Monday, 11 November 2019

Proton Power - Portfolio Addition

Earlier this year I started to take more interest in the potential of hydrogen as a solution in the fight against climate change. It is a gas which is the most abundant on earth and burns without producing greenhouse gases or carbon. The only waste product is water.

The costs of producing green hydrogen from using the energy from renewables such as wind and solar are falling rapidly which makes this once expensive form of producing energy more attractive.

On the back of this interest I purchased a small stake in ITM Power in late August and took advantage of adding some more shares as part of a placing last month. The combined holding have appreciated from 37p to currently 68p so up 83%. On the back of this I decided to add another player in the hydrogen sector, AFC Energy in mid September and that too has seen significant price movement - up from 4.8p to currently 9.4p, a gain of 95%.

I am probably pushing my luck but I will ride the alternative energy wave and have decided to add a third small hydrogen play Proton Power Services.

This is another small AIM-listed company - market cap. £145m - involved in the development of large scale hydrogen fuel cell technology which can be used for a variety of applications. The hydrogen fuel cell is highly efficient and, in contrast to power generated by conventional internal combustion engines, coal-fired power station or nuclear reactor, there are no toxic, radioactive or greenhouse gases produced or emitted.

According to the latest half-year results (link via Investegate), the company has initiated several new projects including taking deliver of an automated stack assembly machine capable of 5,000 units per year. They entered a joint venture with Skoda Electric to develop fuel cell electric buses using Proton's modular HyRange system. In August, they announced a joint venture to integrate large industrial fuel cells with power electronic battery storage to create a 'plug n play' power unit.

I suspect the hydrogen powered cars could well compete with battery powered EVs in the coming few years due to the higher GHG emissions produced from the manufacture of batteries. This is particularly the case for heavier vehicles like lorries and buses where the more efficient hydrogen powered vehicles have an advantage.
Basics of Fuel Cell Vehicle
(click to enlarge)

The global fuel cell market is estimated to be worth $8 bn by 2021 and growing at 15% per annum. The company has identified several key targets within this market including :

  • back-up power for telecoms and data centers
  • hydrogen battery zero emission vehicles - buses, airport vehicles, off-road vehicles, trucks and fork lift trucks
  • shipping
  • fuel cell trains

12 m share price

However exciting these projects appear, the fact remains that the company is still not making profits so for investors, it's about jam tomorrow which is always risky.
As can be seen from the chart, the share price has been volatile which is common for smaller companies - under 10p at the start of the year and rising quickly to 40p before falling back. My initial purchase price was 24p.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation... investing in smaller companies can be rewarding but is higher risk - always DYOR!


  1. Early Bird Catches the Worm. Well done on your gains thus far.

    In your research have you discovered a fund that holds the kinds of companies you describe?

    1. Thanks and to answer your question - no, which is partly why I am acquiring these individual share holdings to build my own mini-fund.