www.jpmorganmarkets.comGlobalEquityResearch22April2022ThismaterialisneitherintendedtobedistributedtoMainlandChinainvestorsnortoprovidesecuritiesinvestmentconsultancyserviceswithintheterritoryofMainlandChina.Thismaterialoranyportionhereofmaynotbereprinted,soldorredistributedwithoutthewrittenconsentofJ.P.Morgan.GlobalEnergyOutlookSpotlightonHydrogen,alternativeenergy&nascenttechnologies;KeyIdeas:ITMandPLUGEMEAMining,Steel&HydrogenPatrickJonesAC(44-20)7742-5964patrick.jones@jpmorgan.comBloombergJPMAPJONES<GO>J.P.MorganSecuritiesplcU.S.TransportationandFuelTransformationBillPetersonAC(1-415)315-6766bill.peterson@jpmchase.comBloombergJPMAPETERSONB<GO>J.P.MorganSecuritiesLLCGlobalEnergyStrategyChristyanFMalek(44-20)7134-9188christyan.f.malek@jpmorgan.comJ.P.MorganSecuritiesplcRicardoRezende,CFA(44-20)7742-6896ricardo.rezende@jpmorgan.comJ.P.MorganSecuritiesplcEllisFSkinner(44-20)7134-7684ellis.skinner@jpmorgan.comJ.P.MorganSecuritiesplcESG&SustainabilityResearchJean-XavierHecker(33-1)40154472jean-xavier.hecker@jpmorgan.comJ.P.MorganSecuritiesplcSeepage22foranalystcertificationandimportantdisclosures,includingnon-USanalystdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.IntheGlobalEnergyOutlook(link),wearguethatHydrogen(H2)willplayapivotalroleintheenergytransitionpost2030,particularlyforseveralhardto-abatesectors(suchassteel,ammoniaandheavydutytransportation).WeexpectsignificantH2investment,particularlyinEurope,giventhepotentialtoreduceRussianfossilfuelimportsandmodelpotentialGreenH2productionof~10Mtpain2030(0.2%ofglobalenergyconsumption).Othernascenttechnologies(CCUS&fusion),whilepromising,areunlikelytomateriallycontributetotheglobalenergymixintheforeseeablefuture.WehighlightITMPower(OW)andPlugPower(OW)askeyideasintheH2space.SpeedofH2adoptiontobedeterminedby(i)renewabledeployment&(ii)fossilfuelprices.WeestimateGreenH2coststofallfrom$3.5-5.0/kgin2020to$1.7-2.8/kgby2030E,makingthefuelmorecompetitivecomparedtoBlueandGreyH2.GreenH2costscouldfallfasterinsomeregions(MENA,SouthernEurope,LatinAmerica),acceleratingadoptionthere.Also,theincreaseinfossilfuelprices,particularlyEuropeangas,thermal&cokingcoal,andEUCO2allowances,haveeffectivelyincreasedtheH2pricelevelneededtobreak-even.Weseestrongeconomic&policyincentives,butstillexpectlarge-scaleGreenH2deploymentwilltaketime.Weforecast2030installedelectrolysercapacityof~102GW(link),representing~0.2%ofglobalenergyconsumptionby2030E,butwithfarmorepotentialbeyond2030.Nascenttechnologies:stillaWork-in-Progress.Technologycanhelptobridgethefutureenergyshortfall;however,scalabilityandthecommercialreadinessofmanytechnologiesremainachallenge.Somealternativesbeingdeveloped,suchasfusion,nuclearsmallmodularreactors(‘SMRs’)andCCUS,couldbepivotalonthepathtowards2050carbonneutrality–butareunlikelytohaveamaterialimpactwithintheforeseeablefuture.PreferITM(OW)andPLUG(OW)toNel(UW)&GHS(UW).ITMisbetterpositionedtowinnear-termordermomentumandtherecentlyannouncedVitolpartnershipforH2refuelingoperationsdiversifiesITMintonewpartsoftheH2supplychain.PLUGisanemergingleaderintheglobalH2ecosystemwithoutsizedgrowthpotentialandattractiveexpansionopportunities.AsanemergingproducerofgreenH2,PLUGcanbenefitfromscalewhileitsrapidexpansionplansisresultingintheUSbeingthesecondlargestcountryinelectrolyzershipments(onlybehindChina)in2022.WeremainUWonNelASA,aswearelessconfidentingrowthstrategy,andUWonGHSgivenitsmorenascentposition&recentguidancesuspension.2GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comTableofContentsHydrogenoffersasolutiontodecarbonizemanyhard-to-abatesectors.....................3GreenH2potentiallycompetitivevs.FossilFuelsinEU...........................................5GreenH2deploymentsettoacceleratepost2030.....................................................8Carboncapture&storage:manypossibleend-uses,buteconomics&implementationstillchallenging.....................................................................................................10Fusionenergy:stillonlyaverylong-termpossibility.............................................11EMEAHydrogenValuation&financialsummaries...............................................14InvestmentThesis,ValuationandRisks..............................17EquityRatingsandPriceTargetsMktCapPriceRatingPriceTargetCompanyTicker($mn)CCYPriceCurPrevCurEndDatePrevEndDateITMPowerITMLN2,258.55GBp341OWn/c470Dec-23n/cn/cNelASANELNO2,596.74NOK15.70UWn/c11.40Dec-23n/cn/cGreenHydrogenSystemsGREENHDC184.14DKK20.10UWn/c27.00Dec-23n/cn/cSource:Companydata,BloombergFinanceL.P.,J.P.Morganestimates.n/c=nochange.Allpricesasof21Apr22.3GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comHydrogenoffersasolutiontodecarbonizemanyhard-to-abatesectorsEnergytransitionisaboutmuchmorethansimplyswitchingtorenewablepowerwithmanysectorsnoteasilyelectrified(i.e.‘hard-to-abate’sectors)andthusdecarbonizedusingrenewablepower.Instead,alternativetechnologiesareneeded.Oneofthemostprominentofthese,whichweseeasincreasinglyfeasible,botheconomically&technologically,isHydrogenasanenergycarrier.Table1:Understandinghard-to-abatesectors&energytransitionpotentialwithHydrogenTransportationBuildingsIndustrialEndusesectorLightVehiclesHeavyDutyVehiclesAirTravelShippingHeating&CoolingCookingWaterHeatingPrimarySteelCementChemicalsOilRefining%GlobalCO2emissions13%11%4%4%7%6%2%12%4%1%3%Electrificationpossible?YesDifficultNoNoYesYesYesNoNoNoNoH2adoptionpossible?YesYesNascentNascentYesYesYesYesSomeSome(specificapplications)Some(specificapplications)Source:J.P.Morganestimates,Companydata.Althoughitisunlikelytobeviableforsomeend-uses(i.e.cement),orviableintheforeseeablefutureforothers(i.e.aviation),weexpectitcanplayamaterialroleby2030todecarbonizesteel,ammonia,andheavy-dutyroadtransportation.However,weexpectthevastmajorityofH2adoptionwilllikelyoccurpost2030(beyondourforecastedtimeframe).Longer-termH2demandprojectionsvaryfrom~200Mtpa(BNEF’slowcase)to~700Mtpa(BNEF’sStrongPolicyScenario)to2050E.ThesewouldamounttoH2representing~4%to~15%oftheglobalenergymixby2050E.Figure1:2050H2DemandScenariosrangefrom200-700MtpaH2Mtpain2050Source:J.P.Morganestimates,BNEF,HydrogenCouncil,IEAFigure2:H2couldsatisfy4-16%of2050Eglobalenergydemand;butadoptiontotaketime(i.e.mostlybeyond2030)%ofglobalenergyconsumptionSource:J.P.Morganestimates,BNEF,HydrogenCouncil,IEAReducingLCOH&increasingmanufacturingscalekeyforGreenH2take-offAcriticalfactordrivinggreaterH2adoptionisdrivingdownthecostofGreenH2(i.e.H2producedfromwaterelectrolysis).Weestimatethatthepowerutilizedintheelectrolysisprocessrepresents~70%oftheLevelisedCostsofH2(LCOH)onaper0100200300400500600700800BNEF-StrongPolicyH2CouncilIEA-NZSIEA-SDSBNEF-WeakPolicy0%2%4%6%8%10%12%14%16%BNEF-StrongPolicyH2CouncilIEA-NZSIEA-SDSBNEF-WeakPolicy4GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comkilogrambasis.Thus,reducingtheLCOEforwind&solarpower(asdiscussedinthemainreport)isthecriticaldrivertoreduceGreenH2costs.However,withupsiderisktowind/solarLCOEsexpectedtobepassedontoconsumers,weseeupsiderisktothisview.Ourforecastsalsoembedareductiontosystemcosts(i.e.thecapitalcostsforeachelectrolyser)of~10%perannumto2030E.Figure3:BreakdownoftheLevelizedCostofGreenH2Outof100%Source:J.P.Morganestimates,Companydata.Figure4:ElectrolysersystemcostsforITM&NelASAUS$/kwSource:J.P.Morganestimates,Companydata.GreenH2costsalreadyfallingwithfurtherpotentialfordeclinesto2030E–dependentonWind/SolarpowerpricesWeexpectthecostofGreenH2tobecomeincreasinglycompetitivevsotherH2productionroutes–namelyvsGreyH2(steammethanereforming,theprimaryrouteforH2productiontoday)andBlueH2(GreyH2withCCS).WeestimateGreenH2coststofallfrom$3.5-5.0/kgin2020to$1.7-2.8/kgby2030.However,wenoteGreenH2costscouldfallfasterinsomeregions(i.e.MENA,SouthernEurope)whichcouldaccelerateadoptionintheseregions.BlueH2couldfacegreaterimpedimentsgivenlesspolicysupport,geopoliticalfactors(i.e.continueddependenceongasimports),andgreateruncertaintyfromlong-termgasprices.AlsoturquoiseH2willlikelynotbecommerciallyviableintheforeseeablefutureandfacessomeofthesameimpedimentsasBlueH2,inourview.Figure5:HowwillH2costsprogress?Green,Blue,Grey,andTurquoiseLevelisedCostofH2overtime,$/kgSource:J.P.Morganestimates,Companydata.Electricity66%Capex21%Water5%Maintenance&Other8%02004006008001,0001,2002021E2022E2023E2024E2025E2026E2027E2028E2029EITM(PEM)Nel(ALK)0.01.02.03.04.05.06.020202025E2030E2035E2040E5GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comGreenH2potentiallycompetitivevs.FossilFuelsinEU…ifallelsewasequalWemustalsoconsidertheH2pricelevelneededforH2tobecompetitivevs‘Business-as-usual’usingfossilfuelsacrossvaryingend-uses.Inanall-else-equalscenario,the>100%riseinfossilfuelpricesoverthepast12months(includingEuropean&USgas,thermal&cokingcoal)hasincreasedthecompetitivenessofH2vsfossilfuels.Inthisscenario,forend-usessuchasammonia,steel,andHDtrucking,weestimateH2canbecompetitivewithfossilfuelsatpricesof~$3.5/kg,effectivelywithinthelowerendoftherangeofachievableH2coststoday.However,energymarketdynamicsarenotallelseequal.Asdetailedinthemainreport,increasedmetalsprices,freightrates,andcompetitionforEPCserviceshavelikelyincreasedthecapexforwind/solargenerationconsiderably.Thiscostwilllikelybepassedontoconsumersofpower,increasingH2costs.Figure6:FossilfuelpricesrisensignificantlyYoYPricechangesinceMar'21Source:BloombergFinanceL.P.Figure7:Higherfossilfuelprices=higherH2breakevencostlevelsUS$/kgSource:J.P.Morganestimates.Steel:H2costsof>6$/kgeconomicwithcurrentcokingcoalpricesof>$400/tWeexpectH2tobecomeamajorlowCO2fuelsourceforreducingironinthesteelsupplychain.Theindustryalreadyusesnaturalgas(CH4)for<5%ofglobalsteelsupplyintheformofDirectReductionIron(‘DRI’),andthisprocesscanbeadjustedtoutilize100%H2.Also,ouranalysisshowsthatatcurrentEUCO2andhardcokingcoalpricesof~EUR80/tand~$500/t,respectively(butnotassuminganincreaseinenergypricesforwind/solargeneration),H2-derivedsteelonlyrequiresanH2priceof$6.5/kgtobreakevenvsblastfurnacesteel.290%260%248%124%75%85%61%0%50%100%150%200%250%300%350%CokingCoalEUGasThermalCoalUSGasEUCO2BrentUSDiesel3.62.61.84.96.56.601234567EuropeanTruckingSteelAmmoniaFeb'21Mar'226GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comFigure8:H2priceneededforH2-steeltobreakevenagainstBOFsteelundervariousCokingcoal&EUCO2pricescenariosEUR/kgSource:J.P.Morganestimates,Companydata.H2steelcouldreach~70Mtpaby2030E&cuttingcokingcoaldemandEuropeansteelproducershaveledtheindustrygloballyforitsenergytransitionplans.WeestimateEuropeanH2-derivedsteelvolumescouldreach~40Mtpaby2030E.ForAsia,weforecasttheregioncoulddeliver~30Mtpaby2030E,withonlyanegligiblecontributionfromotherregions.Together,weestimatethiscouldreducecokingcoaldemandby~40Mtpaby2030E,or~4%oftheseabornecokingcoalmarket.Incontrast,weexpectthiscouldgenerateGreenH2demandof~5Mtpaby2030.Weestimatethiswouldrequire~50GWofelectrolysiscapacity,whichwouldamountto~50%ofourglobal2030Einstalledelectrolysercapacityforecast.Figure9:H2derivedsteeloutputto2030EMtpaSource:J.P.Morganestimates,Companydata.Figure10:Cokingcoaldemandlossto2030EMtpaSource:J.P.Morganestimates,Companydata.Ammonia:recordEuropeangaspricessupportingGreenH2interestAmmoniaaccountsfor~50%ofcurrentglobalH2demandandisalsolikelytoplayaroleasamoretransportableformofH2anddirectfuellongerterm.Today,themainfeedstockforammoniaisnaturalgas(i.e.‘greyammonia’),buttheuseofGreenH2(aswellasnaturalgaswithCCS,‘blueammonia’)isgainingtraction,particularlyinEurope(givenhighlocalgasprices&supplysecurityconcerns),andsurprisinglytheMiddleEast(wherelowsolarpowercostsmakeGreenH2andthusgreenAmmonialowercost).At$6/mmbtu(notassuminganincreaseinenergypricesforwind/solargeneration),itismoredifficultforGreenH2tocompetegivenaGreenH2costswouldneedtobe~$1.6/kg(atthelowendof2030estimates)tocompetewithnaturalgas.Atthecurrentforwardpriceof~$30/mmbtu,GreenH2costswouldonlyneedtobe~$6.6/kgtoreachthesameammoniacostasnaturalgas.2.02.43.23.92.62.93.64.43.94.24.95.70.01.02.03.04.05.06.0$160/t$200/t$300/t$400/tCO2:EUR40/tCO2:EUR60/tCO2:EUR120/t10.619.428.539.354.067.90.020.040.060.080.02025E2026E2027E2028E2029E2030EEuropeChinaJapanKoreaAustraliaRussia&CISNorthAmerica-7.4-13.6-20.0-27.5-37.8-47.5-60.0-50.0-40.0-30.0-20.0-10.00.02025E2026E2027E2028E2029E2030EEuropeChinaJapanKoreaAustraliaRussia&CISNorthAmerica7GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comFigure11:GreenH2costneededtobreakevenvsgreyammoniaatvariousnaturalgaspricesLHS-$/kgH2,RHS-$/tonneammoniaSource:J.P.Morganestimates,Companydata.HeavyDutyTrucking:greaterenergyintensityrequirements&netpayloadimpactsupportiveforFCEVsoverBEVsAnotherindustrythatcouldseeacceleratedH2adoptionisinHeavy-Dutytrucking.AlthoughweexpectBatteryEVstodominateinthepassengervehiclespace,weexpectheavy-dutytruckingcouldinsteadfavorH2FCEVpowertrainssincehigherpayloadsrequirehigherenergydensities.Thus,aspayloadsincrease,atrade-offappearsbetweenbatteryweightandthusnetpayload.Forexample,a50,000lbClass8BEVtruckloses~1/3ofitsgrosspayloadtotheweightofthebattery,comparedtoonly<10%foraFCEV.ThisseverelyincreasestheTCOforBEVtrucksgivenmoretrucksareneededtomovethesamepayloadandtocompensatefordwell(i.e.chargingtime).H2FCEVtrucksarealreadybeingdeployedbyH2Energy,whichoperatesa‘pay-per-kilometer’FCEVtruckventureinSwitzerland.Thecompanyhasalreadydeployed~100HyundaiXcienttrucksinthecountryalongwithbuildingoutitsownH2electrolysiscapacityandrefuelingstations.H2Energythenonlychargescustomersaflatcostperkilometerforuseofitsserviceandoffersasimplyapproachforcustomerstodecarbonizetheirtruckfleet.GivenSwitzerlanddieseltax,H2Energy'smodeloffersacompetitiveTCOforcustomersvstypicaldieseltrucks,evenatallinH2costs(includingtransportation&storage)of>$10/kg.1.62.63.64.65.66.602004006008001,0001,2001,4001,60001234567$5/mmbtu$10/mmbtu$15/mmbtu$20/mmbtu$25/mmbtu$30/mmbtuGreenH2($/kg)Ammoniacost($/tonne)8GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comFigure12:TruckpayloadcomparisonacrossdifferentdrivetrainsTotallbsfora50,000lbs(~23tonne)payloadtruckSource:J.P.Morganestimates,Companydata.Figure13:SwissH2breakevenpricevsdieselforHDtruckingUS$/kgSource:J.P.Morganestimates,Companydata.GreenH2deploymentsettoacceleratepost2030WeexpectpolicysupporttohelpfurtherdrivetheswitchtoGreenH2,especiallywheretechnicalbarriersfortransitionarelower(i.e.refining,ammonia,&steel).WeestimatethatifcurrentglobalH2outputof~90MtpaweretobereplacedwithGreenH2,itwouldrequire~940GWofelectrolysiscapacity.Also,if100%ofglobalH2outputwerederivedfromGreenH2by2030E,theIEA’sdemandestimateof~210Mtpawouldrequire>2,200GWofelectrolysiscapacity.Weestimatethiswouldamountto~4%ofglobalenergyconsumptionby2030E.Figure14:IEA’sGlobalH2Demandin2025&2030assumingaNetZeroScenarioH2production,MtpaSource:IEA,Companydata.Figure15:InstalledElectrolysercapacityifallH2inIEA’sNetZeroScenarioisderivedfromGreenH2Cumulativeinstalledelectrolysiscapacity,GWSource:J.P.Morganestimates,IEA,Companydata.Forecast~102GWofinstalledcapacityby2030E;equatingto~10MtpaofH2outputor~0.2%of2030EglobalenergyconsumptionAlthoughweexpectanaccelerationofGreenH2developmentoverthecomingdecade,westillacknowledgethatdeployinggreatercapacityacrossmorecomplexend-uses(i.e.transportation)willtaketimeandthuslimitthelevelofGeenH2deploymentintheforeseeablefuture.Thus,weforecasta2030basecaseinstalledelectrolysercapacityofonly~102GW,whichweestimatewouldproduce~10MtpaofGreenH2.Notably,weestimatethat~70%ofthiscapacitywouldonlybebroughtonlineafter2028andweforecastadditionsin2030tobe~35GW.Although,asdiscussedabove,weexpectGreenH2couldstarttoachieveamaterialinroadsin010,00020,00030,00040,00050,000DieselFCEVBEVFuel&tankorBatteryWeightNetPayload5.95.34.84.23.66.46.46.46.46.412.311.711.210.710.10.02.04.06.08.010.012.014.0+40%+30%+20%+10%+0%DirectCostTransport&Other8913421105010015020025020202025E2030ERefiningIndustryTransportPowerAmmonia(fuel)SynfuelsBuildingsGridinjection9381,4192,232-5001,0001,5002,0002,50020202025E2030E9GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comindustriessuchasrefining,ammonia,andsteel,wedonotyetexpectthistoamounttoasignificantportionofglobalenergyconsumptionyet.WeestimateGreenH2wouldonlyequateto~0.2%ofglobalenergyconsumptionby2030.Figure16:Annualelectrolysercapacityadditions-JPMeAnnualinstalledelectrolysiscapacity,GWSource:J.P.Morganestimates,Companydata.Figure17:Globalinstalledelectrolysercapacityto2030-JPMeCumulativeinstalledelectrolysiscapacity,GWSource:J.P.Morganestimates,Companydata.010203040506020202022E2024E2026E2028E2030EHighMidLow02040608010012014020202022E2024E2026E2028E2030EInstalledelectrolysercapacity(GW)HighMidLow10GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comCarboncapture&storage:manypossibleend-uses,buteconomics&implementationstillchallengingCarboncaptureutilization&storage(CCUS)isabroadtermformanytechnologiesthataimtoreduceemissionswithoutnecessarilyreducingfossilfuelsconsumptionorchangingtheinitialindustrialprocesswhichemitsCO2.Althoughithasbeenutilizedacrossvariousindustries,ithasnotyetbeenmeaningfullydeployedatlargescale.Ithasgarneredgreaterattentionwithmorecorporatesinhard-to-abatesectorscommittingtonetzeroemissions.Italsooffersapotentialroutetopreservefossilfuelrevenues(bothforproducingcorporates&countries).Althoughtheindustryisstillrelativelynascenttoday,BNEFestimatethatcurrentCCScapacityof~45Mtpain2020couldgrowto~200Mtpaby2030E.However,weestimateitwouldstillamountto<1%ofglobalCO2emissionsbytheendofthedecade.Figure18:CCUScapacity:historical&announcedMtpaSource:BloombergFinanceL.P.estimates.CCUSisconsideredanoptionforpotentiallyreducingemissionsacrossseveralindustrialsectorsincludingcement,fertilisers,steel,powergeneration,andchemicals.However,thenatureoftheemissionsacrossthesedifferentend-usesvariesconsiderablyandrequiredifferentprocessesforcapturingCO2.Forexample,CO2concentrationfromasteelmillis~20-27%,whilethefluegasfromthermalpowerplantsistypically3-14%,accordingtotheIEA.Incontrast,theCO2concentrationfromH2productionusingsteammethanereforming(i.e.‘BlueH2’)isrelativelyhigher.LowerconcentrationswilltypicallyleadtohigheroverallcostsonaUS$perCO2tonnebasis.Also,thenumberofemissionspointsisalsoacriticalfactorandwillimpactthetotalcostpertonne.Forexample,atypicalsteelmillhas20-30pointsofCO2emissions,whichrequiresgreaterinfrastructureandthusfacesgreaterchallengestoachievesufficientlyhighcapturerates.CostsforCCUSvaryconsiderablyacrossindustries,technologiesThus,thecostsforutilizingCCUSacrossdifferentindustrieswilllikelyvaryconsiderably.Forhigherconcentration,morematureend-usessuchasethanol&ammonia,BNEFestimatethatCCUScostscouldbeUS$19-37/t,wellbelowmostlong-termCO2priceforecasts.However,formoreemergingtechnologieswithlowerCO2concentrationlevels,suchasDirectAirCapture(DAC),costsarelikelytobemateriallyhigher.BNEFestimatesDACCCUScoststobeUS$90-167/t.0501001502002000200220042006200820102012201420162018202020222024202620282030NaturalGasProcessingPowerGenHydrogenChemicalsFertilizer,EthanolCementOther11GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comFigure19:CarbonCapture&StorageCostsacrossdifferentendusesUS$/tonneCO2Source:BloombergFinanceL.P.estimates.Practical&politicalconsiderationcouldlimitCCUSdeploymentAlthoughwebelieveCCUScouldplayamaterialroleinreducingemissionsinsomesectors(i.e.cement),weexpectseveralfactorswilllikelylimititsdeployment.Firstly,weexpectthecostsofusingalternativezeroCO2technologiestofall,whichcouldofferbetterdecarbonisationsolutionsformanyend-uses.Forexample,thelevelizedcostofelectricity(LCOE)forbothonshorewindandsolarhasfallendramaticallyoverthelastdecade,tothepointwherecostsfornewbuildrenewableshavebroadlyalignedwithnewbuildcoalandgas.Also,evenforhard-to-abatesectors,GreenH2-derivedsteelappearsamorecredible&competitiveroutetodecarbonisethesteelindustry.Secondly,givenCCSdoesnotreducefossilfuelconsumption,alltheothernon-CO2issuesstemmingfromfossilfuelwouldremain.Forexample,EuropeaneffortstodiversifyfossilfuelimportswouldbemorechallengingifCCUSweretobeutilizedforvariousindustries(i.e.steel,powergeneration).Thirdly,geologicalconditionsforlong-termundergroundCO2storagevaryconsiderably.ThiscouldlimitCCUS’sfeasibilityinregionswithsignificantCO2emissionsbutlowstoragecapability(i.e.India,China)orleadtohighertransportationcosts.Thus,weexpectCCUSwilllikelybeutilizedinonlyseveralsectorswhereotherzeroCO2alternativesappearunlikelytobecommerciallyviable,suchascement.Fusionenergy:stillonlyaverylong-termpossibilityFusionenergyisaproposedformofpowergenerationwhichcouldgenerateelectricityusingtheheatfromanuclearfusionreaction.Incontrasttoconventionalnuclearpowertoday(i.e.nuclearfission),whichgeneratesenergyfromsplittinganatom,fusiongeneratesenergyfrominitiallyusingenergy(hightemperatureheat)toforcetogethertheatomicnucleioftwohydrogenisotopes.Thisreactioncreatesheliumandfargreaterheat,whichcanbeusedtocreatesteamandthusgenerateelectricity.Thisisthesamechemicalreactionwhichoccursatthecoreofstarswithimmensegravitationalpressureandtemperaturesof~10millionCelsius.GivensuchpressuresarenotachievableonEarth,temperaturesof>100millionCelsiusareneededtocausethefusionreaction.Devicesforharnessingtheenergyfromthis18192738404554545555565757626374909496105263733465999145818410372707597100941671561321670306090120150180IronandsteelEthanol,AmmoniaCoalpowerCoalpowerIronandsteelIronandsteelAirCementCoalpowerPetrolrefiningGaspowerCoalpowerCementCoalpowerIronandsteelGaspowerAirCementCementPetrolrefiningHighconcentrationCaOloopingLiquidabsorptionMembraneSolidadsorption12GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comreactionarereferredtoasfusionreactors.Asasourceofpower,nuclearfusionisexpectedtohavemanyadvantagesoverconventionalnuclearfissiontechnology,whichiswidelyutilisedtoday.Althoughresearchonfusionenergyhasbeenongoingsincethe1940s,itremainsanascenttechnologythatisstillfarfromcommercialreadiness.Longresearchhistory&morestilltocomeResearchintofusionenergystartedintheearly20thcentury,primarilytobetterunderstandhowstarswerepowered,butalsoincludedotherapplications,includingdefense,rocketpropulsion,andenergygeneration.Thefirstexperimenttoachievethermonuclearfusionwasachievedin1958.Overthelastseveraldecades,mostresearchhasbeenconductedthroughgovernmentorinternationalinitiatives,giventhescale,timeline,andcapitalrequiredformanyoftheexperimentalreactors.ForexampletheJointEuropeanTorus(JET)wasinitiallyproposedin1975andwasofficiallyopenedin1984andremainsaresearchfacilityonfusionenergytoday.Theopportunity:almostunlimitedenergygeneration,safety,&reducedwasteFusionenergypresentsseveralkeyadvantagesovernuclearfissionandotherzeroCO2energysources.Firstly,thefusionreactionhasthepotentialtorelease4milliontimesasmuchenergyasfossilfuelsandfourtimesasmuchnuclearfission(atequalmass).Thismeansusingonlyaverysmallamountoffuelandinitialenergycangenerateanincrediblygreateramountofenergy.Also,similartonuclearfissionandwind&solarpower,thefusionreactionemitszeroCO2emissions.Importantly,fusionenergyalsohassignificantsafetyadvantagesgiventhereactorisnotatriskofcatastrophicmeltdown(thereactioncanbeimmediatelystopped)andproducesonlyminimalradioactivewaste.TheChallenge:scale,stability,&efficiencyNevertheless,thechallengesfordevelopingandcommerciallydeployingfusionenergyarestillincrediblyimmense.Todate,allfusionreactorsarestillatexperimentalscale.EventheJETlaboratoryreactoronlyhasfullheatingpowerof~38MW(inputenergy).Arguablythegreatestchallengeforfusionenergyisachievinggreaterenergyoutputfromthefusionreactionthanisrequiredasinputtoachievetheinitialfusionreaction.Theextremeconditions(namelytemperature&pressure)neededforthefusionreactionhaveonlyeverbeenachievedverybriefly(seconds),sostabilityofthefusionreactionremainsakeyhurdletoimprovingtheefficiency(i.e.generatingmorepowerthanthereactionconsumes).Recentprogressinfusionresearch&projectsNevertheless,significantresearchisongoingandlargerfusionreactorprojectsareindevelopment.TheInternationalThermonuclearExperimentalReactor(ITER)projectinFrance,withatotalbudgetof~US$25bnrepresentsthelargestinvestmentinfusionyetandoneofthelargestinternationalcollaborationprojectsinhistory.TheprojectisjointlyfundedbyaninternationalconsortiumincludingtheUnitedStates,theEuropeanUnion,China,Russia,Japan,India,andSouthKorea.Constructionbeganin2013withcoreassemblybeginningin2020.Assemblyisexpectedtobecompletedandcommissioningstartin2025.However,thefinalphase(deuterium-tritium)isnotexpectedtostartuntil2035.ITER’spowerinputof320MW(50MWabsorbedinthereaction)wouldyield500MWofthermalenergyoutputifsuccessful.ThiswouldimplyITERachievinga13GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comQ-valueof~10,oryielding10xtheenergyinput.ThisisakeygoalofITER,sincenofusionexperimenttodatehasachievedaQ-scoreof1(i.e.generatingmoreenergythanitconsumed).Recently,theJETlaboratorysuccessfullyreplicatedatsmallerscaletheuniqueprocessenvisionedfortheITERreactor,supportingtheunderlyingthesisbehindITER'sgoal&larger-scale(link).WeexpectmoreresearchdevelopmentsondifferentareasoffusiontechnologyaftertheUSCongressallocated$4.7bnforadditionalfusionR&Dinlate2020.Majorcorporatessupportingfusiondevelopment;ENIplanningforcommercialscalegenerationbyearly2030sOutsidethepublicsphere,therehasalsobeenapick-upinprivatefundingforfusionresearch&development.BNEFestimatesthattherewas$2.4bnofprivatecapitalinvestedinfusionenergyin2021,amultipleofthe$300minvestedinfusionstart-upsover2020.Also,majoroilproducerssuchasENI,Equinor,andChevronhavealsofundedfusionresearch,underscoringthewiderinterestinthetechnology’slong-termpotential.Notably,ENIbelievesitsfusionresearchcanachievenetenergygeneration(i.e.Q-value>1)withinfiveyearsandindicateditistargetingcommercialscalegenerationcontributingtothegroup’stotalnewenergysoldbytheearly2030’s.Privateventures&start-upsalsodrivingfusionresearchPrivateventuresinfusionenergyincludeavarietyoffirms,includinguniversityspin-outs.Forexample,CommonwealthFusionwasspunoutofMITin2018withfundingfromBreakthroughEnergyVentures&Temasek,whileFirstLightFusionwasspunoutofOxfordUniversity.Botharetargetingnetenergygain(i.e.Q-valueof>1)bymid-decade.InApril’22,FirstLightannounced(link)ithadachievedfusionwithits‘projectile’approach,whichwasindependentlyverifiedbytheUKAtomicEnergyAgency.FirstLightbelievesthistechnologyoffersapotentialpathwaytoaLevelisedCostofElectricityof<$50/MWh,andthusacompetitivepotentialsourceofbaseloadpower.Itisnowadvancingplansfora‘gain’’experimentwhichwillaimtogeneratemoreenergythanisconsumed,i.e.Q-valueof>1).Thecompanyisalsoplanningtopartnerwithexistingpowerproducerstodevelopapotentialpilotscaleplantof~150MW,whichitbelievescouldcost<US$1bnintheearly2030s.Olderfirms,suchasGeneralFusionandTAETechnologies,seededcapitalfromventurecapitalfirms,philanthropists,andotherorganisations.Privatecapitalsupportingfusionresearch&developmentOutsidethepublicsphere,therehasalsobeenapick-upinprivatefundingforfusionresearch&development.BNEFestimatesthattherewas$2.4bnofprivatecapitalinvestedinfusionenergyin2021,amultipleofthe$300minvestedinfusionstart-upsover2020.Also,majoroilproducerssuchasENI,Equinor,andChevronhavealsofundedfusionresearch,underscoringthewiderinterestinthetechnology'slong-termpotential.Privateventuresfocusedonfusionenergyincludeavarietyoffirms,includinguniversityspin-outs.Forexample,CommonwealthFusionwasspunoutofMITin2018withfundingfromBreakthroughEnergyVentures&Temasek,whileFirstLightFusionwasspunoutofOxfordUniversity.Bothfirmsaretargetingnetenergygain(i.e.Q-valueof>1)bymid-decade.OlderfirmssuchasGeneralFusionandTAETechnologieshaveseededcapitalfromenergyventurecapitalfirms,philanthropists,andotherorganisations.14GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comFigure20:European&USprivateinvestmentinfusionenergyUS$mSource:BloombergFinanceL.P.estimates.Nevertheless,fusionenergystillonlyalong-termpossibilitywithmanychallengesstillremainingDespitegreaterinvestorinterestandattractingmorecapital,wedonotexpectittocontributetoglobalenergysupplyinthenearormedium-term,echoingthecommonclichéthatfusionenergyhasbeen‘twentyyearsawayforthelastfiftyyears.’Andanyinvestmenttodayislikelytobespentsimplyonresearchefforts.ToquoteBNEF,“Rampinguptoengineerandproduceacommercialfusiondevicewilllikelyrequirehundredsofmillionsorbillionsofadditionaldollars.Anyentityclaimingitcanbuildacommercialpowerplantusingfusionby2030forlessdeservesseriousskepticism.”EMEAHydrogenValuation&financialsummariesTable2:EMEAHydrogenrelativevaluation20212022E2023E2024E2025EEV/SalesITM147.423.114.58.56.6Nel28.319.012.76.75.9GHS185.517.43.52.82.0Average120.419.810.26.04.9EV/EBITDAITMn/an/an/a170.460.4Neln/an/an/a186.177.7GHSn/an/an/an/a28.3Averagen/an/an/a178.355.5FCFyieldITM-0.9%-1.7%-1.0%-0.4%0.1%Nel-3.3%-2.3%-1.8%-1.3%-0.1%GHS-62.5%-11.6%-7.6%-12.3%-4.2%Average-22.2%-5.2%-3.5%-4.7%-1.4%Source:J.P.Morganestimates,Companydata.050100150200250300350400450Pre-2002200320052007200920112013201520172019202115GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comTable3:ITMPowerfinancialsummary30AprilYearEnd20212022E2023E2024E2025E2026EElectrolyserShipmentsMW3302284638751,300TotalcapacityMW5501,0001,0002,0002,5003,250CapacityUtilisation%0%3%23%23%35%40%AverageSystemPrice$/kw606680568431372337AverageSystemPriceEUR/kw506574479363313284AverageSystemPriceGBP/kw453506414307260233SystemSalesRevenueGBPm1.312.180.0127.6215.8272.2After-marketRevenueGBPm0.10.32.25.411.519.3OtherGBPm2.90.20.50.50.50.6TotalRevenueGBPm4.312.782.8133.5227.9292.0GroupEBITDAGBPm-21.6-21.7-8.2-2.011.432.1EBITDAmargin%-505%-171%-10%-1%5%11%D&AGBPm2.33.96.68.04.55.7EBITGBPm-26.7-26.7-15.7-10.86.125.7EBITmargin%-624%-210%-19%-8%3%9%NetIncomeGBPm-27.7-24.1-11.8-8.14.619.3EarningspershareGBp/sh-5.5-4.4-2.1-1.50.83.5CapexGBPm-14.4-5.8-29.1-13.5-16.0-18.3FreeCashFlowGBPm-36.1-19.7-39.0-23.5-9.73.4CashpositionGBPm176.1398.5359.4335.9326.2329.6Netdebt/(cash)GBPm-169.8-392.4-353.4-329.9-320.2-323.5Source:J.P.Morganestimates,Companydata.Table4:NelASAfinancialsummary31DecemberYearEnd202020212022E2023E2024E2025EElectrolyserShipmentsMW52892204138661,050TotalcapacityMW803235501,0501,5752,100CapacityUtilisation%65%40%40%39%55%50%AveSystemPrice(100%)$/kw700688656600550500AveSystemPrice(100%)NOK/kw6,3125,0912,9832,4762,2462,019SystemSalesRevenueNOKm3384667181,0281,9532,129FuelingStationSalesUnits16203055119160FuelingStationRevenueNOKm3003034287131,3991,695GroupRevenueNOKm6527981,1461,7413,3523,824GroupEBITDANOKm-252-475-377-108121290ElectrolysersNOKm-82-210-194-24123213FuelingNOKm-105-169-971089169Other/eliminationsNOKm-65-97-86-94-91-92EBITDAmargin%-39%-60%-33%-6%4%8%D&ANOKm163.0107.6247.3180.1140.7101.2EBITNOKm-414.5-582.9-624.1-287.9-19.8188.8EBITmargin%-64%-73%-54%-17%-1%5%NetIncomeNOKm1,261.9-1,666.9-369.2-204.3-16.6129.4EarningspershareNOK/sh0.9-1.2-0.2-0.10.00.1CapexNOKm232.2377.2361.1213.9250.4287.3FreeCashFlowNOKm-458.4-826.6-585.4-463.9-318.2-26.9CashpositionNOKm2,332.92,722.83,573.43,105.62,783.42,752.7Netdebt/(cash)NOKm-2,211.2-2,566.2-3,436.7-2,968.9-2,646.8-2,616.0Source:J.P.Morganestimates,Companydata.16GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comRevenueEstimateChangesinmillionsFY22EFY23ECompanyBBGTickerCCYPrevCur∆PrevCur∆ITMPowerITMLNGBP2313(10)75838NelASANELNONOK1,1121,146341,7411,741-GreenHydrogenSystemsGREENHDCDKK8686-384384-Source:BloombergFinanceL.P.,J.P.Morganestimates.17GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comInvestmentThesis,ValuationandRisksITMPowerplc(Overweight;PriceTarget:470p)InvestmentThesisITMPowerisaProtonExchangeMembrane('PEM’)focusedHydrogenelectrolysermanufacturerbasedinSheffield,UK.WeexpectITMtobenefitfromsignificantgrowthinglobalgreenhydrogendemandandthushydrogenelectrolyserdemand.ThegroupisincreasingitsmanufacturingwiththerecentlycommissionedBessemerParkfacility,whichhas1GWofmanufacturingcapacity.Thisalsowillhelpthegroupreducecostsandincreaseprofitability.Thus,werateITMOverweight.ValuationWevalueITMPowerusingacombinationof18xCY’30EV/EBITDAand3.1xCY’30EV/Salesacrossthree‘High’,‘Mid’,and‘Low’macroscenariosofglobalelectrolysershipmentsgiventhelong-termuncertaintyastohowthemarketwilldevelop.OurPriceTargetisanaverageofthefairvaluesundereachscenario.RiskstoRatingandPriceTargetDownsiderisksforITMPowerinclude:1)variationsinlong-termglobalhydrogenelectrolyserdemand;2)developmentsinenvironmentalpolicieswhichcouldimpactlong-termhydrogenadoptionacrossseveralsectors;3)progressinexpandingitsoperationsandachievinglong-termprofitability;4)near-termFCFburnwhichwouldreduceorincreasethegroup’scashposition;and5)futureinvestmentdecisionsinHydrogenfuelinggarnergreaterfinancialandexecutionrisksgiventhenascentstateofthemarket.NelASA(Underweight;PriceTarget:Nkr11.40)InvestmentThesisNelASAisaHydrogenelectrolysermanufacturerbasedinNorwaywithoperationsinNorway,theUnitedStates,andDenmark.WeexpectNeltobenefitfromsignificantgrowthinglobalgreenhydrogendemandandthushydrogenelectrolyserdemand.ThegroupisexpandingitselectrolysermanufacturingcapacityinNorwayaswellastheUnitedStates.NelalsomanufacturersHydrogenrefuelingstationsatitsDenmarkfacility.ThuswerateNelUnerweight.ValuationWevalueNelusingacombinationof18xCY’30EV/EBITDAand3.1xCY’30EV/Salesacrossthree‘High’,‘Mid’,and'Low'macroscenariosofglobalelectrolysershipmentsgiventhelong-termuncertaintyastohowthemarketwilldevelop.Ourpricetargetisanaverageofthefairvaluesundereachscenario.RiskstoRatingandPriceTargetRisksforNelASAinclude:1)variationsinlong-termglobalhydrogenelectrolyserdemand;2)developmentsinenvironmentalpolicieswhichcouldimpactlong-termhydrogenadoptionacrossseveralsectors;3)progressinexpandingitsoperationsandachievinglong-termprofitability;and4)FCFburncouldbediminishedifordersandthussalessurprisetotheupside.18GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comGreenHydrogenSystemsA/S(Underweight;PriceTarget:Dkr27.00)InvestmentThesisGreenHydrogenSystemsA/S(GHS)isaHydrogenelectrolysermanufacturerbasedinDenmark.Thecompanyissolelyfocusedonpressurizedalkalineelectrolysertechnology,withonemanufacturingsiteinKolding,Denmark.WeexpectGHStobenefitfromsignificantgrowthinglobalgreenhydrogendemandand,thus,hydrogenelectrolyserdemand.ThegroupisexpandingitselectrolysermanufacturingcapacityinDenmark.However,weexpecttheelectrolyserindustrytoremaincompetitiveandGHSisatanearlierstepofdevelopmentvsitsmorematurepeers.Thus,werateGHSUnderweight.ValuationWevalueGHSusingacombinationof4xCY’25EV/Saleswitha12.5%WACC.ThismultiplereflectsadiscounttotheaverageEV/SalesmultipleofrelativelymorematureEMEAHydrogenElectrolyserOEMsNelASAandITMPower,while12.5%WACCreflectsthegreaterfundingriskforGHSinourviewvspeers.RiskstoRatingandPriceTargetRisksforGHSinclude:1)positivevariationsinlong-termglobalhydrogenelectrolyserdemand;2)developmentsinenvironmentalpolicies,whichcouldpositivelyornegativelyimpactlong-termhydrogenadoptionacrossseveralsectors;3)progressinexpandingitsoperationsandachievinglong-termprofitability;and4)FCFburncouldbeimpactedifdevelopmentcostsorR&Dareeventuallygreaterorlessthanexpected.19GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comITMPower:SummaryofFinancialsIncomeStatementFY20AFY21AFY22EFY23EFY24ECashFlowStatementFY20AFY21AFY22EFY23EFY24ERevenue341383134Cashflowfromoperatingactivities(12)(20)(13)(10)(10)COGS(9)(11)(18)(78)(122)o/wDepreciation&amortization33579Grossprofit-----o/wChangesinworkingcapital3(3)8(6)(11)SG&A(8)(9)(9)(10)(10)Adj.EBITDA(20)(22)(22)(8)(2)Cashflowfrominvestingactivities(11)(12)(7)(29)(13)D&A(10)(5)(5)(7)(9)o/wCapitalexpenditure(9)(14)(6)(29)(13)Adj.EBIT(29)(27)(27)(16)(11)as%ofsales273.0%337.4%45.3%35.2%10.1%NetInterest0(1)(0)00Adj.PBT(29)(28)(27)(16)(11)Cashflowfromfinancingactivities5816924200Tax(0)(0)343o/wDividendspaid00000MinorityInterest-----o/wSharesissued/(repurchased)5917424200Adj.NetIncome(29)(28)(24)(12)(8)o/wNetdebtissued/(repaid)-----ReportedEPS(7.37)(5.46)(4.38)(2.13)(1.47)Netchangeincash35136222(39)(24)Adj.EPS(7.37)(5.46)(4.38)(2.13)(1.47)Adj.Freecashflowtofirm(21)(34)(18)(39)(24)DPS-----y/yGrowth32.5%59.0%(45.5%)113.4%(39.7%)Payoutratio-----Sharesoutstanding398507551551551BalanceSheetFY20AFY21AFY22EFY23EFY24ERatioAnalysisFY20AFY21AFY22EFY23EFY24ECashandcashequivalents40176398359336Grossmargin-----Accountsreceivable232361425EBITDAmargin(599.2%)(504.8%)(170.8%)(10.0%)(1.5%)Inventories4671425EBITmargin(893.2%)(623.6%)(210.5%)(18.9%)(8.1%)Othercurrentassets00000Netprofitmargin(891.6%)(647.9%)(190.0%)(14.2%)(6.1%)Currentassets68205411387385PP&E714163844ROE(71.6%)(21.9%)(7.9%)(2.9%)(2.0%)LTinvestments00000ROA(45.9%)(17.7%)(7.2%)(2.7%)(1.9%)Othernoncurrentassets9101098ROCE(71.8%)(21.1%)(9.7%)(4.8%)(3.4%)Totalassets83229437434437SG&A/Sales255.7%206.8%67.0%11.8%7.4%Netdebt/Equity-----Shorttermborrowings-----Netdebt/EBITDA-----Payables141351425Othershorttermliabilities712111111Sales/Assets(x)0.10.00.00.20.3Currentliabilities2125152535Assets/Equity(x)1.61.21.11.11.1Long-termdebt-----Interestcover(x)219.1NMNM--Otherlongtermliabilities66666Operatingleverage(758.3%)(31.2%)0.1%(7.5%)(50.8%)Totalliabilities2732213141Taxrate(0.1%)(0.2%)(10.7%)(25.0%)(25.0%)Shareholders'equity56197416404396Revenuey/yGrowth(28.3%)29.9%197.0%551.8%61.4%Minorityinterests-----EBITDAy/yGrowth165.2%9.4%0.5%(62.0%)(75.8%)Totalliabilities&equity83229437434437EPSy/yGrowth152.7%(25.9%)(19.8%)(51.3%)(31.1%)BVPS-----ValuationFY20AFY21AFY22EFY23EFY24Ey/yGrowth-----P/E(x)NMNMNMNMNMP/BV(x)-----Netdebt/(cash)-----EV/EBITDA(x)16.310.1NMNMNMDividendYield-----Source:CompanyreportsandJ.P.Morganestimates.Note:£inmillions(exceptper-sharedata).FiscalyearendsApr.o/w-outofwhich20GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comNelASA:SummaryofFinancialsIncomeStatementFY20AFY21AFY22EFY23EFY24ECashFlowStatementFY20AFY21AFY22EFY23EFY24ERevenue6527981,1461,7413,352Cashflowfromoperatingactivities(226)(449)(224)(250)(68)COGS(394)(552)(583)(798)(1,970)o/wDepreciation&amortization163108247180141Grossprofit-----o/wChangesinworkingcapital(35)(6)133(230)(196)SG&A(329)(472)(581)(650)(779)Adj.EBITDA(252)(475)(377)(108)121Cashflowfrominvestingactivities(294)(374)(361)(214)(250)D&A(163)(108)(247)(180)(141)o/wCapitalexpenditure(127)(258)(267)(214)(250)Adj.EBIT(415)(583)(624)(288)(20)as%ofsales19.5%32.4%23.3%12.3%7.5%NetInterest1,659(1,101)235(4)(4)Adj.PBT1,245(1,684)(389)(292)(24)Cashflowfromfinancingactivities2,3241,2161,436(4)(4)Tax161719887o/wDividendspaid00000MinorityInterest-----o/wSharesissued/(repurchased)2,3831,2551,44000Adj.NetIncome1,262(1,667)(369)(204)(17)o/wNetdebtissued/(repaid)150000ReportedEPS0.90(1.19)(0.24)(0.13)(0.01)Netchangeincash1,807390851(468)(322)Adj.EPS0.90(1.19)(0.24)(0.13)(0.01)Adj.Freecashflowtofirm(1,990)404(738)(459)(313)DPS-----y/yGrowth577.4%(120.3%)(282.6%)(37.8%)(31.8%)Payoutratio-----Sharesoutstanding1,4081,4011,5591,5591,559BalanceSheetFY20AFY21AFY22EFY23EFY24ERatioAnalysisFY20AFY21AFY22EFY23EFY24ECashandcashequivalents2,3332,7233,5733,1062,783Grossmargin-----Accountsreceivable101211151344500EBITDAmargin(38.6%)(59.6%)(32.9%)(6.2%)3.6%Inventories237328283371599EBITmargin(63.6%)(73.1%)(54.5%)(16.5%)(0.6%)Othercurrentassets1,9228811,1211,1211,121Netprofitmargin193.6%(208.9%)(32.2%)(11.7%)(0.5%)Currentassets4,5944,1445,1294,9425,003PP&E378624643677786ROE34.5%(31.7%)(6.6%)(3.4%)(0.3%)LTinvestments-----ROA29.4%(27.4%)(5.6%)(2.9%)(0.2%)Othernoncurrentassets1,1871,2391,3341,3341,334ROCE(11.1%)(11.2%)(11.7%)(6.2%)(0.4%)Totalassets6,1596,0077,1056,9527,124SG&A/Sales50.5%59.1%50.7%37.3%23.3%Netdebt/EquityNMNMNMNMNMShorttermborrowings-----Netdebt/EBITDA9.25.79.428.6NMPayables82133160212400Othershorttermliabilities350572572572572Sales/Assets(x)0.20.10.20.20.5Currentliabilities431705733784972Assets/Equity(x)1.21.21.21.21.2Long-termdebt3023232323Interestcover(x)0.2NM1.6NM31.0Otherlongtermliabilities207240240240240Operatingleverage299.5%181.3%16.2%(103.7%)(100.7%)Totalliabilities6689689961,0471,235Taxrate1.3%(1.0%)(5.0%)(30.0%)(30.0%)Shareholders'equity5,4685,0396,1095,9055,889Revenuey/yGrowth21.0%22.4%43.6%51.9%92.5%Minorityinterests-----EBITDAy/yGrowth40.5%89.0%(20.7%)(71.4%)(212.1%)Totalliabilities&equity6,1376,0077,1056,9527,124EPSy/yGrowth(510.5%)(232.8%)(80.1%)(44.7%)(91.9%)BVPS-----ValuationFY20AFY21AFY22EFY23EFY24Ey/yGrowth-----P/E(x)17.5NMNMNMNMP/BV(x)-----Netdebt/(cash)(2,303)(2,700)(3,550)(3,082)(2,760)EV/EBITDA(x)9.212.68.9NM39.9DividendYield-----Source:CompanyreportsandJ.P.Morganestimates.Note:Nkrinmillions(exceptper-sharedata).FiscalyearendsDec.o/w-outofwhich21GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comGreenHydrogenSystems:SummaryofFinancialsIncomeStatementFY20AFY21AFY22EFY23EFY24ECashFlowStatementFY20AFY21AFY22EFY23EFY24ERevenue9586384548Cashflowfromoperatingactivities(25)(155)(222)(119)(44)COGS(13)(22)(92)(326)(439)o/wDepreciation&amortization31565189189Grossprofit-----o/wChangesinworkingcapital31(14)22(36)(13)SG&A-----Adj.EBITDA(70)(148)(245)(84)(32)Cashflowfrominvestingactivities(32)(887)28(8)(161)D&A(3)(15)(65)(189)(189)o/wCapitalexpenditure(21)(145)(400)(100)(80)Adj.EBIT(73)(163)(311)(273)(221)as%ofsales218.4%2811.6%466.7%26.0%14.6%NetInterest(3)(335)000Adj.PBT(76)(498)(311)(273)(221)Cashflowfromfinancingactivities2031,15303500Tax26161411o/wDividendspaid-----MinorityInterest-----o/wSharesissued/(repurchased)31,17803500Adj.NetIncome(73)(493)(295)(259)(210)o/wNetdebtissued/(repaid)202(20)000ReportedEPS(2.47)(6.17)(3.60)(2.93)(2.21)Netchangeincash147111(194)224(205)Adj.EPS(2.47)(6.17)(3.60)(2.93)(2.21)Adj.Freecashflowtofirm(43)38(622)(219)(124)DPS-----y/yGrowth97.9%(188.6%)(1740.7%)(64.8%)(43.3%)Payoutratio-----Sharesoutstanding3080828895BalanceSheetFY20AFY21AFY22EFY23EFY24ERatioAnalysisFY20AFY21AFY22EFY23EFY24ECashandcashequivalents1562677329691Grossmargin-----Accountsreceivable44125368EBITDAmargin(737.8%)(2870.3%)(286.3%)(21.8%)(5.8%)Inventories873114554EBITmargin(770.4%)(3158.0%)(362.7%)(71.0%)(40.3%)Othercurrentassets731313131Netprofitmargin(776.3%)(9529.6%)(344.6%)(67.5%)(38.3%)Currentassets175375127425244PP&E21161511461407ROE(896.7%)(84.4%)(28.8%)(28.1%)(24.3%)LTinvestments-----ROA(53.5%)(64.5%)(26.1%)(25.1%)(21.0%)Othernoncurrentassets37759330210247ROCE(77.0%)(24.6%)(31.9%)(31.1%)(26.9%)Totalassets2331,2959681,097898SG&A/Sales-----Netdebt/EquityNMNMNMNMNMShorttermborrowings40000Netdebt/EBITDANM1.80.33.52.9Payables2543114960Othershorttermliabilities2476767676Sales/Assets(x)0.10.00.10.40.5Currentliabilities5311987126136Assets/Equity(x)16.81.31.11.11.2Long-termdebt1700000Interestcover(x)NMNM---Otherlongtermliabilities144444Operatingleverage(1504.5%)(276.2%)5.8%(3.5%)(44.7%)Totalliabilities23712391130140Taxrate(3.0%)(1.1%)(5.0%)(5.0%)(5.0%)Shareholders'equity(4)1,172877967758Revenuey/yGrowth(33.6%)(45.2%)1557.1%348.2%42.7%Minorityinterests00(0)(0)(0)EBITDAy/yGrowth494.9%113.3%65.3%(65.8%)(62.0%)Totalliabilities&equity2331,2959681,097898EPSy/yGrowth220.2%150.0%(41.6%)(18.7%)(24.6%)BVPS-----ValuationFY20AFY21AFY22EFY23EFY24Ey/yGrowth-----P/E(x)NMNMNMNMNMP/BV(x)-----Netdebt/(cash)18(267)(73)(296)(91)EV/EBITDA(x)20.311.017.915.315.7DividendYield-----Source:CompanyreportsandJ.P.Morganestimates.Note:Dkrinmillions(exceptper-sharedata).FiscalyearendsDec.o/w-outofwhich22GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comOtherCompaniesDiscussedinThisReport(allpricesinthisreportasofmarketcloseon21April2022)PlugPower(PLUG/$22.85/OW)AnalystCertification:TheResearchAnalyst(s)denotedbyan“AC”onthecoverofthisreportcertifies(or,wheremultipleResearchAnalystsareprimarilyresponsibleforthisreport,theResearchAnalystdenotedbyan“AC”onthecoverorwithinthedocumentindividuallycertifies,withrespecttoeachsecurityorissuerthattheResearchAnalystcoversinthisresearch)that:(1)alloftheviewsexpressedinthisreportaccuratelyreflecttheResearchAnalyst’spersonalviewsaboutanyandallofthesubjectsecuritiesorissuers;and(2)nopartofanyoftheResearchAnalyst'scompensationwas,is,orwillbedirectlyorindirectlyrelatedtothespecificrecommendationsorviewsexpressedbytheResearchAnalyst(s)inthisreport.ForallKorea-basedResearchAnalystslistedonthefrontcover,ifapplicable,theyalsocertify,asperKOFIArequirements,thattheResearchAnalyst’sanalysiswasmadeingoodfaithandthattheviewsreflecttheResearchAnalyst’sownopinion,withoutundueinfluenceorintervention.AllauthorsnamedwithinthisreportareResearchAnalystsunlessotherwisespecified.InEurope,SectorSpecialists(SalesandTrading)maybeshownonthisreportascontactsbutarenotauthorsofthereportorpartoftheResearchDepartment.ImportantDisclosuresMarketMaker:J.P.MorganSecuritiesLLCmakesamarketinthesecuritiesofPlugPower.MarketMaker/LiquidityProvider:J.P.Morganisamarketmakerand/orliquidityproviderinthefinancialinstrumentsof/relatedtoITMPower,NelASA,GreenHydrogenSystems,PlugPower.ManagerorCo-manager:J.P.Morganactedasmanagerorco-managerinapublicofferingofsecuritiesorfinancialinstruments(assuchtermisdefinedinDirective2014/65/EU)of/forGreenHydrogenSystemswithinthepast12months.Client:J.P.Morgancurrentlyhas,orhadwithinthepast12months,thefollowingentity(ies)asclients:NelASA,PlugPower.Client/InvestmentBanking:J.P.Morgancurrentlyhas,orhadwithinthepast12months,thefollowingentity(ies)asinvestmentbankingclients:GreenHydrogenSystems.Client/Non-InvestmentBanking,Securities-Related:J.P.Morgancurrentlyhas,orhadwithinthepast12months,thefollowingentity(ies)asclients,andtheservicesprovidedwerenon-investment-banking,securities-related:NelASA,PlugPower.Client/Non-Securities-Related:J.P.Morgancurrentlyhas,orhadwithinthepast12months,thefollowingentity(ies)asclients,andtheservicesprovidedwerenon-securities-related:NelASA,PlugPower.InvestmentBankingCompensationReceived:J.P.Morganhasreceivedinthepast12monthscompensationforinvestmentbankingservicesfromGreenHydrogenSystems.PotentialInvestmentBankingCompensation:J.P.Morganexpectstoreceive,orintendstoseek,compensationforinvestmentbankingservicesinthenextthreemonthsfromGreenHydrogenSystems.Non-InvestmentBankingCompensationReceived:J.P.Morganhasreceivedcompensationinthepast12monthsforproductsorservicesotherthaninvestmentbankingfromNelASA,PlugPower.DebtPosition:J.P.MorganmayholdapositioninthedebtsecuritiesofITMPower,NelASA,GreenHydrogenSystems,PlugPower,ifany.Company-SpecificDisclosures:Importantdisclosures,includingpricechartsandcreditopinionhistorytables,areavailableforcompendiumreportsandallJ.P.Morgan–coveredcompanies,andcertainnon-coveredcompanies,byvisitinghttps://www.jpmm.com/research/disclosures,calling1-800-477-0406,ore-mailingresearch.disclosure.inquiries@jpmorgan.comwithyourrequest.23GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comDateRatingPrice(p)PriceTarget(p)23-Feb-21OW52170016-Jul-21OW39155014-Sep-21OW41450029-Sep-21N44950025-Jan-22N27241001-Mar-22OW332470DateRatingPrice(NKr)PriceTarget(NKr)23-Feb-21N27.042816-Jul-21UW18.441519-Oct-21UW13.001325-Jan-22UW12.121001-Mar-22UW16.0211.424GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comDateRatingPrice(Dkr)PriceTarget(Dkr)02-Aug-21N42.554225-Jan-22UW33.802803-Mar-22UW27.7027DateRatingPrice($)PriceTarget($)14-Jan-21N69.506026-Jan-21N65.727025-Feb-21N50.166501-Mar-21OW48.386505-Mar-21OW40.026129-Mar-21OW34.035126-May-21OW27.814722-Jun-21OW29.855106-Aug-21OW26.004810-Nov-21OW40.725219-Jan-22OW22.834202-Mar-22OW24.8538Thechart(s)showJ.P.Morgan'scontinuingcoverageofthestocks;thecurrentanalystsmayormaynothavecovereditovertheentireperiod.J.P.Morganratingsordesignations:OW=Overweight,N=Neutral,UW=Underweight,NR=NotRatedExplanationofEquityResearchRatings,DesignationsandAnalyst(s)CoverageUniverse:J.P.Morganusesthefollowingratingsystem:Overweight[Overthenextsixtotwelvemonths,weexpectthisstockwilloutperformtheaveragetotalreturnofthestocksintheanalyst’s(ortheanalyst’steam’s)coverageuniverse.]Neutral[Overthenextsixtotwelvemonths,weexpectthisstockwillperforminlinewiththeaveragetotalreturnofthestocksintheanalyst’s(ortheanalyst’steam’s)coverageuniverse.]Underweight[Overthenextsixtotwelvemonths,weexpectthisstockwillunderperformtheaveragetotalreturnofthestocksintheanalyst’s(ortheanalyst’steam’s)coverageuniverse.]NotRated(NR):J.P.Morganhasremovedtheratingand,ifapplicable,thepricetarget,forthisstockbecauseofeitheralackofasufficientfundamentalbasisorforlegal,regulatoryorpolicyreasons.Thepreviousratingand,ifapplicable,thepricetarget,nolongershouldbereliedupon.AnNRdesignationisnotarecommendationorarating.InourAsia(ex-Australiaandex-India)andU.K.small-andmid-capequityresearch,eachstock’sexpectedtotalreturniscomparedtotheexpectedtotalreturnofabenchmarkcountrymarketindex,nottothoseanalysts’coverageuniverse.IfitdoesnotappearintheImportantDisclosuressectionofthisreport,thecertifyinganalyst’scoverageuniversecanbefoundonJ.P.Morgan’sresearchwebsite,https://www.jpmorganmarkets.com.25GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comCoverageUniverse:Jones,Patrick:AluminiumBahrain(ALBH.BH),FirstQuantumMineralsLtd(FM.TO),FresnilloPlc(FRES.L),GreenHydrogenSystems(GREENH.CO),Hochschild(HOCM.L),ITMPower(ITM.L),LundinMining(LUMIN.ST),LundinMiningCorp(LUN.TO),NelASA(NEL.OL),NorskHydro(NHY.OL)Peterson,WilliamC:Blade(BLDE),ChargePoint(CHPT),EVgo(EVGO),Hyliion(HYLN),Hyzon(HYZN),NikolaCorp(NKLA),PlugPower(PLUG),WestportFuelSystems(WPRT)J.P.MorganEquityResearchRatingsDistribution,asofApril02,2022Overweight(buy)Neutral(hold)Underweight(sell)J.P.MorganGlobalEquityResearchCoverage51%37%12%IBclients52%47%36%JPMSEquityResearchCoverage51%37%12%IBclients75%68%51%Pleasenotethatthepercentagesmightnotaddto100%becauseofrounding.Percentageofsubjectcompanieswithineachofthe"buy,""hold"and"sell"categoriesforwhichJ.P.Morganhasprovidedinvestmentbankingserviceswithintheprevious12months.ForpurposesonlyofFINRAratingsdistributionrules,ourOverweightratingfallsintoabuyratingcategory;ourNeutralratingfallsintoaholdratingcategory;andourUnderweightratingfallsintoasellratingcategory.PleasenotethatstockswithanNRdesignationarenotincludedinthetableabove.Thisinformationiscurrentasoftheendofthemostrecentcalendarquarter.EquityValuationandRisks:Forvaluationmethodologyandrisksassociatedwithcoveredcompaniesorpricetargetsforcoveredcompanies,pleaseseethemostrecentcompany-specificresearchreportathttp://www.jpmorganmarkets.com,contacttheprimaryanalystoryourJ.P.Morganrepresentative,oremailresearch.disclosure.inquiries@jpmorgan.com.Formaterialinformationabouttheproprietarymodelsused,pleaseseetheSummaryofFinancialsincompany-specificresearchreportsandtheCompanyTearsheets,whichareavailabletodownloadonthecompanypagesofourclientwebsite,http://www.jpmorganmarkets.com.Thisreportalsosetsoutwithinitthematerialunderlyingassumptionsused.AhistoryofJ.P.Morganinvestmentrecommendationsdisseminatedduringthepreceding12monthscanbeaccessedontheResearch&Commentarypageofhttp://www.jpmorganmarkets.comwhereyoucanalsosearchbyanalystname,sectororfinancialinstrument.Analysts'Compensation:Theresearchanalystsresponsibleforthepreparationofthisreportreceivecompensationbaseduponvariousfactors,includingthequalityandaccuracyofresearch,clientfeedback,competitivefactors,andoverallfirmrevenues.Registrationofnon-USAnalysts:Unlessotherwisenoted,thenon-USanalystslistedonthefrontofthisreportareemployeesofnon-USaffiliatesofJ.P.MorganSecuritiesLLC,maynotberegisteredasresearchanalystsunderFINRArules,maynotbeassociatedpersonsofJ.P.MorganSecuritiesLLC,andmaynotbesubjecttoFINRARule2241or2242restrictionsoncommunicationswithcoveredcompanies,publicappearances,andtradingsecuritiesheldbyaresearchanalystaccount.OtherDisclosuresJ.P.MorganisamarketingnameforinvestmentbankingbusinessesofJPMorganChase&Co.anditssubsidiariesandaffiliatesworldwide.UKMIFIDFICCresearchunbundlingexemption:UKclientsshouldrefertoUKMIFIDResearchUnbundlingexemptionfordetailsofJPMorgan’simplementationoftheFICCresearchexemptionandguidanceonrelevantFICCresearchcategorisation.Allresearchmaterialmadeavailabletoclientsaresimultaneouslyavailableonourclientwebsite,J.P.MorganMarkets,unlessspecificallypermittedbyrelevantlaws.Notallresearchcontentisredistributed,e-mailedormadeavailabletothird-partyaggregators.Forallresearchmaterialavailableonaparticularstock,pleasecontactyoursalesrepresentative.AnylongformnomenclatureforreferencestoChina;HongKong;Taiwan;andMacauwithinthisresearchmaterialareMainlandChina;HongKongSAR(China);Taiwan(China);andMacauSAR(China).J.P.MorganResearchmay,fromtimetotime,writeonissuersorsecuritiestargetedbyeconomicorfinancialsanctionsimposedoradministeredbythegovernmentalauthoritiesoftheU.S.,EU,UKorotherrelevantjurisdictions(SanctionedSecurities).Nothinginthisreportisintendedtobereadorconstruedasencouraging,facilitating,promotingorotherwiseapprovinginvestmentordealinginsuchSanctionedSecurities.Clientsshouldbeawareoftheirownlegalandcomplianceobligationswhenmakinginvestmentdecisions.26GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comOptionsandFuturesrelatedresearch:Iftheinformationcontainedhereinregardsoptions-orfutures-relatedresearch,suchinformationisavailableonlytopersonswhohavereceivedtheproperoptionsorfuturesriskdisclosuredocuments.PleasecontactyourJ.P.MorganRepresentativeorvisithttps://www.theocc.com/components/docs/riskstoc.pdfforacopyoftheOptionClearingCorporation'sCharacteristicsandRisksofStandardizedOptionsorhttp://www.finra.org/sites/default/files/Security_Futures_Risk_Disclosure_Statement_2018.pdfforacopyoftheSecurityFuturesRiskDisclosureStatement.ChangestoInterbankOfferedRates(IBORs)andotherbenchmarkrates:Certaininterestratebenchmarksare,ormayinthefuturebecome,subjecttoongoinginternational,nationalandotherregulatoryguidance,reformandproposalsforreform.Formoreinformation,pleaseconsult:https://www.jpmorgan.com/global/disclosures/interbank_offered_ratesPrivateBankClients:WhereyouarereceivingresearchasaclientoftheprivatebankingbusinessesofferedbyJPMorganChase&Co.anditssubsidiaries(“J.P.MorganPrivateBank”),researchisprovidedtoyoubyJ.P.MorganPrivateBankandnotbyanyotherdivisionofJ.P.Morgan,including,butnotlimitedto,theJ.P.MorganCorporateandInvestmentBankanditsGlobalResearchdivision.Legalentityresponsiblefortheproductionanddistributionofresearch:ThelegalentityidentifiedbelowthenameoftheRegACResearchAnalystwhoauthoredthismaterialisthelegalentityresponsiblefortheproductionofthisresearch.WheremultipleRegACResearchAnalystsauthoredthismaterialwithdifferentlegalentitiesidentifiedbelowtheirnames,theselegalentitiesarejointlyresponsiblefortheproductionofthisresearch.ResearchAnalystsfromvariousJ.P.Morganaffiliatesmayhavecontributedtotheproductionofthismaterialbutmaynotbelicensedtocarryoutregulatedactivitiesinyourjurisdiction(anddonotholdthemselvesoutasbeingabletodoso).Unlessotherwisestatedbelow,thismaterialhasbeendistributedbythelegalentityresponsibleforproduction.Ifyouhaveanyqueries,pleasecontacttherelevantResearchAnalystinyourjurisdictionortheentityinyourjurisdictionthathasdistributedthisresearchmaterial.LegalEntitiesDisclosuresandCountry-/Region-SpecificDisclosures:Argentina:JPMorganChaseBankN.ASucursalBuenosAiresisregulatedbyBancoCentraldelaRepúblicaArgentina(“BCRA”-CentralBankofArgentina)andComisiónNacionaldeValores(“CNV”-ArgentinianSecuritiesCommission”-ALYCyANIntegralN°51).Australia:J.P.MorganSecuritiesAustraliaLimited(“JPMSAL”)(ABN61003245234/AFSLicenceNo:238066)isregulatedbytheAustralianSecuritiesandInvestmentsCommissionandisaMarket,ClearingandSettlementParticipantofASXLimitedandCHI-X.ThismaterialisissuedanddistributedinAustraliabyoronbehalfofJPMSALonlyto"wholesaleclients"(asdefinedinsection761GoftheCorporationsAct2001).Alistofallfinancialproductscoveredcanbefoundbyvisitinghttps://www.jpmm.com/research/disclosures.J.P.MorganseekstocovercompaniesofrelevancetothedomesticandinternationalinvestorbaseacrossallGlobalIndustryClassificationStandard(GICS)sectors,aswellasacrossarangeofmarketcapitalisationsizes.Ifapplicable,inthecourseofconductingpublicsideduediligenceonthesubjectcompany(ies),theResearchAnalystteammayattimesperformsuchdiligencethroughcorporateengagementssuchassitevisits,discussionswithcompanyrepresentatives,managementpresentations,etc.ResearchissuedbyJPMSALhasbeenpreparedinaccordancewithJ.P.MorganAustralia’sResearchIndependencePolicywhichcanbefoundatthefollowinglink:J.P.MorganAustralia-ResearchIndependencePolicy.Brazil:BancoJ.P.MorganS.A.isregulatedbytheComissaodeValoresMobiliarios(CVM)andbytheCentralBankofBrazil.OmbudsmanJ.P.Morgan:0800-7700847/ouvidoria.jp.morgan@jpmorgan.com.Canada:J.P.MorganSecuritiesCanadaInc.isaregisteredinvestmentdealer,regulatedbytheInvestmentIndustryRegulatoryOrganizationofCanadaandtheOntarioSecuritiesCommissionandistheparticipatingmemberonCanadianexchanges.ThismaterialisdistributedinCanadabyoronbehalfofJ.P.MorganSecuritiesCanadaInc.Chile:InversionesJ.P.MorganLimitadaisanunregulatedentityincorporatedinChile.China:J.P.MorganSecurities(China)CompanyLimitedhasbeenapprovedbyCSRCtoconductthesecuritiesinvestmentconsultancybusiness.DubaiInternationalFinancialCentre(DIFC):JPMorganChaseBank,N.A.,DubaiBranchisregulatedbytheDubaiFinancialServicesAuthority(DFSA)anditsregisteredaddressisDubaiInternationalFinancialCentre-TheGate,WestWing,Level3and9POBox506551,Dubai,UAE.ThismaterialhasbeendistributedbyJPMorganChaseBank,N.A.,DubaiBranchtopersonsregardedasprofessionalclientsormarketcounterpartiesasdefinedundertheDFSArules.EuropeanEconomicArea(EEA):Unlessspecifiedtothecontrary,researchisdistributedintheEEAbyJ.P.MorganSE(“JPMSE”),whichissubjecttoprudentialsupervisionbytheEuropeanCentralBank(“ECB”)incooperationwithBaFinandDeutscheBundesbankinGermany.JPMSEisacompanyheadquarteredinFrankfurtwithregisteredaddressatTaunusTurm,Taunustor1,FrankfurtamMain,60310,Germany.ThematerialhasbeendistributedintheEEAtopersonsregardedasprofessionalinvestors(orequivalent)pursuanttoArt.4para.1no.10andAnnexIIofMiFIDIIanditsrespectiveimplementationintheirhomejurisdictions(“EEAprofessionalinvestors”).ThismaterialmustnotbeactedonorreliedonbypersonswhoarenotEEAprofessionalinvestors.AnyinvestmentorinvestmentactivitytowhichthismaterialrelatesisonlyavailabletoEEArelevantpersonsandwillbeengagedinonlywithEEArelevantpersons.HongKong:J.P.MorganSecurities(AsiaPacific)Limited(CEnumberAAJ321)isregulatedbytheHongKongMonetaryAuthorityandtheSecuritiesandFuturesCommissioninHongKong,andJ.P.MorganBroking(HongKong)Limited(CEnumberAAB027)isregulatedbytheSecuritiesandFuturesCommissioninHongKong.JPMorganChaseBank,N.A.,HongKong(CENumberAAL996)isregulatedbytheHongKongMonetaryAuthorityandtheSecuritiesandFuturesCommission,isorganizedunderthelawsoftheUnitedStateswithlimitedliability.India:J.P.MorganIndiaPrivateLimited(CorporateIdentityNumber-U67120MH1992FTC068724),havingitsregisteredofficeatJ.P.MorganTower,Off.C.S.T.Road,Kalina,Santacruz-East,Mumbai–400098,isregisteredwiththeSecuritiesandExchangeBoardofIndia(SEBI)asa‘ResearchAnalyst’havingregistrationnumberINH000001873.J.P.MorganIndiaPrivateLimitedisalsoregisteredwithSEBIasamemberoftheNationalStockExchangeofIndia27GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comLimitedandtheBombayStockExchangeLimited(SEBIRegistrationNumber–INZ000239730)andasaMerchantBanker(SEBIRegistrationNumber-MB/INM000002970).Telephone:91-22-61573000,Facsimile:91-22-61573990andWebsite:http://www.jpmipl.com.JPMorganChaseBank,N.A.-MumbaiBranchislicensedbytheReserveBankofIndia(RBI)(LicenceNo.53/LicenceNo.BY.4/94;SEBI-IN/CUS/014/CDSL:IN-DP-CDSL-444-2008/IN-DP-NSDL-285-2008/INBI00000984/INE231311239)asaScheduledCommercialBankinIndia,whichisitsprimarylicenseallowingittocarryonBankingbusinessinIndiaandotheractivities,whichaBankbranchinIndiaarepermittedtoundertake.Fornon-localresearchmaterial,thismaterialisnotdistributedinIndiabyJ.P.MorganIndiaPrivateLimited.Indonesia:PTJ.P.MorganSekuritasIndonesiaisamemberoftheIndonesiaStockExchangeandisregulatedbytheOJKa.k.a.BAPEPAMLK.Korea:J.P.MorganSecurities(FarEast)Limited,SeoulBranch,isamemberoftheKoreaExchange(KRX).JPMorganChaseBank,N.A.,SeoulBranch,islicensedasabranchofficeofforeignbank(JPMorganChaseBank,N.A.)inKorea.BothentitiesareregulatedbytheFinancialServicesCommission(FSC)andtheFinancialSupervisoryService(FSS).Fornon-macroresearchmaterial,thematerialisdistributedinKoreabyorthroughJ.P.MorganSecurities(FarEast)Limited,SeoulBranch.Japan:JPMorganSecuritiesJapanCo.,Ltd.andJPMorganChaseBank,N.A.,TokyoBranchareregulatedbytheFinancialServicesAgencyinJapan.Malaysia:ThismaterialisissuedanddistributedinMalaysiabyJPMorganSecurities(Malaysia)SdnBhd(18146-X),whichisaParticipatingOrganizationofBursaMalaysiaBerhadandholdsaCapitalMarketsServicesLicenseissuedbytheSecuritiesCommissioninMalaysia.Mexico:J.P.MorganCasadeBolsa,S.A.deC.V.andJ.P.MorganGrupoFinancieroaremembersoftheMexicanStockExchangeandareauthorizedtoactasabrokerdealerbytheNationalBankingandSecuritiesExchangeCommission.NewZealand:ThismaterialisissuedanddistributedbyJPMSALinNewZealandonlyto"wholesaleclients"(asdefinedintheFinancialMarketsConductAct2013).JPMSALisregisteredasaFinancialServiceProviderundertheFinancialServiceproviders(RegistrationandDisputeResolution)Actof2008.Pakistan:J.P.MorganPakistanBroking(Pvt.)LtdisamemberoftheKarachiStockExchangeandregulatedbytheSecuritiesandExchangeCommissionofPakistan.Philippines:J.P.MorganSecuritiesPhilippinesInc.isaTradingParticipantofthePhilippineStockExchangeandamemberoftheSecuritiesClearingCorporationofthePhilippinesandtheSecuritiesInvestorProtectionFund.ItisregulatedbytheSecuritiesandExchangeCommission.Russia:CBJ.P.MorganBankInternationalLLCisregulatedbytheCentralBankofRussia.Singapore:ThismaterialisissuedanddistributedinSingaporebyorthroughJ.P.MorganSecuritiesSingaporePrivateLimited(JPMSS)[MCI(P)093/09/2021andCo.Reg.No.:199405335R],whichisamemberoftheSingaporeExchangeSecuritiesTradingLimited,and/orJPMorganChaseBank,N.A.,Singaporebranch(JPMCBSingapore),bothofwhichareregulatedbytheMonetaryAuthorityofSingapore.ThismaterialisissuedanddistributedinSingaporeonlytoaccreditedinvestors,expertinvestorsandinstitutionalinvestors,asdefinedinSection4AoftheSecuritiesandFuturesAct,Cap.289(SFA).Thismaterialisnotintendedtobeissuedordistributedtoanyretailinvestorsoranyotherinvestorsthatdonotfallintotheclassesof“accreditedinvestors,”“expertinvestors”or“institutionalinvestors,”asdefinedunderSection4AoftheSFA.RecipientsofthismaterialinSingaporearetocontactJPMSSorJPMCBSingaporeinrespectofanymattersarisingfrom,orinconnectionwith,thematerial.Asatthedateofthismaterial,JPMSSisadesignatedmarketmakerforcertainstructuredwarrantslistedontheSingaporeExchangewheretheunderlyingsecuritiesmaybethesecuritiesdiscussedinthismaterial.Arisingfromitsroleasadesignatedmarketmakerforsuchstructuredwarrants,JPMSSmayconducthedgingactivitiesinrespectofsuchunderlyingsecuritiesandholdorhaveaninterestinsuchunderlyingsecuritiesasaresult.TheupdatedlistofstructuredwarrantsforwhichJPMSSactsasdesignatedmarketmakermaybefoundonthewebsiteoftheSingaporeExchangeLimited:http://www.sgx.com.SouthAfrica:J.P.MorganEquitiesSouthAfricaProprietaryLimitedandJPMorganChaseBank,N.A.,JohannesburgBrancharemembersoftheJohannesburgSecuritiesExchangeandareregulatedbytheFinancialServicesBoard.Taiwan:J.P.MorganSecurities(Taiwan)LimitedisaparticipantoftheTaiwanStockExchange(company-type)andregulatedbytheTaiwanSecuritiesandFuturesBureau.MaterialrelatingtoequitysecuritiesisissuedanddistributedinTaiwanbyJ.P.MorganSecurities(Taiwan)Limited,subjecttothelicensescopeandtheapplicablelawsandtheregulationsinTaiwan.AccordingtoParagraph2,Article7-1ofOperationalRegulationsGoverningSecuritiesFirmsRecommendingTradesinSecuritiestoCustomers(asamendedorsupplemented)and/orotherapplicablelawsorregulations,pleasenotethattherecipientofthismaterialisnotpermittedtoengageinanyactivitiesinconnectionwiththematerialthatmaygiverisetoconflictsofinterests,unlessotherwisedisclosedinthe“ImportantDisclosures”inthismaterial.Thailand:ThismaterialisissuedanddistributedinThailandbyJPMorganSecurities(Thailand)Ltd.,whichisamemberoftheStockExchangeofThailandandisregulatedbytheMinistryofFinanceandtheSecuritiesandExchangeCommission,anditsregisteredaddressis3rdFloor,20NorthSathornRoad,Silom,Bangrak,Bangkok10500.UK:Unlessspecifiedtothecontrary,researchisdistributedintheUKbyJ.P.MorganSecuritiesplc(“JPMSplc”)whichisamemberoftheLondonStockExchangeandisauthorisedbythePrudentialRegulationAuthorityandregulatedbytheFinancialConductAuthorityandthePrudentialRegulationAuthority.JPMSplcisregisteredinEngland&WalesNo.2711006,RegisteredOffice25BankStreet,London,E145JP.ThismaterialisdirectedintheUKonlyto:(a)personshavingprofessionalexperienceinmattersrelatingtoinvestmentsfallingwithinarticle19(5)oftheFinancialServicesandMarketsAct2000(FinancialPromotion)(Order)2005(“theFPO”);(b)personsoutlinedinarticle49oftheFPO(highnetworthcompanies,unincorporatedassociationsorpartnerships,thetrusteesofhighvaluetrusts,etc.);or(c)anypersonstowhomthiscommunicationmayotherwiselawfullybemade;allsuchpersonsbeingreferredtoas"UKrelevantpersons".ThismaterialmustnotbeactedonorreliedonbypersonswhoarenotUKrelevantpersons.AnyinvestmentorinvestmentactivitytowhichthismaterialrelatesisonlyavailabletoUKrelevantpersonsandwillbeengagedinonlywithUKrelevantpersons.ResearchissuedbyJPMSplchasbeenpreparedinaccordancewithJPMSplc'spolicyforpreventionandavoidanceofconflictsofinterestrelatedtotheproductionofResearchwhichcanbefoundatthefollowinglink:J.P.MorganEMEA-ResearchIndependencePolicy.U.S.:J.P.MorganSecuritiesLLC(“JPMS”)isamemberoftheNYSE,FINRA,SIPC,andtheNFA.JPMorganChaseBank,N.A.isamemberoftheFDIC.Materialpublishedbynon-U.S.affiliatesisdistributedintheU.S.byJPMSwhoacceptsresponsibilityforitscontent.28GlobalEquityResearch22April2022PatrickJones(44-20)7742-5964patrick.jones@jpmorgan.comGeneral:Additionalinformationisavailableuponrequest.Theinformationinthismaterialhasbeenobtainedfromsourcesbelievedtobereliable.Whileallreasonablecarehasbeentakentoensurethatthefactsstatedinthismaterialareaccurateandthattheforecasts,opinionsandexpectationscontainedhereinarefairandreasonable,JPMorganChase&Co.oritsaffiliatesand/orsubsidiaries(collectivelyJ.P.Morgan)makenorepresentationsorwarrantieswhatsoevertothecompletenessoraccuracyofthematerialprovided,exceptwithrespecttoanydisclosuresrelativetoJ.P.MorganandtheResearchAnalyst'sinvolvementwiththeissuerthatisthesubjectofthematerial.Accordingly,norelianceshouldbeplacedontheaccuracy,fairnessorcompletenessoftheinformationcontainedinthismaterial.Anydatadiscrepanciesinthismaterialcouldbetheresultofdifferentcalculationsand/oradjustments.J.P.Morganacceptsnoliabilitywhatsoeverforanylossarisingfromanyuseofthismaterialoritscontents,andneitherJ.P.Morgannoranyofitsrespectivedirectors,officersoremployees,shallbeinanywayresponsibleforthecontentshereof,apartfromtheliabilitiesandresponsibilitiesthatmaybeimposedonthembytherelevantregulatoryauthorityinthejurisdictioninquestion,ortheregulatoryregimethereunder.Opinions,forecastsorprojectionscontainedinthismaterialrepresentJ.P.Morgan'scurrentopinionsorjudgmentasofthedateofthematerialonlyandarethereforesubjecttochangewithoutnotice.Periodicupdatesmaybeprovidedoncompanies/industriesbasedoncompany-specificdevelopmentsorannouncements,marketconditionsoranyotherpubliclyavailableinformation.Therecanbenoassurancethatfutureresultsoreventswillbeconsistentwithanysuchopinions,forecastsorprojections,whichrepresentonlyonepossibleoutcome.Furthermore,suchopinions,forecastsorprojectionsaresubjecttocertainrisks,uncertaintiesandassumptionsthathavenotbeenverified,andfutureactualresultsoreventscoulddiffermaterially.Thevalueof,orincomefrom,anyinvestmentsreferredtointhismaterialmayfluctuateand/orbeaffectedbychangesinexchangerates.Allpricingisindicativeasofthecloseofmarketforthesecuritiesdiscussed,unlessotherwisestated.Pastperformanceisnotindicativeoffutureresults.Accordingly,investorsmayreceivebacklessthanoriginallyinvested.Thismaterialisnotintendedasanofferorsolicitationforthepurchaseorsaleofanyfinancialinstrument.Theopinionsandrecommendationshereindonottakeintoaccountindividualclientcircumstances,objectives,orneedsandarenotintendedasrecommendationsofparticularsecurities,financialinstrumentsorstrategiestoparticularclients.Therecipientsofthismaterialmustmaketheirownindependentdecisionsregardinganysecuritiesorfinancialinstrumentsmentionedhereinandshouldseekadvicefromsuchindependentfinancial,legal,taxorotheradviserastheydeemnecessary.J.P.MorganmaytradeasaprincipalonthebasisoftheResearchAnalysts’viewsandresearch,anditmayalsoengageintransactionsforitsownaccountorforitsclients’accountsinamannerinconsistentwiththeviewstakeninthismaterial,andJ.P.Morganisundernoobligationtoensurethatsuchothercommunicationisbroughttotheattentionofanyrecipientofthismaterial.OtherswithinJ.P.Morgan,includingStrategists,SalesstaffandotherResearchAnalysts,maytakeviewsthatareinconsistentwiththosetakeninthismaterial.EmployeesofJ.P.Morgannotinvolvedinthepreparationofthismaterialmayhaveinvestmentsinthesecurities(orderivativesofsuchsecurities)mentionedinthismaterialandmaytradetheminwaysdifferentfromthosediscussedinthismaterial.Thismaterialisnotanadvertisementforormarketingofanyissuer,itsproductsorservices,oritssecuritiesinanyjurisdiction."OtherDisclosures"lastrevisedApril09,2022.Copyright2022JPMorganChase&Co.Allrightsreserved.Thismaterialoranyportionhereofmaynotbereprinted,soldorredistributedwithoutthewrittenconsentofJ.P.Morgan.#$J&098$#PCompleted21Apr202211:54PMBSTDisseminated22Apr202212:15AMBST
VIP
