CICC has initiated coverage on REFIRE (02570) with an "Outperform" rating and a target price of HK$84.63, based on a P/S valuation method at 7x 2026 P/S. The firm forecasts 2025-2026 EPS at -RMB6.0 and -RMB4.7, respectively. Revenue for the same period is projected at RMB670 million and RMB980 million. The target price implies a 17.5% upside from the current valuation of 5.9x 2026 P/S.
As a leading player in the fuel cell sector, REFIRE is expanding into commercial applications such as heavy-duty trucks and off-grid ultra-fast charging stations, positioning itself for long-term growth. Potential catalysts include favorable hydrogen energy policies and accelerated adoption in the fuel cell industry.
Key insights from CICC: 1. **Rapid Cost Reduction in Fuel Cells**: The firm anticipates fuel cell heavy-duty trucks could achieve cost parity post-2028. Global fuel cell vehicle sales may reach 426,000 units by 2028, with a 97.5% CAGR from 2023-2028. 2. **REFIRE’s Competitive Edge**: - Market leadership (18% share in 2024) with R&D investment surpassing peers. - In-house production of stacks, membrane electrodes, and bipolar plates, driving localization of core components. - Dominance in heavy-duty trucks (42% share in 2023) and expansion into low-cost hydrogen applications. - Integrated hydrogen solutions leveraging electrolyzers and fuel cells.
**Growth Drivers**: - **Electrolyzer and Off-Grid Charging**: REFIRE launched PEM electrolyzers and related products in 2023, enhancing technological synergy. Its 2024 off-grid ultra-fast chargers address demand in highways and tourist sites, alleviating grid pressure. Non-vehicle fuel cell system sales surged 133% YoY to over RMB54 million in 2024. - **Global Expansion**: Overseas revenue accounted for 9% of fuel cell system sales in 2024, with accelerated growth expected.
**Risks**: Policy delays, slower technological advancements, sustained losses, price competition, overseas expansion hurdles, receivables risks, customer concentration, and large share unlocks.
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