critics are probably more justified in pointing out the overall balance of the e-car.

The lithium in solution is fed into fused-salt electrolysis. Simply put, this is a process whereby electric current is applied to electrodes in a metal-containing solution or melt.

This then produces the pure form of the metal in a melt. This process was originally used to extract aluminum and is still used for this purpose today. In addition, however, the process has gained in importance for other industrial metals, such as sodium or magnesium. However, one point that should also be mentioned is the fact that the electrodes are made of graphite, i.e. pure carbon. Of course, this also causes wear and tear, again in the form of CO2, but also from the highly toxic carbon monoxide.

4. use of lithium

Lithium has become our everyday companion. For my generation and younger, it has created a whole new way of life. Far from civilized conversation and cultural society, you can now realize your life in an average 6-inch surreality. You can finally be who you want to be without facing problems of reality.

What do I mean by that?

Lithium is mainly used for rechargeable batteries, or accumulators for short. Its use is therefore inevitably commonplace, provided you own a cell phone, laptop, tools or even a hybrid or electric car.

Hence the assumption of the massive growth of the lithium industry.

5. the value chain explained by the market example.

For this purpose, I would like to discuss the value chain of the market on which this growth is supposed to be based - the e-car market.

- Mining:

As is usual with all raw materials, this must inevitably be extracted. Riches are offered above all by the Latin Americans, such as Chile and Argentina and Bolivia. This is because the so-called "lithium triangle" is located at the border triangle of these countries, where the world's main reserves are located.

Named producers there today are already Livent $LTHM , Allkem $AKE (through Galaxy) and Lithium Americas $LAC .

What do the 3 have in common? Due to the high lithium price in recent years, high valuations resulted on the stock market. These are now in decline and so are the valuations, but why?

The producers have their own producer prices, which of course depend on individual, variable costs. So if the lithium price rises on the world market, profits rise. Correspondingly, this also works the other way around.

Again, a little food for thought in the direction of dependency: alone one third of the world's known lithium deposits are in the hands of Chinese investors ...

- converter, or even refinery (chemical):

Here we are at the interface where our lithium is also made usable. I described the process in point 3, so we can save that at this point.

But what about the costs and the expected margins?

Of course, here again it is primarily industrial service providers, such as Bilfinger $GBF (-0,46 %) , Vinci $DG (-0,09 %) or Ferrovial $FER who will profit from the development of new industries. Long transport routes are also being taken on in this industry, which should strengthen the global logistics division or at least provide further tailwind alongside e-commerce. Other factors in this point are very different. Therefore, I'll make a case distinction.

Case 1:

The company owns "only" converters and is therefore dependent on the lithium price of the producers.

This means that the own margin roughly results from the sale of lithium compounds, such as lithium hydroxide, from the variable costs and the purchase of the raw material. This has been the major shortcoming in recent years, as the margins here have been crushingly low compared to the process importance. Representatives for this case include Ganfeng $1772 (+0,99 %) and Tianqi $9696 (+1,66 %) . Therefore, this case can probably also be stamped as a Chinese phenomenon.

Case 2: The company is located in the mining segment, owns its own mines (or is in the process of building them up) and processes the lithium on its own.

Here, of course, significantly higher margins can be expected in subsequent years. The cost point of purchasing is almost eliminated. Of course, the corresponding production costs must now be added, since one takes over two value-adding links in the chain. Nevertheless, one is not dependent on the world market price, but only on one's own costs.

Here, western representatives, such as Albemarle $ALB (-1,12 %) , Rock Tech $RCK (+4,88 %) (in the future) and Livent $LTHM .

But why is this segment the most promising in the lithium sector?

All the "hype" around lithium shares is based on studies of future e-car targets.

Capacities in the mining segment are steadily increasing. Therefore, it is quite reasonable to assume a "moderate" lithium price in the next few years. In addition, the converter capacities are also already the current problem of the shortage economy. In addition, one is in the fortunate position of being able to profit massively in battery recycling as well, since the material has to be added again at exactly this point of the value chain for purity purposes and quality standards.

But why do they now make lithium hydroxide and not pure "lithium"?

The answer is relatively simple: cost/benefit.

In the final stage of the entire value chain, it's not about pure lithium. The final product is usually the lithium-ion battery. Ions are electrically charged particles in a chemical compound.

Lithium hydroxide is obtained quite simply from the lithium salt of the mine with lime water (extremely cheap to buy).

The further transport also proves to be relatively simple, since lithium appears chemically bound and rather inert in contrast to the pure substance.

- Cell and battery producer

Here we are almost at the final stage of the battery. Of course, the costs of the previous value creators are borne here. Furthermore, the supplier prices of the required materials are added.

In addition to chemicals, graphite, electrodes and precious metals such as cobalt or nickel are needed at this stage.

Of course, this is strongly dependent on the design of the battery. I am referring to the "classic" lithium-ion battery.

However, since my reference levels are more in the chemical process, I am keeping this paragraph relatively lean now.

Important representatives in this sector are Panasonic $6752 (+2,7 %) , Samsung SDI $0L2T (+2,28 %) but also here already Tesla $TSLA (-4,32 %) .

- Automobile construction

Here, too, I'll keep this short, since it's not about building an e-car.

Ultimately, all costs come together at this point. The carmaker has little room for maneuver in the current framework of global capacities. Nevertheless, long-term supply agreements have already been concluded with suppliers in order to be able to withstand the price competition.

For example, Mercedes-Benz secured $MBG (-1,31 %) secured approx. 10,000 t/year from the future producer Rock Tech Lithium Hydroxide via a fixed supply contract.

Volkswagen $VOW (-0,15 %) and Stellantis $STLAM (-0,34 %) (formerly PSA and Fiat-Chrysler) secured pre-emptive rights from Vulcan $VUL (-1,96 %) .

GM $GM (-2,75 %) secured shares in Lithium Americas for $650 million.

Nevertheless, these capacities must first be created. The foundations have been laid.

Postscript - personal speculation:

But what do I want to express with all this?

Just because "lithium" is in the name of a share, one is not exactly betting on a hobbyhorse here. Of course, the demand for lithium will increase and corresponding capacities have to be expanded. Nevertheless, today's stock market valuations do not correspond to the comparable parameters for the future. Here, it is always assumed from an extremely optimistic scenario that all tangible assets will be directly consumed by the end consumer. However, this will not be the case due to economic and social differences and the internal competition is already enormous today.

The real margins are more likely to be in chemical processing, as the shortage of production capacity is likely to continue into the mid-2030s. In addition, corresponding projects in Germany are being significantly promoted in order to reduce dependencies. Competitors are still manageable, relative to raw material producers, carmakers, and cell and battery suppliers. One is less bound to the price pressure of the end consumer, but again dependent on high transport routes and costs. Last but not least, one represents the link between recycling and reproduction in the future.

The next overview:

- Biofuels - More sin than reasons.

- E-Fuels - A clarification. What is actually behind the term and why they will most likely find a breakthrough.

Why "green" hydrogen can't live up to the hype. - Part 2

Values Community,

First of all, a big thank you that my last contribution on the subject of "hydrogen" was so well received or even sourly received.

In order to understand the context, I ask you to read part 1 as well, so that as few misunderstandings as possible occur.

https://app.getquin.com/activity/MDWIzGWvkU?lang=de&utm_source=sharing

Here again 5 reasons why the stock market values "green" hydrogen too high. Numbering follows the last post.

Please take a more speculative view. Clairvoyance is not my superpower.

6. storage medium, no energy carrier!

Contrary to the perception of many, hydrogen does not serve as an energy carrier, but as a storage medium.

Hydrogen can be produced extremely cheaply via electrolysis in the event of overproduction on the power grid. Why? The efficiency does not matter at all. The electricity is surplus anyway and is not needed anywhere else.

In fact, we would already have this surplus of electricity in Germany today. Due to the high prices, however, it is probably more lucrative to export it than to promote domestic electrolysers with it. It doesn't matter whether the electricity is generated from renewable sources or fossil fuels, and thus at least laying the foundations for a sustainable hydrogen industry. I can recommend the negative success story of the highly praised "WunH2" project in cooperation with Siemens. $SIE (-0,45 %) , can be recommended. The failure should, speculatively, have a signal effect.

https://www.bundesnetzagentur.de/SharedDocs/Pressemitteilungen/DE/2023/20230104_smard.html#:~:text=Deutschland%20war%20im%20Jahr%202022,um%2051%2C1%20Prozent%20gestiegen.

7. geopolitics - finally new dependencies again.

Hydrogen should serve the general public accordingly for "everything". Heating medium, alternative fuel, chemical raw material, ...

However, nobody questions the production sites. These will not be able to take place in the temperate climate zones. Europe is also generally quite limited due to population density. This means that production sites are already being relocated to more southerly countries, such as those bordering the Mediterranean or African states. There are also concrete plans for hydrogen pipelines to Europe. Algeria, Angola, Egypt, ... These are all countries that are generally known for their legal security and economic obligations.

But what is the disadvantage, although it would of course be more efficient because of the solar intensity? We are once again becoming dependent, but in the case of an "energy turnaround" this will hit us much harder than the last time we were dependent on Russia.

None of today's investors can say in retrospect that they did not know this. $PLUG (-4,22 %) are already reaping the fruits of great investments, especially in Egypt, according to one magazine, or even the German flagship company $PNE3 (-0,63 %) with its involvement in South Africa.

8. safety first!

Hydrogen is probably the most dangerous gas in terms of explosiveness that could be handled. From a volume concentration of 18%, it inevitably leads to an explosion on contact with atmospheric oxygen! Furthermore, it is still flammable from 4% volume concentration.

Who wants to be around in the event of a leak from a pipe, container, motor vehicle, etc.? Volunteers? - Please don't!

Examples for the extent of such a reaction is for example the crash of the Hindenburg. Here, however, "only" a fire occurred, because the concentration of oxygen in the air was too low.

A possible solution would be the mixture with nitrogen. However, according to the risks involved, this would mean that a volume concentration ratio of approx. 95/5 would have to exist. This aspect alone again speaks in favor of the air separation giants Linde $LIN , Air Liquide $AI (+4,21 %) , Air Products $APD (-1 %) or also Nippon $4091 (+2,97 %) to name a Japanese company, which would find new sales opportunities in the field of nitrogen for safety reasons.

9. storage and capacities

A topic that is very rarely addressed, but is part of every value chain - storage.

It's not as simple as people like to think: "Let's just do away with natural gas and use the existing infrastructure for hydrogen." Nonsense! Hydrogen and natural gas are fundamentally different in their makeup! Hydrogen is the element with the highest energy density, but it is also the most finely porous. This means: Hydrogen would still volatilize in existing storage facilities because the porosity, i.e. the ratio of the void volume to the total volume, of the materials is for the most part insufficient in Germany.

Hydrogen is transported and stored in liquid form. Hydrogen is compressed to 700bar and cooled in isolation at -250 degrees Celsius.

This would benefit plant manufacturers such as Sulzer $SUN (-1,15 %) , Voestalpine $VOE (-0,28 %) or Hexagon Composites $HEX (-0,4 %) .

In context, this means that the infrastructure must first be created before we can even think about regenerative hydrogen in the future. In my contribution to Vorwerk $VH2 (-3 %) from which I would advise against at the moment, I also explained profiteers of the infrastructure change. For example Vinci $DG (-0,09 %) , Ferrovial $FER , Hochtief $HOT (-0,13 %) or Strabag $STR (-1,35 %) .

Realistically, it will be in Germany only in 20+ years, which for me again does not reflect the current stock market values of the H2 companies.

For the time being, I exclude the adsorption of hydrogen to solid or liquid media. From the current point of view, it does not seem to be a mass solution for the whole society.

10. mobility in individual traffic

The biggest dichotomy, with many still seeing renewable hydrogen in the race, is private individual transport.

The electric car will dominate private households and rightly so! The big disadvantage of the hydrogen car here is efficiency.

While electric cars can use electricity without further conversion and have an efficiency of between 70% and 90%, the form of energy in the hydrogen car must be converted several times.

Here, green hydrogen is produced with the help of electrolysis. For transport, this is compressed and liquefied. Only then is the vehicle refueled. The back reaction of the electrolysis now takes place by means of a fuel cell. An illustration of this can be found in the appendix.

Nevertheless, it is of course up to you to decide which fuel form you will prefer in the future, and this is in no way intended as an appeal to drive an electric car in the future. Compared to other carriers, however, it is the most sensible option in terms of efficiency.

I hereby expressly ask you to note that this is exclusively about the passenger car in this point. For reasons of resource conservation alone, I am in favor of the fuel cell as a drive system for freight transport on roads and railways, as well as in aviation and at sea.

Further energy sources and possibilities of the future power mix I will explain in further contributions.

Of course, if there is also interest, the pro-hydrogen arguments can also be brought to light in further articles. Because these outweigh without question. Nevertheless, the hype, as it is currently traded, is simply unjustified and at least 20 years too early. The stock market may trade the future, but dreaming will be punished.

Planned and already in process is:

- Why it still makes sense to invest in oil and gas producers for 30+ years.

- Waste-to-Fuel - Away with the garbage!

- Regenerative methanol production and the real opportunities for C02 reduction.

Friedrich Vorwerk - Watchlist, investment or descending branch?

Dear Getquin'ers,

Due to new circumstances and information, I have changed my opinion on Friedrich Vorwerk contrary to the first post. However, I am still convinced that circumstances will turn around and lead the company to the success it deserves.

Furthermore, I have implemented the questions under the 1st post.

My topic today will be the Friedrich Vorwerk Group $VH2 (-3 %) will be. A medium-sized company that will have a decisive influence on the change.

First, a brief overview of the company's history:

No, this is not the household appliance manufacturer of the same name.

Founded in 1962 as "Lohnbaggerbetrieb Kleesch & Vorwerk" and renamed "Friedrich Vorwerk KG" in 1972, the focus at that time was already on underground infrastructure (natural gas and wastewater networks).

Since 2021, the "Friedrich Vorwerk Group" has been listed on the stock exchange in the Prime Standard.

Business segment/business activities:

In an umbrella term, it can be said that the Vorwerk Group is active in plant construction. However, it offers a sensational diversification with shareholdings in various sectors, including road construction (SKS), corrosion protection (Korupp) and many more. The company has a fully integrated and majority-owned value chain, which can offer any solution to the customer.

The business segments are officially declared on the basis of the area of use:

- Natural Gas

- Electricity

- Clean Hydrogen

- Adjacent Opportunities (complex, individual infrastructure projects)

But let us now turn to the most significant items of the business in each case:

1. turnkey solutions

- This includes the all-round package I mentioned for complex infrastructure projects. Friedrich Vorwerk takes on such projects from planning through execution and commissioning to maintenance.

2. engineering

- This area is extremely interesting for industry and utilities and mainly includes project support on behalf of the customer.

3. plant construction and service

- I deliberately combine this point, as it probably reflects the "classic" plant construction most closely. The focus is clearly on electricity, gas and liquid transport, including pump and compressor stations for onward transport, as well as transformers, electrolysers, heat generators, substations, and much more.

Friedrich Vorwerk's business thus covers the entire range of energy transport from the producer to the consumer. I enclose an internal overview. The entire business activity can of course be viewed individually on the website (https://www.friedrich-vorwerk.de/).

Note: The structure on my part does not correspond to the internal structure according to Vorwerk's own company presentation!

Fundamental data:

Here, I orient myself on the basis of the given data up to Q4/22. An overview is attached/edited for publication.

In fact, this is a point to be viewed critically from the current situation. The financials are intrinsically sound and the business is profitable. However, ongoing inflationary pressures and severe supply difficulties are squeezing margins considerably (after Q4/22). Sales of Electricity, Clean Hydrogen and Adj. Opp. divisions are steadily increasing (especially the latter), with the Gas Transmission division stagnating, due to the "green" transformation.

A solid market position is increasingly emerging, particularly in the German market, which will be able to meet the challenges of the future and should benefit strongly from this should.

The order situation continues to be sensational. In fiscal 2022, the number of orders received increased by 146%. The approximate total volume of these orders is in the range of €850 million to €1.1 billion. (as of September 2022). However, further order intakes have already been officially announced.

NEW JAN. 31, 2023:

Following the announcement of the preliminary figures for the full year 2022, the company can still be expected to grow very strongly.

Sales increased by +56% in Q4/22 alone. For the full year, at €368 million, forecasts of €320 million were far exceeded. The margin, on the other hand, is shockingly low. Only 2.6% was generated in Q4/22. Nevertheless, a moderate margin of 9.2% was achieved for the year as a whole.

But how can that be? In revenue-driving projects, a lack of personnel led to deadline pressure. As a result, orders had to be completed with the help of contractors (partner contractors).

Furthermore, the restructuring of the Puhlmann Group is continuing and the defense against a cyberattack led to profitability and visibility problems.

The outlook also leaves much to be desired. For 2023, a lower sales level is already expected in advance. In 2024, on the other hand, there should be a decent boost from projects in the electricity sector.

It remains to be seen.

Share:

Following the announcement of the preliminary figures, we are trending at around €12 per share. A hard correction, but appropriate. MBB sold just under 16% of its shares, 31.01, and now owns just under 36% of the shares. Other well-known investors here are Amundi and Fidelity. Only just under 46% of the shares are now in free circulation.

KGV 22: ~13 KGV 23: ~11 KGV 24: ~9

FCF:

For many members of our community, the free cash flow is sometimes a decisive criterion for an investment.

In 2022, the FCF of € 3.55 million is still very low and thus probably rather deterrent. As early as 2023, however, FCF is expected to rise to over €20 million and continue to increase.

Margin:

A net margin of 9% is the target for the next few years.

Dividend:

0.2€/share was paid in July 2022.

Personal opinion:

Friedrich Vorwerk is a promising beneficiary of the energy transition and has a first-class position in the transport solutions segment. The order situation is good, the finances appear relatively solid with cutbacks in some places. Potential customers here are not only companies but also the public sector, especially within the EU. The pipeline network should offer great order opportunities as the economy restructures (gas/hydrogen). This should have become particularly noticeable after a joint Norway/Germany cooperation in the course of the last visit of our Federal Minister of Economics.

The next big order point will be energy transport solutions for offshore/onshore transport. The expansion of offshore capacity alone to 40 GW by 2040 will generate huge orders to transfer electricity onshore.

My personal target for the stock by the end of 2023 is around €15/share. An entry on my part was made today. (Stop: 8€). Nevertheless, the management should now urgently take care of the known problems of lacking human resources without generating further internal cost pressures themselves. The answer to the question of the headline now therefore: Watchlist.

In the last contribution the question of @TomTurboInvest whether there are not better investment opportunities in this respect. I fully share this view and appreciate at this point once again the profundity of the question. However, if one attaches great importance to diversification, one should certainly keep an eye on Friedrich Vorwerk in the infrastructure sector. I consider a "buy & hold forever" strategy to be less sensible here. The zenith of growth should be priced into the share price between 2030 and 2035. Beyond that, you'll want to settle into the dividend payer portfolio for the long term.

I also see the following as intra-European competitors in the segment: Hochtief $HOT (-0,13 %) , Strabag $STR (-1,35 %) , Vinci $DG (-0,09 %) and Ferrovial $FER . Under certain circumstances, Bilfinger could also be included in this segment. $GBF (-0,46 %)

Conclusion:

I thank you very much for your attention to this point and I hope to have kept a certain simplicity, which could be elaborated if necessary. Please do not hesitate to correct or question me, because this is the only way to get into a discourse.

Thank you very much.

Sources:

https://www.friedrich-vorwerk.de/

Friedrich Vorwerk: Q3/22 quarterly statement + preliminary figures Q4/22.

Chart image: https://www.wallstreet-online.de/