A very interesting article on Hydrogen published by Japanese bank Nomura. Here is an excerpt which they claim to be a game changer:
"....In an effort to build trust and support, earlier this year the EU announced the formation of the European Hydrogen Bank (EHB), established as a major funding scheme to ramp up the hydrogen value chain. The EHB is seen as a market-making tool supporting both the domestic production and consumption of renewable and low-carbon hydrogen and the import of hydrogen and its derivatives, including the provision of guarantees to commercial banks...."
Hi, I appreciate your blog very much and read all of your posts. Being an investment novice, I look forward very much to learn more from you and admire your work a lot.
Thank you, the hydrogen idea is interesting. I wonder if you have found any charts / evidence to show that hydrogen powered vehicles / aircraft / ships are steadily stealing market share from electric / hybrid / ICE ones? As I am guessing that the market for source of energy of mobile vehicles is most likely a winner takes all market, as after all, it is quite unlikely that any city will develop several separate sources of recharging / refueling infrastructure for all types of vehicles.
I have found several interesting stocks / points that I would like to ask your opinion on:
1/ For Airtel Africa,
I have read that the E payment in Africa is very fragmented.
What would be the final total addressable market?
What competitive advantages that the company has in comparison to other competitors?
After several years, would you imagine that this company will become a market leader and be consistently profitable?
Or are there any other formidable competitors that is backed by huge capital and likely leading the market into price war?
2/ For Alibaba thesis,
I notice that the growth of cloud has slowed down last year [arguably due to COVID policy], but I want to check if our assumption of long term growth of cloud market is right in China or not. I fear that the demand for cloud service for China [Economy mostly mostly based on industrial] is very different from US [Economy mostly based on virtual / financial / software] such that we cannot project the same results in China.
Have you found any market research material on the customers of cloud service in China and their usage trend, whether it is reasonable to project that their use will increase in the long term?
I heard that government customers have switched to state owned enterprise cloud service, so who are the customers of private cloud service [game developer / financial institution etc] ?
And if the trend of 5G / IOT / Big data in manufacturing continue its path of development, would those manufacturers use private cloud service in the manufacturing process or install their own local computer network [thereby forfeiting any benefits to private cloud service]? Which is more cost efficient?
3/ Micron:
I heard famous investors like Pabrai and Li Lui invest heavily in Micron. Initially I tend to agree their judgement that the DRAM market is gonna to grow and is currently already consolidated. But I found that Chinese DRAM companies [e. CXMT, YMTC] are already offering similar products albeit slightly lagged performance, but at 20-30% discount to Micron / Samsung / SK hynix products. I am wondering whether Li Lui and Pabrai are underestimating Chinese companies to level up production capacities and pose threat [I think cheaper slower DRAM though can still be a threat if it is cheap enough]. If we read history, the production throne of DRAM has been switched from US to Japan to Korea over decades.
What made China unable to closely follow Western companies?
Is it the lack of top manufacturing equipment [EUV lithography] or the highly likely political forbiddance of usage of Chinese DRAM products by US government?
Or is it that even if they can catch up, it would mostly take up to a decade as their current market share is below 1%? I have read that the LCD and solar equipment markets are already occupied Chinese companies, though once they were occupied by Western companies like DRAM market too.
4/ Kaspi $KSPI
I recently read an interesting stocks - Kaspi, which operates on Kazakhstan and listed on LSE. It is a combination of E-commerce, payment, fintech and bank for the country, which already occupied the market and highly profitable from what I read.
Can watch a video of the stock here: Artem Fokin from Caro-Kann on Kaspi
Do you think that the numbers are too good to be true? Would appreciate if you can write a thesis on it if it is worth for investment, like elaborating more on the valuation, TAM, competitors and risks.
5/ For the blog, would like to kindly make some suggestions, for example,
a/ occasional follow up on the chosen companies, their development and whether the thesis holds, [sometimes if there are not much new ideas, just some revision of old ideas is better, actually only 1-2 good ideas like Alibaba / Manolete every 1-3 years are already enough; inaction may be better than action];
b/ some write up on historical companies that are highly profitable or falls miserably at the end, how to valuate them at that historical juncture and what lessons can we learn from them.
The hydrogen solution is primarily aimed at industries that are difficult or impossible to decarbonize in any other way.
While the EV solution works for cars, it doesn't work for aviation or shipping. Similarly, heavy industry, such as steel, cement, and chemical production, requires large amounts of energy to operate, making it challenging to switch to renewable energy sources, such as wind or solar, which may not be able to provide the necessary energy intensity. In all of these cases, hydrogen provides the only answer.
Whether hydrogen cars win market share from EVs is to be seen. I am not convinced that EVs are the way forward. There are a number of issues that are hard to ignore:
1. Most people want to charge their car overnight while they sleep. But there is no solar power at night and wind is also lower. As a result the electricity being used to charge the EV is generally from hydrocarbon (dirty) fuels. So EVs may not be so green after all. Green or Blue Hydrogen solves this problem.
2. Not everyone has a charging point at their home. If you live in an apartment block or in a house with no off-street parking then how do you charge your vehicle? This problem doesn't exist for hydrogen.
3. Charging a vehicle is time consuming. A traditional gas filling station can refuel a car in minutes and then the next vehicle is able to refuel. The same would be true for hydrogen refueling. But an electric car is plugged to a charging point for hours resulting in lots of waiting time (wasted time) for those waiting to charge.
4. Batteries only have a finite life. What happens to all those EV batteries when they die? A Tesla battery is 2m long, 1m wide and 15cm thick. Will landfill sites be full of these things in years to come, each being full of toxic chemicals? Is that really green?
5. Batteries use rare earth minerals like lithium and there may not be enough for it to be a sustainable solution. What then? Hydrogen exists in abundance in the atmosphere.
So you can see that all of the excitement around electric cars maybe overdone. Perhaps it is the short term fix until something better comes along. Maybe hydrogen is what we are really waiting for.
Time will tell.
In relation to the other parts of your message, I cannot answer those here because this is a hydrogen energy investment thread and they are out of scope.
A very interesting article on Hydrogen published by Japanese bank Nomura. Here is an excerpt which they claim to be a game changer:
"....In an effort to build trust and support, earlier this year the EU announced the formation of the European Hydrogen Bank (EHB), established as a major funding scheme to ramp up the hydrogen value chain. The EHB is seen as a market-making tool supporting both the domestic production and consumption of renewable and low-carbon hydrogen and the import of hydrogen and its derivatives, including the provision of guarantees to commercial banks...."
See the entire article here: https://capitalmonitor.ai/partner-content/green-hydrogen-will-unlock-scalable-opportunities-in-clean-energy/
Dear Emanuel,
Hi, I appreciate your blog very much and read all of your posts. Being an investment novice, I look forward very much to learn more from you and admire your work a lot.
Thank you, the hydrogen idea is interesting. I wonder if you have found any charts / evidence to show that hydrogen powered vehicles / aircraft / ships are steadily stealing market share from electric / hybrid / ICE ones? As I am guessing that the market for source of energy of mobile vehicles is most likely a winner takes all market, as after all, it is quite unlikely that any city will develop several separate sources of recharging / refueling infrastructure for all types of vehicles.
I have found several interesting stocks / points that I would like to ask your opinion on:
1/ For Airtel Africa,
I have read that the E payment in Africa is very fragmented.
What would be the final total addressable market?
What competitive advantages that the company has in comparison to other competitors?
After several years, would you imagine that this company will become a market leader and be consistently profitable?
Or are there any other formidable competitors that is backed by huge capital and likely leading the market into price war?
2/ For Alibaba thesis,
I notice that the growth of cloud has slowed down last year [arguably due to COVID policy], but I want to check if our assumption of long term growth of cloud market is right in China or not. I fear that the demand for cloud service for China [Economy mostly mostly based on industrial] is very different from US [Economy mostly based on virtual / financial / software] such that we cannot project the same results in China.
Have you found any market research material on the customers of cloud service in China and their usage trend, whether it is reasonable to project that their use will increase in the long term?
I heard that government customers have switched to state owned enterprise cloud service, so who are the customers of private cloud service [game developer / financial institution etc] ?
And if the trend of 5G / IOT / Big data in manufacturing continue its path of development, would those manufacturers use private cloud service in the manufacturing process or install their own local computer network [thereby forfeiting any benefits to private cloud service]? Which is more cost efficient?
3/ Micron:
I heard famous investors like Pabrai and Li Lui invest heavily in Micron. Initially I tend to agree their judgement that the DRAM market is gonna to grow and is currently already consolidated. But I found that Chinese DRAM companies [e. CXMT, YMTC] are already offering similar products albeit slightly lagged performance, but at 20-30% discount to Micron / Samsung / SK hynix products. I am wondering whether Li Lui and Pabrai are underestimating Chinese companies to level up production capacities and pose threat [I think cheaper slower DRAM though can still be a threat if it is cheap enough]. If we read history, the production throne of DRAM has been switched from US to Japan to Korea over decades.
What made China unable to closely follow Western companies?
Is it the lack of top manufacturing equipment [EUV lithography] or the highly likely political forbiddance of usage of Chinese DRAM products by US government?
Or is it that even if they can catch up, it would mostly take up to a decade as their current market share is below 1%? I have read that the LCD and solar equipment markets are already occupied Chinese companies, though once they were occupied by Western companies like DRAM market too.
4/ Kaspi $KSPI
I recently read an interesting stocks - Kaspi, which operates on Kazakhstan and listed on LSE. It is a combination of E-commerce, payment, fintech and bank for the country, which already occupied the market and highly profitable from what I read.
Can watch a video of the stock here: Artem Fokin from Caro-Kann on Kaspi
$KSPI https://www.youtube.com/watch?v=1y1hDtHvM_Q&t=1145s
Do you think that the numbers are too good to be true? Would appreciate if you can write a thesis on it if it is worth for investment, like elaborating more on the valuation, TAM, competitors and risks.
5/ For the blog, would like to kindly make some suggestions, for example,
a/ occasional follow up on the chosen companies, their development and whether the thesis holds, [sometimes if there are not much new ideas, just some revision of old ideas is better, actually only 1-2 good ideas like Alibaba / Manolete every 1-3 years are already enough; inaction may be better than action];
b/ some write up on historical companies that are highly profitable or falls miserably at the end, how to valuate them at that historical juncture and what lessons can we learn from them.
Regards and take care,
YY
YY
Thank you for your comments.
The hydrogen solution is primarily aimed at industries that are difficult or impossible to decarbonize in any other way.
While the EV solution works for cars, it doesn't work for aviation or shipping. Similarly, heavy industry, such as steel, cement, and chemical production, requires large amounts of energy to operate, making it challenging to switch to renewable energy sources, such as wind or solar, which may not be able to provide the necessary energy intensity. In all of these cases, hydrogen provides the only answer.
Whether hydrogen cars win market share from EVs is to be seen. I am not convinced that EVs are the way forward. There are a number of issues that are hard to ignore:
1. Most people want to charge their car overnight while they sleep. But there is no solar power at night and wind is also lower. As a result the electricity being used to charge the EV is generally from hydrocarbon (dirty) fuels. So EVs may not be so green after all. Green or Blue Hydrogen solves this problem.
2. Not everyone has a charging point at their home. If you live in an apartment block or in a house with no off-street parking then how do you charge your vehicle? This problem doesn't exist for hydrogen.
3. Charging a vehicle is time consuming. A traditional gas filling station can refuel a car in minutes and then the next vehicle is able to refuel. The same would be true for hydrogen refueling. But an electric car is plugged to a charging point for hours resulting in lots of waiting time (wasted time) for those waiting to charge.
4. Batteries only have a finite life. What happens to all those EV batteries when they die? A Tesla battery is 2m long, 1m wide and 15cm thick. Will landfill sites be full of these things in years to come, each being full of toxic chemicals? Is that really green?
5. Batteries use rare earth minerals like lithium and there may not be enough for it to be a sustainable solution. What then? Hydrogen exists in abundance in the atmosphere.
So you can see that all of the excitement around electric cars maybe overdone. Perhaps it is the short term fix until something better comes along. Maybe hydrogen is what we are really waiting for.
Time will tell.
In relation to the other parts of your message, I cannot answer those here because this is a hydrogen energy investment thread and they are out of scope.
Regards
James