{"text":[[{"start":8.39,"text":"What do you do when your core business in the hydrogen-powered vehicle sector isn’t going anywhere fast? You try your hand in another related industry with bigger potential, in this case the equally experimental market for power derived from nuclear fusion."}],[{"start":26.28,"text":"That appears to be the approach from Jiangsu Guofu Hydrogen Energy Equipment Co. Ltd. (2582.HK), which on Monday announced a winning bid for a nuclear fusion-related project. Nuclear fusion and the green energy vehicle technologies that are Guofu’s main business line both share the common element of being powered by hydrogen. Both technologies also require the ability to cool hydrogen down to super low temperatures when it becomes a liquid instead of a gas."}],[{"start":57.370000000000005,"text":"We’re not scientists, so we can’t really comment on whether being a specialist in hydrogen-powered vehicles qualifies you to pursue hydrogen technology for fusion. China and other countries are pumping huge amounts of money into hydrogen fusion technology, which has the potential to create massive amounts of electricity using the huge energy released through the fusing of two hydrogen atoms to create helium."}],[{"start":84.30000000000001,"text":"China is also trying to develop hydrogen for clean-energy vehicles, though most of the rest of the world has largely abandoned such technology due to practical issues. Most notably, the hydrogen used to power vehicles is very expensive to produce. It’s also quite costly to transport and store due to the need for super-cold temperatures."}],[{"start":109.04,"text":"Guofu’s core business selling hydrogen supply systems for vehicles and hydrogen refueling station equipment has basically stalled over the last two years as the industry fails to gain much traction – a sharp contrast with the explosion of electric-powered vehicles. Given that reality, Guofu is trying to bring some excitement back to its stock with its latest announcement of a move into nuclear fusion."}],[{"start":135.24,"text":"According to its announcement, the company won the bid for an 80k cold box procurement project at the Institute of Plasma Physics at the Hefei Institutes of Physical Science. The revenue opportunity from this project is quite small, with Guofu’s bid amount at just 3.2 million yuan ($463,000). Instead, Guofu is hyping this win for giving it a chance to work on the “critical cryogenic systems of a national-level fusion research platform.”"}],[{"start":169.17000000000002,"text":"“The successful bid of the project indicates that the company’s cryogenic engineering capabilities have further expanded from the hydrogen energy sector to key components and system integration of nuclear fusion at low temperature, promoting a new revenue growth point to the group and unlocking synergies between hydrogen energy and nuclear fusion — two future energy technologies,” Guofu said."}],[{"start":195.21,"text":"Shareholders weren’t impressed by the news. Guofu’s stock rose slightly at the open on Tuesday, but then quickly gave back the gains and was down 2.5% in late morning trade. The shares have lost about one-third of their value since Guofu made its IPO in November 2024 just as Hong Kong’s current stock rally was beginning. In a slightly encouraging sign, the stock has rallied 60% since the start of this year, following two other recent business updates. One of those involved a preliminary purchase agreement from an Australian company, and the other a relatively large sale to a demonstration project in Guangdong province."}],[{"start":239.20000000000002,"text":"Anemic market"}],[{"start":241.03000000000003,"text":"You can’t really blame Guofu for its slow progress. The reality is that carmakers haven’t embraced hydrogen technology for the reasons we’ve already stated, despite Beijing’s efforts to promote the sector. Sales of hydrogen vehicles in China totaled just 5,405 in 2024, down from an equally small 5,800 in 2023, according to industry data. The downward trend accelerated in the first half of last year, with sales plunging 47% year-on-year as just 1,373 hydrogen-powered vehicles were sold in the six-month period."}],[{"start":283.32000000000005,"text":"China’s entire national fleet of hydrogen-powered vehicles numbered just 30,000 at the end of last year, well short of the 50,000 the country was targeting, according to data from China’s Hydrogen Fuel Cell Vehicle Industrialization Development Report cited by Fuel Cell Works."}],[{"start":301.81000000000006,"text":"The industry’s failure to take off has taken a toll on Guofu, causing its sales to slip into reverse starting in 2024. After rising 45% in 2023, its revenue fell 12% year-on-year to 459 million yuan in 2024. It slid another 19% in the first half of last year to 109 million yuan, compared with 135 million yuan in the year-ago period."}],[{"start":335.4000000000001,"text":"The company’s two main revenue sources are vehicle-mounted high-pressure hydrogen supply systems used in hydrogen-powered vehicles; and equipment for hydrogen refueling stations. Sales of the former rose 27% in the first half of last year, indicating stable demand from vehicle makers. But hydrogen refueling station equipment sales tumbled 78% during the six-month period, indicating lack of construction of the refueling infrastructure that will be necessary if the industry hopes to ever take off."}],[{"start":372.9400000000001,"text":"The most revealing figure from its balance sheet is Guofu’s inventory, which rose 23% in just six months to 159 million yuan at the end of last June from 129 million at the end of 2024. That shows demand is rapidly fading, leading the company to accumulate big stockpiles of unsold equipment that may eventually have to be written off."}],[{"start":400.3200000000001,"text":"As it continues to lose money, including an 89 million yuan loss in the first half of last year, Guofu has been scrambling to raise new cash to keep funding its operations. It has raised a total of HK$510 million ($65 million) through four share placements since its IPO, which raised another HK$340 million. But its cash was down to 288 million yuan midway through last year from 336 million yuan at the end of 2024 as it continues to lose money."}],[{"start":437.3600000000001,"text":"The company admitted in its midyear report that things aren’t progressing very quickly in China and said it is looking for overseas opportunities to try and jumpstart its growth. In that direction, it said it had identified several promising projects abroad, without providing specifics. The Australia agreement announced in January was probably one of those, though no figures were given for the potential revenue opportunity."}],[{"start":464.71000000000015,"text":"Given the many challenges it faces, you have to credit Guofu for taking creative steps to try to boost its business. The latest move into nuclear fusion looks rather small and is also in another highly experimental area without any big immediate revenue opportunity. Still, if that initiative makes better progress than its core hydrogen vehicle business, then perhaps the stock could be worth a fresh look."}],[{"start":499.2400000000002,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1771975116_6648.mp3"}