Spruce Point Capital Management, 25 January 2018
Report entitled “Fuel Sell Opportunity” highlights the findings of Spruce Point’s on the ground due diligence on the nascent state of the China hydrogen fuel cell industry, and the significant challenges faced by Ballard’s China partners, Broad Ocean and Synergy. The report discusses the potentially significant risk to Ballard’s backlog and suggests that the stock has 35%-70% downside.
China Industry Challenges: There are currently only 36 licensed fuel cell vehicles on the road in China, only six refueling stations (one is public), and limited planning being devoted to hydrogen sourcing and transportation. In Spruce Point’s view, the lack of refueling infrastructure, confusion around refueling subsidies and abysmal refueling station economics pose the greatest threat to fuel cell vehicle commercialization. At this point, it still remains uncertain if China will develop the fuel cell vehicle market beyond an experimental phase.