Review Of A-Share Hydrogen Investment: Green Hydrogen Is Intended To Reduce Emissions And Increase Revenue, And Some Entrants Have Insufficient "Hydrogen" Content

The news of Longji (601012. SH) marching into "photovoltaic hydrogen production" brought about a burst of hydrogen concept wind in April.

On April 5, the media reported that Xi'an Longji Hydrogen Energy Technology Co., Ltd. (hereinafter referred to as "Longji hydrogen energy") was successfully registered on March 31, 2021. The shareholders are Xi'an Longji green energy Venture Capital Management Co., Ltd. and Shanghai zhuqueying private investment fund partnership (limited partnership). Li Zhenguo, founder of Longji, personally serves as the chairman and general manager.

On April 6, the news broke out, and the next day, the wind hydrogen energy index rose 4.48%. As a new theme of the day's market, the concept of hydrogen energy led to the return of some funds to the "carbon neutral" plate.

In addition to Longji, there were many companies in the field of hydrogen energy in April.

For example, on April 18, Baofeng energy (600989. SH) announced that it plans to set up a wholly-owned subsidiary in Ningdong, Ningxia with its own capital of 1 billion yuan, to produce green hydrogen for chemical production through solar power generation.

According to incomplete statistics, at least 12 A-share listed companies disclosed hydrogen related business in April, and many of them announced that they would carry out new hydrogen business or cooperation, with a total amount of more than 16 billion yuan.

At the local level, relevant statistics show that as of April this year, at least 27 provinces have issued policies in the field of hydrogen energy.

From April 1 to 26, the wind hydrogen index increased by 5.79%, significantly outperforming the market. Xueren shares (002639. SZ), a component of the index, also rose 46.49%, becoming the champion of a shares in the first trading week of April.

Layout green hydrogen logic

In 2021, some new A-share listed companies of hydrogen energy choose to directly develop green hydrogen represented by "photovoltaic hydrogen production". There are two logic behind this choice.

First, green hydrogen business can either provide performance increment for the company or reduce production and operation costs.

Taking the photovoltaic integration giant Longji as an example, photovoltaic hydrogen production is a new business.

"The whole industry chain needs to reduce the cost of photovoltaic, and the industry trend is the same, reducing costs and increasing efficiency, so leading companies also need to expand their own industrial chain." In a telephone meeting minutes of a securities company "hydrogen energy" obtained by the reporter on the evening of April 7, an electricity new energy analyst analyzed the reasons for Longji's march into green hydrogen.

Relevant people of Longji told reporters that the production of hydrogen and photovoltaic is very different, and the production line needs to be newly built: "we have a research and development team, and there will be some cooperation with the outside in terms of (hydrogen production) equipment."

According to qixinbao data, Wuxi Longji Hydrogen Energy Technology Co., Ltd., the first foreign investment of Longji hydrogen energy Co., Ltd., a 100% holding company, was established on April 20.

"Hydrogen production equipment will be produced in the future, and the manufacturing (production line) will be located in Wuxi," the source told reporters. "At present, we are mainly considering hydrogen production equipment business, and there are (pushing) photovoltaic hydrogen production solutions. We will not prepare hydrogen and do not do upstream and downstream business."

This logic is also reflected in Baofeng energy. In its investment announcement, it said that "green hydrogen" produced by new energy instead of raw coal to produce hydrogen can make the company free from the constraints of coal resources and maintain the stability of cost.

In addition, Baofeng energy related people also told reporters that the company is currently studying the application scope of hydrogen, "hydrogen export may not be ruled out in the future.".

The second logic for enterprises to enter the green hydrogen market is to develop green hydrogen energy, which can directly help enterprises reduce emissions and help them achieve their carbon neutral goals.

For example, Baofeng energy recently said that using "green hydrogen" produced by new energy instead of raw coal to produce hydrogen can achieve nearly zero carbon dioxide emission and unlimited environmental capacity, providing unlimited space for the company's development.

At present, part of Baofeng's comprehensive demonstration project of hydrogen production from water electrolysis by solar energy has been completed and put into operation. It is estimated that after all the projects are put into operation, the annual consumption of coal resources will be reduced by 254000 tons, and the emission of carbon dioxide will be reduced by about 445000 tons.

According to the company, Baofeng may have 2gw of photovoltaic capacity each year in the future, with the goal of "ultimately replacing all hydrogen in all coal to olefin capacity with green hydrogen".

CITIC Securities believes that green hydrogen will become a high-quality unique "carbon sequestration" tool in the future. Compared with the traditional gray hydrogen and blue hydrogen, it is also expected to enjoy the "carbon neutral" premium (that is, the carbon fixed value is superimposed on the value of conventional hydrogen). The emergence of "green hydrogen" market in the future will provide a platform for realizing the value of photovoltaic resources.

In this regard, Baofeng energy sources told reporters that in the future implementation of carbon trading and carbon tax, "if the carbon emission indicators saved can be traded", can also create profits for the company.

Green hydrogen is difficult to contribute in the short term

According to China hydrogen energy alliance, hydrogen will account for 10% of the total energy consumption in 2050. Among them, the scale of hydrogen production by electrolysis from renewable energy will reach 40 million tons, which will become the highest hydrogen production mode.

The prospect of green hydrogen market is promising, but the enterprises that have entered the field recently will not enjoy the gain of green hydrogen business in the short term.

On the one hand, the green hydrogen business recently disclosed by Longji and Baofeng energy will not be completed immediately.

Longji shares related people told reporters that the company's photovoltaic hydrogen production project, in an optimistic situation, will not start until the end of the year.

Similarly, the investment of Baofeng energy's 1 billion yuan wholly-owned subsidiary of Ningxia has just passed the resolution of the board of directors and has not yet entered the implementation stage.

As for the "national comprehensive demonstration project for hydrogen production by solar energy electrolysis" which was partially put into operation in April this year, according to the company's personage, the number of units put into operation at present is 6 groups, and it is expected that all 25 units will be put into operation by the end of the year.

On the other hand, in the current hydrogen energy field, "green hydrogen" and other clean energy hydrogen production is still a "small-scale, high-cost" mode for the time being, and it will take time for large-scale commercialization to realize the market space.

At present, China's hydrogen production capacity is about 41 million tons / year, and the output is about 33.42 million tons. In terms of production mode, China's coal to hydrogen production is the largest, reaching 21.23 million tons, accounting for 63.54%. Hydrogen production from industrial by-products and natural gas were followed by 7.08 million tons and 4.6 million tons respectively. The output of hydrogen production from electrolytic water is about 500000 tons, accounting for only 1.52%.

According to the data of the petroleum and Chemical Industry Planning Institute, the current hydrogen production cost of electrolytic water is about 3-5 yuan / nm ^ 3, which is still significantly higher than that of fossil fuel (0.6-1.2 yuan for natural gas and 1-1.2 yuan for coal) and industrial by-products (1.2 yuan for coke oven gas and 1.3-1.5 yuan for chlor alkali).

Due to the high cost, electrolytic water hydrogen production is not economical compared with other hydrogen production methods. At present, the cost of electricity price accounts for about 78% of the cost of hydrogen production from electrolytic water in alkaline electrolysis, which is a relatively economic technical route of electrolytic water. In other words, the cost of photovoltaic hydrogen production is linked to the cost of photovoltaic power generation.

Therefore, the photovoltaic hydrogen production with the cost of power generation decreasing continuously is a good business with constant cost reduction. However, in recent years, the cost of photovoltaic power generation has not been able to compete with other methods.

According to CITIC Securities, if the power generation cost of renewable energy such as photovoltaic is reduced to less than 0.30 yuan / kwh in 2025, the cost of hydrogen production from electrolytic water can be reduced to around 20 yuan / kg, that is, 1.8 yuan / nm ^ 3, which is close to the highest cost of industrial by-product hydrogen. In 2030, if the power generation cost is reduced to 0.2 yuan / kWh, the cost of photovoltaic hydrogen production is expected to drop to about 1.3 yuan / nm ^ 3, which is equivalent to hydrogen production from fossil energy.

Baofeng energy sources told reporters that the current cost of hydrogen production from coal is 0.6-0.7 yuan / standard square, which is significantly lower than that of photovoltaic hydrogen production. According to the previous project feasibility analysis of Baofeng energy, the comprehensive cost of photovoltaic hydrogen production can be controlled at 1.34 yuan / standard square for its future Ningxia project.

As for the cost of photovoltaic hydrogen production, Baofeng energy made further explanation in a recent annual report telephone conference.

"Now photovoltaic modules are about 1-2 pieces, and a watt is between 3.2 yuan and 3.5 yuan. With the expansion of scale, the minimum cost dropped to more than 2 yuan last year. The main cost of photovoltaic power generation comes from depreciation and financial expenses. One watt is controlled at about 2.5 yuan, and the depreciation cost in 25 years can be reduced to 0.1 yuan, so the power generation cost can be controlled at about 0.12-0.13 yuan. 6 yuan per kilowatt hour, which is equivalent to the cost of hydrogen production from coal under the current coal price. " Baofeng Energy said.

Some players have insufficient hydrogen content

In addition to Longji and Baofeng energy, snowman and Houpu (300471. SZ) have also made some moves in the field of hydrogen energy recently.

On April 23, snowman announced that it was planned to raise no more than 670 million yuan for the construction of hydrogen fuel cell system production base, the construction of hydrogen energy technology research and development center and the supplement of working capital.

On the evening of April 20, Houpu announced that it had signed an investment agreement with the people's Government of Xindu District, Chengdu. The investment project is called Houpu international hydrogen energy industrial cluster project, and the project is planned to invest 15 billion yuan.

According to the wind hydrogen energy index, snowman shares and Houpu shares have risen the first (28.83%) and third (21.79%) respectively among the 32 constituent stocks.

Among the top gainers, snowman and Houpu are favored by funds. In April, snowman shares have been on the trading list for six times. Not only are institutions and well-known hot money on the list, but some of them have also played a short-term trade of "buy today and sell tomorrow".

For example, on the Dragon Tiger list on April 7, Huaxin securities Hangzhou branch and Huatai Securities Shanghai Gonghe new road business department bought 15.3907 million and 13.6376 million respectively, occupying the first and second buying seats.

The next day, when Snowman's shares rose again, the two sales offices sold 16.9365 million and 16.3577 million respectively, ranking fourth and fifth among the top five buyers.

On April 9, snowman shares once again made the dragon and tiger list. On the same day, the business department of Haiyang Road, Rugao of Great Wall Securities, went on to buy one and sell two seats at the same time, buying 30.2441 million yuan and selling 30.9902 million yuan.

In addition, according to the data of tonghuashun, the buying two to four seats of snowman shares on that day were well-known hot money (CAITONG securities Hangzhou Shangtang Road business department), institutional dedicated and first-line hot money (the second business department of Tuanjie Road, Lhasa, Dongfang Fortune Securities).

Similar plots are also staged in Houpu's Dragon and tiger list.

When Houpu Stock Co., Ltd. was listed on the dragon and tiger list on April 8, the sales department seats of the first-line hot money Liyang road in Shanghai were on the same day, buying 11.4573 million yuan and selling 2.6398 million yuan.

In addition to Liyang road in Shanghai, institutional seats and well-known hot money business department seats such as sunanbang appeared in the dragon and tiger list in April.

The main business of the two hot targets of fund selection in the two markets is not hydrogen energy. The reporter of the 21st century economic report has noticed that the existing business of snowman and Houpu is insufficient in "hydrogen", so it is necessary to be vigilant against the risk of market capital concept speculation.

According to the announcements issued by Houpu and snowman on April 8 and April 11, the business income scale of hydrogen energy field of the two companies is relatively small, less than 1% of the total revenue.

In addition, in 2020, the performance of both Xueren and Houpu shares will be in deficit. The former changes from profit to loss by 180 million, while the latter's net profit decreases by 905.35% year on year.

Under the loss of performance, the cash flow of snowman and Houpu also declined. The accumulated net cash flow of Houpu shares in 2020 was - 31.6376 million yuan, and that of snowman shares was 131 million yuan in 2020, with a year-on-year decrease of 19.26%.

In fact, the capital problem of Houpu shares has aroused the concern of Shenzhen Stock Exchange. The Shenzhen Stock Exchange has issued a letter of concern on April 21, asking how it can launch a 15 billion hydrogen energy project with total assets of 1.912 billion and monetary fund balance of 136 million（ Editor: Zhu Yimin)

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