ACES And SALCOS Projects Will Boost Global Hydrogen Adoption

Key Takeaways

• Technological leadership and real-world project references position HydrogenPro for increased market share and improved margins through efficiency gains and recurring equipment sales.
  
• Strategic partnerships, global expansion, and falling production costs support diversified revenue streams and long-term growth, despite near-term project delays.
  
• Slow hydrogen market adoption, project delays, financial losses, and reliance on large projects heighten risks to revenue stability, margin recovery, and future capital needs.

Catalysts

Engages in designing and delivering green hydrogen technology and systems in Norway, Europe, the United States, and the Asia Pacific.

• HydrogenPro's leading role in delivering equipment to two of the world's largest green hydrogen projects (ACES and SALCOS) provides it with critical operational references and real-world performance data that few competitors can match. As these projects enter full operation in 2025 and 2026, successful delivery and visible performance should drive increased credibility, market share, and future revenue growth.
  
• Demonstrated technological advancements, particularly the new Generation 3 electrodes and validation of high-pressure solutions (up to 30 bar), position HydrogenPro to offer higher efficiency and lower operating costs for customers, which can boost long-term recurring equipment sales, support better pricing, and improve future net margins.
  
• Strategic partnerships and equity investments from major industrial players (ANDRITZ, Mitsubishi, and LONGi), as well as ongoing geographic expansion in high-growth markets (Europe, North America, Middle East, India), set up diversified and resilient revenue streams. In a rapidly globalizing hydrogen market, this broad exposure could lead to outperformance in future earnings and reduced volatility.
  
• Falling production costs (e.g., Danish electrode line on time and under budget, ongoing operational efficiency programs, and significant cost reduction initiatives) are likely to drive stronger future gross margins and EBITDA as volumes scale and new technologies are adopted.
  
• Global momentum toward decarbonization, reinforced by mounting government policy support in key regions, continues to expand the total addressable market for green hydrogen-benefiting HydrogenPro's sales pipeline and long-term revenue growth, even as near-term project delays persist.

HydrogenPro Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming HydrogenPro's revenue will grow by 155.2% annually over the next 3 years.
• Analysts are not forecasting that HydrogenPro will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate HydrogenPro's profit margin will increase from -100.3% to the average NO Machinery industry of 5.9% in 3 years.
• If HydrogenPro's profit margin were to converge on the industry average, you could expect earnings to reach NOK 208.4 million (and earnings per share of NOK 2.06) by about July 2028, up from NOK -214.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 5.6x on those 2028 earnings, up from -1.5x today. This future PE is lower than the current PE for the NO Machinery industry at 27.0x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.3%, as per the Simply Wall St company report.

HydrogenPro Future Earnings Per Share Growth

Risks

• Multiple references to a challenging and slow market, along with mention of project cancellations and postponements across the hydrogen sector, indicate weak short-term demand and long project lead times; this could suppress revenue growth and prolong negative EBITDA in the long term.
  
• Persistent negative earnings (Q1 net loss of NOK 65 million, negative EBITDA and EBIT), ongoing cash burn, and reliance on periodic equity injections suggest that HydrogenPro may require additional capital in the coming years, raising risk of shareholder dilution and constraining margin recovery.
  
• The company's backlog growth is modest and dependent on a small number of large projects (e.g., ACES, SALCOS), with some projects awaiting Final Investment Decisions (FID) and clear customer-driven delays; this project concentration and uncertain pipeline timing create volatility in revenues and earnings.
  
• Heavy focus on R&D and manufacturing expansion to maintain technological leadership (notably in Denmark) is necessary for competitiveness, but market adoption of green hydrogen remains slow; if industry demand lags, ongoing OpEx and CapEx could negatively impact net margins and increase financial risks.
  
• Exposure to geopolitical and regulatory risks in key markets (Europe, China, U.S., Middle East), including approvals for strategic shareholdings, project financing, and government grants, introduces uncertainties for timely revenue realization and could impact liquidity and financial stability.

Valuation

• The analysts have a consensus price target of NOK9.28 for HydrogenPro based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be NOK3.6 billion, earnings will come to NOK208.4 million, and it would be trading on a PE ratio of 5.6x, assuming you use a discount rate of 7.3%.
• Given the current share price of NOK3.8, the analyst price target of NOK9.28 is 59.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.