DFC (mkt cap US$2.3bn, N/R) currently manufactures phosphoric acid fuel cells that can run on natural gas or hydrogen, as with Ceres technology. These fuel cells operate at a lower temperature and achieve 40-45% electrical efficiency, whereas Ceres can achieve 60%. DFC outlined a plan to deliver fuel cell sales for power generation of KRW1,500bn (c. US$1,300m, a recent 50% increase to the previous target) by FY23, having started commercial sales in 2016 at KRW77bn and achieving KRW480bn revenues in FY19 (KRW452bn FY20 target). Within its FY20 results, it forecast 300MW of orders by 2023 as a market size, with 129MW of orders in FY19. The deal with Ceres will expand its offering, and 50MW is a material capacity addition. The opportunity – DFC is well established (discussed overleaf) with considerable capability and 70% mkt share in Korea. The government is highly supportive of fuel cell technology, targeting 16GW by 2040 and its green new deal commitment stands at US$64bn. As a major natural gas importer, fuel flexible fuel cells are an attractive generation solution. The deal is at the stack level, similar to that which Ceres has agreed with Bosch, with DFC to use its extensive experience to develop systems with higher power, initially focussed on domestic markets, but is set to export overseas longer term. As larger scale units are developed then new market opportunities will evolve for Ceres technology. The deal is also indicative of an acceleration of progress. Our View - This is an exciting transaction, de-risking the offering considerably and adding confidence to the long term value proposition. Being the first partner to make public its commitment to move to commercial production at scale shows confidence in the technology and may lead others to accelerate plans. We leave forecasts unchanged, but reduce our discount rate from 12% to 10.5% to reflect a material de-risking, lifting our TP to 820p, Buy.