2G Energy: Affordable Hydrogen Beneficiary 2G Energy, a German company, is set to benefit from the growing demand for affordable hydrogen. As the world shifts towards cleaner and more sustainable energy sources, the demand for hydrogen has been steadily increasing. 2G Energy, with its expertise in combined heat and power systems, is well-positioned to capitalize on this trend. With its innovative and efficient products, 2G Energy is able to produce hydrogen at a lower cost, making it a key player in the market. This has led to a surge in demand for their systems, especially in the industrial and commercial sectors. Not only is 2G Energy a beneficiary of the increasing demand for hydrogen, but it is also contributing to the development of a more sustainable energy future. By providing affordable and reliable hydrogen solutions, the company is helping to reduce carbon emissions and combat climate change. In a world where renewable energy sources are becoming increasingly important, 2G Energy’s role as a günstiger Wasserstoff-Profiteur, or affordable hydrogen beneficiary, is crucial. With their technology and expertise, they are paving the way for a greener and more sustainable future.
Hydrogen stocks were in high demand a few years ago. Meanwhile, the wheat has been separated from the chaff. For contrarian investors, this is a good opportunity to take a closer look at the industry. Today, I would like to introduce a German hydrogen company to you.
Brief overview of 2G Energy The 2G Energy AG from Heek, near Münster, has become one of the world’s leading providers of combined heat and power units (CHP) in recent years. In this future-oriented sector, 2G Energy covers the entire value chain from production to planning, installation and maintenance of CHP units that can operate on natural gas, biogas and even hydrogen.
Compared to solar and wind energy, CHP units have an important advantage: they are grid-friendly thanks to their constant power yield, as they generate a constant minimum amount of energy.
Growth pace picks up Analysts expect a significant increase in sales growth over the next few years. While sales grew by around 10% in 2023, the annual growth rate is expected to double in the next two years. Earnings per share are expected to increase even more strongly.
Large heat pumps to boost sales from 2024 Last year, 2G Energy announced its entry into the business of large heat pumps. According to the 2G management, this division is expected to contribute at least 10 million euros in sales by 2024. To strengthen the new business segment, the company acquired the Dutch heat pump specialist Nrgteq. Nrgteq was founded in 2010 and has since implemented around 600 heat pump projects, including water-water, air-water, and brine-water heat pumps.
Nrgteq has also been profitable for years and had annual sales of around 3 million euros at the time of acquisition. That’s not much, but I expect the company to be able to multiply its sales in the coming years, as Nrgteq has so far mainly focused on sales in the Benelux countries. With the larger distribution network of 2G Energy, business will now be rolled out to major markets such as Germany, France, and Great Britain.
Stock with years of sideways movement Stocks in the renewable energy and hydrogen sectors had a very difficult time in 2022 and 2023. Compared to its competitors, 2G’s stock has managed to hold up relatively well and has been moving sideways in the past two years. After the longer breathing period, the stock is now ripe for a new upward movement.
Attractive valuation Another factor that speaks for higher prices is the low valuation of the stock. The current market value of 2G Energy of around 430 million euros is only 1.1 times the expected sales for 2024. The price-earnings ratio (P/E ratio) is 17, which also seems very attractive considering the expected growth rates. All that is needed is a change in sentiment among investors towards the industry.