The energy transition in Germany is causing some nightmares, but there are also companies that are economically benefiting from it as more and more customers turn to decentralized energy solutions for security. Here in the „Closing Bell“ now an example:

The energy transition beneficiary and hydrogen winner 2G Energy recently presented initial key figures for the final quarter of 2023 and also raised its revenue forecast for the coming year.

As a result, the 2G share rose. Before we take a look at the latest figures and forecasts for 2024 and 2025, let me first introduce the company and its business model:

2G Energy in profile The company 2G Energy, founded in 2005 and based in Heek, Westphalia, is one of the established companies in the German market for so-called decentralized energy generation. 2G Energy specializes in the production of energy generation systems using combined heat and power (CHP) in cogeneration units (CHP), which can be operated with natural gas, biogas, and hydrogen.

The CHP plants from 2G have capacities from 20 to 4,500 kW and ensure independent supply of electricity and heat. The plants can be used in various industries and areas. 2G Energy’s customers include industrial companies, municipalities, municipal utilities, and energy suppliers.

In addition to the production of cogeneration units, the company also offers holistic solutions such as planning and installation as well as service and maintenance services. This means that 2G is able to cover almost the entire value chain surrounding CHP plants. In addition, 2G recently also entered the lucrative business of heat pumps for large customers.

Order intake increases significantly in the 4th quarter In the past 4th quarter of 2023, 2G Energy recorded orders amounting to 47.5 million euros. This was 28% more than in the final quarter of the previous year. The company achieved particularly high growth in Asia, Australia, South and Central America.

In Europe (excluding Germany) and North America, on the other hand, order intake declined. For example, customers from seven countries in the Indo-Pacific region ordered natural gas, biogas, wood gas, sewage gas, hydrogen, and propane CHP units or engines.

Forecasts for 2024 confirmed; revenue forecast for 2025 increased The satisfactory order intake in the 4th quarter of 2023, together with the high order backlog at the beginning of the quarter, ensures continued growth, according to 2G management. Therefore, the company confirms its forecasts for the current year. Accordingly, a revenue of up to 390 million euros is still expected with an operating profit margin (EBIT margin) of 8.5 to 10%.

The 2G management also expects the recent upswing in order intake to continue throughout this year and enable an acceleration of revenue in 2025. Therefore, it significantly increases the revenue forecast for the coming year from 390 to 430 million euros to up to 450 million euros. In my analysis, the 2G share is currently cheaply valued, considering the good prospects.