Global Decarbonisation Monthly Report | April

• Risk free rates continued to increase in March, with the US 10-year and 30-year Treasury yields closing the month at 1.746% and 2.425% respectively.  Market analysts are referring to a rotation of capital towards value, with the Dow Jones Industrial Average up 5.61% in the month, while the S&P500 was up 3.86% and the Nasdaq flat at 0.91% in the period. As companies have now reported their annual reports for the FY 2020, it gave us the opportunity to go over the key fundamentals for the companies in our universe: revenue growth rates, pricing strategies, market shares, operating margins and net income. What we observe and share in this report are robust top line growth across a variety of decarbonisation solutions – from infrastructure solutions related to renewable energy, to consumer led products like telepresence and plant-based burgers.        
• The world’s first classification system for what constitutes a “green activity”, based on science-based criteria, is under intense debate again. The Financial Times reported on March 22nd that it had received a copy of the draft legal text and that natural gas was being considered by the European Union leaders in Brussels to be added as a sustainable solution. Many countries oppose the change and alert of the risk of locking in more fossil fuel investments. The commission will publish the draft legal act in April.        
• President Biden will be hosting a summit with 40 country leaders on April 22nd, the Earth Day. The focus of the event is the climate crisis, and the US president is expected to make further announcements prior to the event, beyond the pledge of making the US energy sector emissions neutral by 2035 and the American economy net zero by 2050. On the 31st of March, President Biden announced a $2 trillion plan to modernise infrastructure, with transportation, affordable housing, and water being areas of focus.

iClima Global Decarbonisation Enablers Index Performance

Past performance is no guarantee of future performance. Source: Bloomberg, Solactive, HANetf *TNR Index, in USD. 12 Month figures based on 31.03.20 -31.03.21.

Performance in March

Concerns over inflation and long-term interest rates will remain as increasing rates of vaccination fuel expectations of economic recovery. As we will see below, several companies in the Climate change ETF reported very strong sales and financial results for the fiscal year 2020. Past performance is no guarantee of future performance.

The Climate change ETF closed the third month of the year down 1.4%, YTD is now up 2.48%. In March, we continue to see a correction on some of the best performing stocks in 2020, particularly in the EV and Fuel Cell segments, with NIO, Workhorse, Tesla, NEL and PowerCell being in the negative territory as investors took profit, part of the rotation we are seeing in the market.

Past performance is on guarantee of future performance. Source of all data: iClima/ Bloomberg. Data as of 31.03.21

iClima Global Decarbonisation Enablers

Performance Table As of 31.03.21

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 31/03/21

Newsworthy Recently Reported Annual Growth Rates

Plug Power (PLUG, up 1.38% YTD) In their Earnings call on February 25th, the upstate NY based fuel cell maker reported a one-time charge of ca. $456 million in the 4Q19 associated with accelerated vesting of a customer’s warrants. A few weeks after the call the company announced that KPMG will be restating the financials for 2018 and 2019. In 2020, the company reported a 42% growth in gross billings, reaching $337 million, with 9,800 fuel cells sold in the year. Their new guidance is gross billings in excess of $475 million (a 41% growth) in 2021 and $ 750 million in 2022 (a 58% growth).

Li Auto Inc (LI, down 14.98% YTD) The Chinese maker of premium plug-in hybrid electric SUVs started production of its first model, the Li ONE in November 2019. In 2020 it reported delivery of 32,624 units, with 14,464 units sold in 4Q2020. As of March 31st, 2021, the company operated via 65 retail stores in 29 cities and 135 servicing centres. Vehicle sales were RMB 4.06 billion ($621.9 million) in 4Q20, representing a 64.6% increase from RMB 2.46 billion in the 3Q2020. The company is reconfiguring its Changzhou factory for their new model pipeline, especially the full-size premium SUV to be launched in 2022.

Workhorse Group (WKHS, down 31.82% YTD) The Ohio based last mile delivery electric truck company reported sales of $1.39 million in 2020, a growth of ca. 270% over FY 2019. In the earnings call at the beginning of March, CEO Duane Hughes said that production target is 3 trucks a day for the beginning of the year, increasing to 10 a day around the summer. Current backlog order was reported as 8,000 units. In the earnings call, the company commented on the US Postal Service contract for 165,000 delivery trucks. Workhorse delivered six prototypes to the USPS and in February the contract was given to Oshkosh Defense (to supply the trucks as ICEs). The company still hopes the US Postal Service process could be reopened to allow pure EVs into the contract.

Hello Fresh (HFG.DE, up 2.46% YTD) The German based meal kit company reported robust growth last year, prompted by Covid measures and WFH. The company closed 4Q2020 with 5.29 million active customers (of which 2.61 are in the USA), a 78.3% growth versus 4Q2019. The number of orders reached 22 million in the 4Q2020 (a 108.8% growth versus orders in 4Q2019) with the orders per customer increasing 18.3% in the same period (reaching 4.2 orders per customer per quarter). In the FY 2020, the company reported total group revenues of €3.75 billion (a 107.3% growth versus FY 2019) and a contribution margin of 28.2% for the year. Last December the company gave a revenue growth guidance for 2021 as 20% to 25% the 2020 revenue figure.

NIO (NIO, down 22% YTD) The Chinese EV maker reported delivery of 17,353 cars in the 4Q2020. In the FY 2020, total units sold added to 43,728 units, compared with 20,565 in FY 2019 (a 112.6% growth). Total revenues reached RMB 6.64 billion ($1.017 billion) in 4Q2020, representing an increase of 133.2% from 4Q2019 and an increase of 46.7% from 3Q 2020. For FY 2020, total revenues reported as RMB 16.258 billion ($2.49 billion), representing an increase of 107.8% over FY 2019.

Zoom (ZM, down 4.02% YTD) Now a household name, the telepresence company reported on March 18th a total revenue for FY ended on January 31, 2020 a 326% growth to that of the previous year. With that the company reported five consecutive years of doubling revenue, namely:

Source: https://investors.zoom.us/static-files/308bb471-ed70-43a5-b6ff-0397e4d780b6. Past performance is on guarantee of future performance

In the same press release, the company confirmed its revenue guidance for the FY to end in January 2022 as between $3.76 and $3.78 billion (a ca. 42% growth).

Alfen (ALFEN.AS, down 13.5% YTD) The Dutch provider of smart grid solutions, EV charging equipment and energy storage systems reported profitable growth in a challenging year. Revenues in FY 2020 reached € 189 million (an overall 32% growth versus FY2019), with EV charging sales leading the growth up by 105%, followed by energy storage sales up 26% and smart grid revenues up by 14%.

Tesla (TSLA, down 7.9% YTD) The global leader in the EV market reported delivery of ca. 500,000 units in 2020. Of that, 180,667 cars were delivered in the 4Q2020 (a 61% YoY growth). In 2020 ca. 205 MW of solar capacity was deployed (of which 86 MW were sold in 4Q2020, a 59% YoY growth) and 3,022 MWh of storage was deployed in 2020 (of which 1,584 MWh in 4Q2020, a 199% YoY growth) driven by popularity of their Megapack (the utility scale storage product). In the 4Q2020 total revenue reported was $10.74 billion ($7.38 billion was reported in 4Q2019).

Vestas Wind Systems (VWS, down 9.9% YTD) The Danish manufacturer of wind turbines reported €14.8 billion in total revenue in FY 2020, a ca. 22% increase over FY 2019. Last year the company delivered 17,212 MW of equipment and reported an order backlog of 24,630 MW of equipment. Their guidance for 2021 is revenue in the €16-17 billion range (including service revenue).

DocuSign (DOCU, down 6.66% YTD) The California company, pilar of the “anywhere economy”, reported a solid fourth quarter ending on January 31, 2021. Revenue reached $430.9 million in the quarter, a 57% YoY growth and $1.5 billion in the FY (a 49% growth over the previous FY).

Beyond Meat (BYND, up 4.89% YTD) The Californian producer of plant based burgers reported a 2020 FY total revenue of $406.8 million, a 36.6% YoY increase, translating into a gross margin of 30.1% of net revenues. CEO Ethan Brown commented that sales to retail customers more than doubled versus prior year.

Sunnova (NOVA, down 15.33% YTD) A provider of US residential solar and storage reported 4Q2020 sales of $38 million, a 13.1% growth over 3Q2019. In the FY 2020 revenue reached $160.8 million, a 22.2% YoY growth. Total customer count reached 107,500 at the end of December. The company’s guidance for 2021 is that new customers addition will be in the 55k to 58k range.  

Canadian Solar Inc (CSIQ, down 8.0% YTD) The Ontario based manufacturer of solar modules reported that in 2020 it shipped 11.3 GW of solar modules, a 32% annual growth rate. The solar business is their largest segment and in FY 2020 reached $3.1 billion, a 19.8% YoY increase. Interesting to note that 47% of all sales were to customers in Asia, followed by 31% of sales to customers in the Americas, and 22% to customers in Europe & Rest of the world. The company has been pursuing the utility scale battery storage segment. As of January 2021 the company reported a total pipeline of 8,771 MWh of battery storage projects (of which only 3 MWh were in operation, and 913 MWh under construction).

Past performance is no guarantee of future performance. Source of all data: Bloomberg. Data as of 31.03.21

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