SIT - Sales Still Up Despite Metering Decline

SIT’s first half results see overall revenue growth continue despite the expected continued slowdown in gas metering sales in Italy. Both heating and water metering have continued to grow strongly. EBITDA margin has dropped with higher transport and logistic costs but key component and raw material costs have been passed on. With the top end of full-year guidance reiterated, we see the company managing well in a volatile and uncertain market.

SIT - Q1s See Continued Growth

SIT’s Q1 results show the company shrugging off the expected slow down in Italian metering sales with strong growth in heating and even stronger growth in water metering. Margins have held well and SIT continues to manage supply chain risk effectively. Guidance remains comfortable giving us confidence in our forecasts.

SIT - Sustainability Plan Announced

SIT has set out a sustainability plan out to 2025 to align the company’s strategic goals with their ongoing environmental, social and governance commitments. The company enables key energy transition technologies providing gas heating components and smart gas meters and most notably key componentry for hydrogen gas use including meters. We see the plan as making the company more attractive to ESG investment mandates.

Active Net Zero Clean Energy Index - Recent Performance

In this note, we review the recent performance of the Active Net Zero Clean Energy Index. We also take a deeper dive into the composition of the Index in terms of market cap, constituent end market / business model and, finally, geographic exposure.

IPCC/WG3 - IPCC Report is a Major Warning

The IPCC Working Group III (WG3) report is a major summary of how society can limit climate change by delivering a net zero emission outcome. It also represents a major warning that we are running out of time to limit global warming to 1.5oC. Coupled with growing energy security concerns we are already seeing some signs of policy moving to improve action such as the recently announced UK government’s Energy Security Strategy. And the relative inflation of fossil fuels (fossilflation) against cle

SIT - Heating Continues to Grow

SIT’s full year results were ahead of our forecasts at all levels and principally reflect strong growth in heating and water metering offsetting a well-signalled slow-down in gas metering. The company also continues to manage supply chain well and is maintaining margin. We expect to see continued strong growth in heating and have increased our forecasts for FY 23 and FY 24 accordingly. Our base case valuation rises from €12.1 to €13.0 as a result.

SIT - Loan Targets Green Ecomony and R&D

A new loan for SIT highlights the fundability of the company. We see the targeted spend on R&D facilities as important as new opportunities are emerging. Recent progress in hydrogen meters and in digital security shows the benefits of the company’s R&D work.

SIT - Hydrogen Meters Certified

SIT has now achieved certification for both its residential and commercial hydrogen meters as well as digital security certification for both. With energy security concerns pushing hydrogen back up the agenda of many European governments, SIT is well placed to find new business beyond the existing trials in which it is participating.

All at Sea - Methanol and Shipping

The shipping industry is likely to be driven towards decarbonisation by the twin pressures of customer demand and regulation. Leading shipowners are already making significant strides in the right direction. Solutions are varied but are driven by considerations of emission reduction potential, fuel density, useability and cost. We think hydrogen and methanol stand out as key solutions in a market worth $105bn per annum with methanol taking an immediate role as commercially and technically viable

SIT - Full Year Confirms Heating Bounce

SIT’s headline sales numbers for FY21 are broadly in line with our forecasts with the heating business showing a bounce from FY20 and the Janz acquisition delivering strong growth. Smart gas metering is slowing as expected while the geographic focus of demand transitions away from Italy. Other than truing up the revenues numbers we are not adjusting our forecasts and the broad picture remains unchanged in our view. We think the ability of the company to create performance from Janz shows its abi

EU Hydrogen Strategy - EU Increases Support for Hydrogen

The European Commission’s adoption of the Hydrogen and Gas Markets Decarbonisation Package marks a clear move of policy to support hydrogen in a net zero future. This is clearly positive for all companies involved in this rapidly growing industry. Specifically, the support for clusters or “valleys” is likely to accelerate demand and we also see the creation of a regulated hydrogen market as making the funding of projects easier. We also see certification of low carbon hydrogen as giving a boost

SIT - Hydrogen Meter Certified

SIT has achieved certification for its 100% hydrogen meter, a world first, opening up the market for this new business line for the company. The meter is already being used in the Hy4Heat trials of 100% residential hydrogen supply in the UK but the certification now opens up possibilities in Europe and beyond.

COP26 - Nuggets in the blah blah blah

While the outcomes of COP26 are mixed, we think that the watering down of ambition on coal power is positive for negative emission technologies and the moves to phase-out fossil fuel subsidies potentially makes green hydrogen more competitive. Broader support for clean energy and efficiency helps and annual monitoring is likely to ensure that support develops to the benefit of the sector. Policy remains an essential part of the clean energy mix especially in its ability to create or mitigate inv

SIT - Heating Stays Strong in Q3

SIT’s Q3 results see continued strong recovery in heating. While gas metering sales have fallen as expected with the maturing of the Italian market, the Janz water metering acquisition has also shown growth. Pricing power in the market has allowed the company to avoid the impact of supply chain cost increases and the EBTIDA margin has improved. With guidance maintained for the full year, we see these results as reassuring.

UK Net Zero Strategy Helpful

We see the UK Government’s Net Zero Strategy as being overall helpful but not especially definitive. Amongst our coverage group, Drax Group (DRX LN) and Velocys (VLS LN) benefit from the Humberside CCS cluster prioritisation and Velocys from SAF support. The amount of renewables is likely to boost the need for flexibility solutions where Drax, Gore Street (GSF LN) and SIMEC Atlantis (SAE LN) can benefit. Hydrogen companies ITM (ITM LN) and Powerhouse Energy (PHE LN) are likely to find support. T

Strix Group plc (KETL LN) - Trading conditions to improve in H2

Today’s trading update for H1 22 highlights the difficult operating environment over the first six months of the year, particularly in Q1. Trading picked up in Q2 and is expected to continue to improve in H2 22, in part, due to the inherent seasonality of the business, but also due to some catch up in demand. Guidance is for FY22 post-tax profit to be in line with the consensus estimate of £32.2m, as a result Zeus reduces its estimate by 2.5% to £32.2m. Previous guidance of £3.0m potential impac

Review of Electricity Market Arrangements - REMA Could Bring Benefits

Last week, the UK government published the consultation paper on its Review of Electricity Market Arrangements (REMA). Any change potentially represents uncertainty in a market that has been wary of changes with a number of shares falling after early details of possible reforms were flagged in the press. We review the possible changes and conclude that while there is some risk, from what we can see at present the likely outcomes could be either minimal or beneficial for investors in clean energy

SHORE CAPITAL - Crestchic+ (LOAD) - House stock at 196p

Invinity Energy Systems - Improving Liquidity for US Investors

Invinity has begun trading shares on the OTCQX Best Market in the USA. We see this as adding liquidity for North American investors and more generally increasing visibility for the company in key markets in North America.

Hybridan Small Cap Feast 09/08/22

Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group exports

Inflation Reduction Act

The US Inflation Reduction Act of 2022 now has a chance of passing the Senate next week as it is being voted under the Reconciliation procedure which allows bills related to the budget to pass on a simple majority rather than the 60-vote majority required to overcome a filibuster. If the act does find its way onto the statue books it will bring US$369bn in clean energy tax credits, grants and other incentives. Much is directed to protecting clean energy manufacturing in the USA, but it is a wide

Hybridan Small Cap Feast 21-07-2022

Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen? Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group export

Cenkos: Oil & Gas -- Getech Group, Longboat Energy, Valeura Energy, Genel Energy, bp, EnQuest, SDX Energy, Eco (Atlantic) Oil & Gas, Occidental Petroleum, ConocoPhillips, Vaalco Energy, Phoenix Global Resources, Sirius Petroleum, Tullow Oil, Equinor, Sunco

Oil posted the biggest weekly decline since early April on growing signs that a global economic slowdown is curbing demand. Prices are near the lowest level in six months. West Texas Intermediate settled at $89 a barrel, ending the week nearly 10% lower. US gasoline consumption has dropped, stoking demand concerns, while low liquidity has added to volatility. Supplies from Libya also picked up, helping to shrink key oil futures time-spreads and ease the tightness in the market. The pullbac

LIBERUM: Staffline Group* - H1 restrained by investment but expect stronger H2

Q2 22: mixed signals

Rolls Royce published mixed figures. Profitability was particularly low, pushing the net result back into the red zone. However, FCF generation was a positive surprise despite the rise in inventory. It has finally found an agreement to sell ITP Aero and will use the resulting cash to repay its only floating interest rate debt.

LIBERUM: Staffline Group* - H1 restrained by investment but expect stronger H2

Morning Note – 4 August 2022

Morning Note – 8 August 2022

Robust ARR growth - tracking in line, cash still strong

Checkit has released an upbeat H1 trading update that shows ARR continues to build rapidly – up 48% y/y to £10.2m, and so represents another strong period, after +43% ARR growth in FY22. The successful rollout of prior year wins - most notably: Grifols - a multinational pharmaceutical (worth £2.7m/3yrs) has been a key contributor. Meanwhile, further benefitting, CKT has also continued to ink new deals, for instance – expanding its role with Center Parcs (announced in May) and as well, Octapharma

Morning Note – 1 August 2022