Shares of AFC Energy, a provider of hydrogen fuel power generation technology, are expected to more than double next year, according to RBC Capital. The London-listed company, founded in 2006, produces a range of proprietary hydrogen fuel cell systems designed to provide off-grid and remote power generation for the construction, mining and transport industries. Shares in the British company have retreated from record highs in 2021, but the investment bank believes continued business momentum is not reflected in AFC’s current valuation. Royal Bank of Canada (RBC) analysts Erwan Kerouredan and Victoria McCulloch said in a June 11 research note to clients that “AFC is on the cusp of significant growth over the next several years.” Although analysts gave the stock an “outperform” ” rating, but they also said it was a “speculative risk.” The investment bank expects the shares to rise 159% over the next 12 months to 40p a share, the most conservative price target among analysts. UK stocks are usually priced in pennies, with 100 pence equaling 1 pound ($1.28). The stock also trades over-the-counter in the United States and Germany, with limited liquidity. The average price target from four analysts on the stock implies an upside potential of 282%. AFC-GB 5Y Line This week, AFC announced it would raise £15.8 million through the issuance of new shares to fund the growth of its power generation business. After the news was announced, the stock fell about 18% as the new shares were priced at a discount. The company said it plans to use the funds to increase inventory and speed up delivery of H-Power generators to customers. The 30kW generators consume hydrogen as fuel and will be supplied to UK customers through its joint venture with equipment rental company Speedy Hire. The three-year agreement with Speedy Hire, under its Speedy Hydrogen Solutions brand, will target the construction and emergency power markets in the UK and Ireland. SDY-GB 5Y Line Last year, AFC Energy also signed an agreement with Saudi Arabia’s TAMGO to sell or lease its zero-emission generators in the MENA region. TAMGO supplies equipment for very large infrastructure and mining projects in Saudi Arabia, including the $500 billion NEOM. While some of the funds raised from the newly issued equity are expected to be used to fulfill the partnership with Speedy Hire, RBC Capital analysts expect that “a significant portion of the funds raised will be used for TAMGO orders.”
