Pinned straw:
With Fortescue's decision to scale back their hydrogen ambitions, companies tied to the story of Green Hydrogen in panic mode with United Hydrogen and Sunshine Hydro talking about their story in the AFR:
For a bit of background, United Hydrogen Limited is a conglomerate (ahem "roll-up") of hydrogen related businesses led by Will Davidson. Apparently Will Davidson used to be CEO of Powerwrap before it got taken over by Praemium.
To get a sense of the size of this "roll-up" just look at the picture below:
That's a crazy amount of companies and puts UWL to shame. And when I get constant emails from UHL about "Pre-IPO" capital raising for "sophisticated investors" and videos with talking head "investor" "Mark Bouris" of Yellow Brick Road, red flags start to appear (I have myself to blame though after clicking the "INVEST IN UHL" button on their website a year ago!).
Pity I'm not a sophisticated investor so can't invest but having the emails means I can keep track of all the raises.
The most recent raise was at 25c. Yet after countless capital raisings the company is valued at over $600m but at one stage I did get an email that they did reach a value of $1bn.
Anyway back to Fortescue. Andrew Forrest appeared on ABC 7:30 and seemed to struggle on a few questions relating to the company's hydrogen ambitions. Not reassuring for all the companies focused on Green Hydrogen and also Davidson's plans to list United Hydrogen on the ASX.
Flipside from Fortescue scaling back on the Green Hydrogen story would have to be more dividends and cashflow and more focus back to mining. Downside would be all the companies out there tied to the Green Hydrogen story. Without a big company like Fortescue putting in the dollars and publicity, investment in this sector is harder to justify with these smaller companies - possibly prompting the story to be published in the AFR.
Just listened to the link @edgescape provided on Twiggy being interviewed by the ABC. I felt he has shifted focus to hydrogen for green Iron and green fertiliser over green energy. These areas may be more profitable and quicker to to develop for Fort over the energy sector. I think it willstill come and he will still work on it however he's found better targets with quicker profit to chase down. After all he is in business, so make sense to me.
Thanks to crowdfunding platforms like Birchal, you don't just have to be a sophisticated investor to lose money in Hydrogen. I have a small part of both Sunshine Hydro and Line Hydrogen.
After their failed SPAC listing, Line are still trying to finish their project in Tassie and are now pivoting to projects in the Philippines. And as for Sunshine Hydro, there hasn't been much news from them other than input on the impacts of different government funding models.
There is an Adelaide-based company that is still listed on the ASX in the Green Hydrogen space @edgescape and @Bradbury - Sparc Technologies (SPN) and they have a JV with FMG that they said on Thursday (see here: Sparc-Hydrogen-Clarification-on-FMG-announcement.PDF) would not be affected by FMG's announcements and intentions to reduce their spend in relation to hydrogen.
Their Sparc Hydrogen joint venture (Sparc Technologies 52%, The University of Adelaide 28% and Fortescue 20%) "is developing next generation green hydrogen technology using a process known as photocatalytic water splitting which requires only sunlight, water and a photocatalyst to produce green hydrogen, without electricity."
Good-o! A boss at my previous job held them and asked me for an opinion on them a couple of years ago and I said they were like a casino bet; you could win big but the odds are you will lose your money, as the eventual winners in this space are very hard to pick at this stage, and the losers will be plentiful. I suggested he just stick with FMG (who he also held) and played it that way.
The Sparc Tech (SPN) chart hasn't exactly been stellar over the past few years, since I had that converstation with him...
At the end of the day, the market will reward those companies who make solid progress towards commercialisation, and will punish those who just burn through cash with very little to show for it, or at least that's how I would expect it to work... It doesn't always. A lot of FMG's following is down to Twiggy himself and what he has achieved - an ASX20 company - the 10th largest ASX-listed company in the country at this point - and he's built it up from nothing to what it is today, but some of the shine is coming off now I reckon, particularly with the revolving door of senior management at Fortescue suggesting that you do what Twiggy says or you do not belong there and you can either quit or be moved on. It's possible that despite what is happening at the coalface (so to speak), the culture at the top is now perhaps quite toxic. I've made money from FMG but I've also reduced my position size over the past year and I'm not putting fresh money into them. The returns have been there, but past performance may not always be a reliable indicator of future performance.
And I won't be investing in SPN - too small - and no good reason that I can see to make me think they are going to be winners over other players in the space.
https://sparctechnologies.com.au/
By the way, Hydrogen is not all SPN do - they have graphene coating tech as well. But not every bright idea makes good money for shareholders.
There is another one - H2G - GreenHy2 Ltd, which used to be called Tempo Australia. But I wouldn't go near them because their MD is Dr Paul Dalgleish who ran RCR into Administration and shareholders who hung on to the end (the final trading halt) with RCR got a 100% loss on their investment for their trouble. I sold out of RCR IRL as soon as the rescue raise settled, so before they went into Administration, so limited my losses, but I wouldn't go near anything that Dalgleish has anything to do with, let alone a company that he runs as the MD. He also (alongside their largest shareholder) pushed out the founder of Tempo, Charlie Bontempo, which was a nasty move at the time.
They are focused on Hydrogen storage rather than hydrogen production, but it's another company operating in that hydrogen space, but not profitably clearly:
Earnings: ROE:
And their graph reflects that:
