Interactive Investor

Why Ceres Power shares surged but Superdry sank to new low

There’s finally some good news at last for clean energy firm Ceres, although things are getting worse for this high street fashion chain. City writer Graeme Evans explains.

18th January 2024 15:32

by Graeme Evans from interactive investor

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A much-anticipated licensing deal by AIM-turned-FTSE 250 stock Ceres Power Holdings (LSE:CWR) today reignited interest in its clean energy technology after a period of share price weakness.

Ceres jumped over 50% to 241p as the best-performing stock on London’s main market after the Imperial College spin-out disclosed a long-term agreement allowing Taiwan’s Delta Electronics to access its hydrogen energy stack portfolio.

The collaboration, which is expected to generate revenues of £43 million, follows September’s warning by Ceres that a new partnership is unlikely to be signed in time for 2023’s results.

Disappointment over the wait for a licensing deal meant Ceres finished 2023 outside the FTSE 250 index, having been promoted to the second tier three months earlier.

The former AIM stock traded as high as 700p when 2022’s drive for energy independence boosted interest in several clean energy players, although valuations across the sector have since been held back by rising costs and higher interest rates.

With its asset-light licensing model, the electrochemical technologies of Ceres are used to develop fuel cells for power generation, electrolysis for the creation of green hydrogen and for energy storage.

Boosted by the earlier roll-out of partnerships with Bosch of Germany and Doosan in Korea, its half-year results in September showed revenues up 17% to £11.3 million.

The latest deal with Delta, a global leader in mass manufacturing, power electronics and data centres for customers such as Microsoft, will see factory construction start this year and initial production by Delta before the end of 2026.

Delta’s expertise also includes solutions for the development of smart buildings, energy infrastructure, grid balancing and energy storage for customers such as Tesla.

Ceres chief executive Phil Caldwell said: “Green hydrogen has a key role to play in delivering a more secure and sustainable future energy system and today we take this first step towards what promises to be a strong collaboration with Delta to accelerate the industry globally.”

Broker Peel Hunt, which has a target price of 475p, described the announcement as “highly positive” for Ceres after an extended period without new licensing news flow.

At the other end of the FTSE All-Share, shares in Superdry (LSE:SDRY) were down over 20% below 17p at one stage Thursday after Sky News reported this week that the fashion retailer has appointed PwC to examine its debt-raising options. The company has not commented on the speculation.

The shares have fallen from 150p a year ago, with the latest blow coming a week before Christmas when founder and chief executive Julian Dunkerton said Superdry’s trading performance has been significantly below management expectations.

Like-for-like sales fell 7% in the most recent six-week period, adding to pressure after unseasonal weather in the early autumn delayed take-up of winter ranges.

However, Dunkerton added: “The operational progress we have made in the first half has been more encouraging with the intellectual property sale for the South Asian region and strong progress on our cost efficiency programme.”

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