ITM Power Shares Climb on Increased Order Momentum: London Mover

ITM Power Plc, a U.K. energy storage and clean-fuel company, gained 6.5 percent in London trading after attracting sales leads at a show in Germany and winning its first contracts in Hungary and South America.

The shares rose to 46.9 pence, the highest since April 5. The Hydrogen and Fuel Cell Fair in Hanover last month generated “a large pipeline of leads which have been followed up,” Sheffield, England-based ITM said in a statement today. This year the requests for bids are for much larger deals and are mostly from international companies, it said.

ITM is looking to gain market share in the power-to-gas energy storage market, initially in Germany, which is expected to become a $1 billion a year market by 2020, according to John-Marc Bunce, an analyst at Nomura Code Securities.

“It is positive that ITM Power is showing increased order momentum,” Bunce said in an e-mailed comment. While small deals, like those in Hungary and South America, won’t “ move the dial to profitability,” ITM is showing potential to win larger orders for power-to-gas projects, he said.

ITM’s share advance extended the gain in five trading days to almost 16 percent, the second-best performance among the 26 companies in the BI GL Fuel Cell/Storage - Competitive Index. The volume of ITM shares traded today was more than the three-month daily average.

Thuga Deal

In March, the company said it won an order to provide a 360 kilowatt power-to-gas storage plant for Thuga Group, a Munich-based municipal utility purchasing cooperative.

That could lead to ITM could winning an order for a project exceeding 1 megawatt within the next 12 months, Bunce said in a note on April 24, when he maintained his buy recommendation on the stock and cut his 12-month price target by 55 percent to 71 pence on concern that the company’s smaller products were not penetrating electrolyser markets as quickly as expected.

The combination of slower-than-expected orders and higher costs may force the company to raise more capital, said Bunce, who cut his revenue estimate by 23 percent for 2013 and by 25 percent for 2014.

J Sainsbury Plc, the U.K.’s third-largest supermarket chain, last month joined a project including ITM to promote the use of hydrogen-fuel-cell electric vehicles in the U.K.

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