Due to the delay in implementing the hydrogen law amendment, hydrogen economy-related equities, which were one of the leaders in the Korean stock market last year, are unable to emerge from the quagmire of a downturn.
However, experts advise that given the hydrogen-related industry’s growth potential, this is a sector that may be exploited as an opportunity to acquire at a low price.
Hydrogen-related companies, such as Doosan Fuel Cell, have continued to fall after surging last year, according to the financial investment sector on the 17th. Hydrogen-themed equities soared in the second half of last year as the government’s commitment to policy assistance and large corporations’ investment announcements continued, but as momentum waned, such as delays in the passage of the hydrogen law amendment, they lost steam and sank quickly.
After climbing to 57,000 won in November last year, Doosan Fuel Cell, which is regarded a representative hydrogen stock, has dropped by 30% in the last three months. In September of last year, Hyosung Advanced Materials, which produces carbon fiber, a vital material for hydrogen storage tanks, reached a peak of 877,000 won, but then plunged more than 40% to a record 520,000 won. Kolon Industries, a firm that makes membranes, a vital component of fuel cells for hydrogen-electric vehicles, climbed to 114,500 won at the end of September last year but has since dropped to half that amount (66,200 won). Sanga Frontec, another membrane manufacturer, has seen its stock drop by more than 40% since September of last year.
The Clean Hydrogen Definition and Certification System, as well as the Clean Hydrogen Power Generation Mandatory System, are important to the amendment of the Hydrogen Act (CHPS). Because the legal standards for clean hydrogen are unclear under the current hydrogen law, it is known that a number of corporations, including SK and Hyundai Motor, are delaying the execution of relevant investments. The announcement that major automakers are discontinuing the development of hydrogen vehicles due to a lack of a hydrogen ecosystem and low marketability also contributed to the stock price drop.
The stock market, on the other hand, suggested that it be used as an opportunity to buy low-cost hydrogen-related stocks. It may take longer to strengthen policies, such as the ratification of the hydrogen law amendment, but there is no doubt that the hydrogen economy is heading in the right direction.
“The stock prices of hydrogen-related stocks at home and abroad have declined more than 40% from their peak in February 2021,” said Jeon Hye-young, a researcher at KTB Investment & Securities. It’s due to a lack of policy momentum, such as “there has been no change in the global decarbonization policy’s hydrogen industry expansion trend.”
Doosan Fuel Cell was chosen as a stock with the potential for short-term momentum. “The field that can flourish in the hydrogen business in a short period of time is a fuel cell,” a former researcher remarked. Orders in the market this year are predicted to be at least 300 MW (megawatts) due to the mandatory system’s introduction, and once orders begin, Doosan Fuel Cell, which has the highest market share in Korea, is expected to profit.”
“The price burden has diminished as the stock prices of hydrogen value chain businesses have plummeted since the second half of last year owing to delays in the approval of the bill,” Kim Da-mi, a researcher at Shinhan Financial Investment, noted.
“Considering the Fed’s interest rate hike,” he continued, “a differentiated approach strategy focusing on stocks that seek structural change by building a hydrogen-related portfolio among low-PER stocks like automobiles and chemicals is more effective than high-PER stocks with a high valuation burden.” Hyundai Steel, Korea Gas Corporation, Hyosung Heavy Industries, Jinsung TC, Hyosung Advanced Materials, Hyundai Mobis, and Hanwha Solutions were chosen as stocks in this category.
