S&O share: It will soon become the Enapter share

The Enapter vision

Enapter designs and manufactures highly efficient hydrogen generators. The technology is based on anion exchange membrane electrolysis (AEM electrolysis), which Enapter has patented. The company’s vision is to completely replace fossil fuels with green hydrogen and make them more accessible. The production of hydrogen is very energy-intensive. And hydrogen is only green if it is produced using renewable energies. Other companies are also active here: Siemens Energy, Linde, Air Liquide or Nel Asa, for example, are planning to use their electrolysers to reduce industrial CO₂-to make free.

Unlike the big competitors, Enapter uses small electrolysis systems that can be enlarged as required. The electrolysers can also be used in the home or at the petrol station, or they can replace diesel generators. In the municipality of Saerbeck in North Rhine-Westphalia, Enapter wants to set up the first mass production for its electrolysers. Up to 100 million euros are to flow into the highly automated production, which should start production as early as 2021.

The story of Enapter

The history of the company, and therefore of the Enapter share, is somewhat unusual. The founder and CEO of Enapter is the entrepreneur Sebastian-Justus Schmidt, who has been involved in software development for more than 30 years. He founded Enapter in 2017 to build green energy systems. To this end, he took over the technology, patents and the core team of the Italian company, consisting of electrochemists ACTA SpA company The company, based in Pisa, was in bankruptcy at the time. After the takeover, Enapter established itself as a pioneer for sustainable hydrogen electrolysers and further developed the ACTA team and product. Enapter has a seat in Pisa as well as in Berlin and further locations in Europe and Asia. With his investment company BluGreen Company Limited Based in Hong Kong, Sebastian-Justus Schmidt bought into the listed S&O Beteiligungen AG in August this year. This, in turn, had previously emerged from S&O Agrar AG, which had successfully processed its insolvency plan in 2019. Initially, Schmidts BluGreen holds around 61.47 percent of the voting rights and share capital in S&O Beteiligungen AG. In a further step, there will be a capital increase in kind, in which BluGreen will contribute its 100 percent stake in Enapter Berlin and Enapter Pisa. This is how Enapter AG will come into being. The Annual General Meeting of S&O Beteiligungen AG, which will be called Enapter AG in the future, also resolved on October 8, 2020 a cash capital increase of around 6.2 million euros with subscription rights for shareholders at a subscription price of 6.00 euros through the issue of 1,031. 500 shares.

How has the Enapter share performed?

The S&O share (future Enapter share), which was quoted at EUR 0.89 (with a trading volume of zero) on August 10, 2020, on the day the majority takeover by Schmidt’s BluGreen was published, jumped to August 11, 2020 , 46 euros. Since then, the S&O share has risen sharply: At its peak, the future Enapter share cost an incredible 76.50. The company classified the following three events as other relevant upcoming events that also affect the potential trading volume:

• the expiry of the offer period for the mandatory offer of BluGreen Energy Ltd on October 19

• the capital increase in kind currently being implemented through the issue of 20 million shares

• and the cash capital increase resolved by the Annual General Meeting on October 8, 2020 through the issue of 1,031,500 shares

The stock offering will therefore increase significantly in the future, which will improve the tradability of the stock.

Opportunities and risks of the future Enapter share

The first analysts have already put the S&O share, the future Enapter share, under observation. Karsten von Blumenthal, analyst at First Berlin Equity Research, sees a number of strengths and opportunities as well as weaknesses and risks at Enapter. Opportunities and Strengths:

• The company operates in a market for green hydrogen that is at the beginning of a strong and long-term growth phase.

• Enapter is the technology leader in AEM electrolysis.

• Enapter aims to build simple, standardized and inexpensive electrolysers and aims for mass production.

• Enapter owns a growing patent portfolio of approved and pending patents. The most important patent protects Enapper’s core technology, AEM electrolysis with a dry cathode, in Europe, the USA, China and India. We see Enapter as excellently positioned to sustainably defend their competitive edge through patents and further research and development, writes Blumenthal.

Risks and weaknesses:

• Enapter is a small company with about 100 employees and limited resources.

• Enapter was founded in 2017 and therefore only has a very short company history.

• Low capital resources: Enapter recently raised funds (with a volume of 4.2 million euros) for corporate financing through a Series A round. According to the analysis by First Berin, the available funds are nowhere near enough to set up a site for mass production of electrolysers and for the planned company growth.

In addition, there are legal risks from the past: In the securities prospectus (June 29, 2020) for the admission of further shares to trading in the regulated market of the Frankfurt Stock Exchange, S&O Beteiligungen as the issuer writes: BaFin could impose additional fees on the issuer due to violations of capital market regulations which could have a significant negative impact on the result and, as a result, on the company’s equity. BaFin had already imposed a budget of 118,000 euros in 2015 and deferred in 2019. In a letter dated April 2, 2019, BaFin announced that the initial suspicion of neglecting ad hoc notifications from 2013 and 2016 had arisen. Since then, the issuer has not received any further information, even on request, as to whether or not an investigation has been initiated by BaFin, according to the prospectus. Investors who are interested in the interesting companies in the field of hydrogen technologies should keep an eye on the further development of Enapter.

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