- AmmPower is a clean energy company dedicated to green ammonia production, whose flagship product, the Independent Ammonia Making Machine, is making inroads into the more than US$200 billion global ammonia market
- IAMM units can produce up to 4 metric tonnes of ammonia per day at 2-4x better unit economics than its competitors
AmmPower (CSE:AMMP) is a clean energy company dedicated to green ammonia production, whose flagship product, the Independent Ammonia Making Machine (IAMM), is making inroads into the over US$200 billion global ammonia market.
The company has accumulated sales prospects for more than 690 units, spanning 52 countries, with near-term (six to nine months) booking potential in excess of US$30 million as of August 2023.
If the company were to achieve even a fraction of this number, the effects would be transformational for the stock and the business’ long-term viability because AmmPower hasn’t produced any revenue since going public in 2020. The question then becomes, how likely is the company to impress potential investors with its proven technology? The answer, thanks to a number of key features and milestones, is strongly positive.
IAMM units can produce up to 4 metric tonnes of ammonia per day at 2-4x better unit economics than competitors thanks to its modularity and limited inputs (water, air and electricity), a stark contrast to 98 per cent of the ammonia industry depending on fossil fuels.
AmmPower’s resulting carbon-free product is suitable for agricultural fertilizers and industrial applications across textiles, refrigeration, mining, cosmetics, pharmaceuticals and semiconductors. Of particular interest is the production of carbon-free shipping fuel and transporting hydrogen as ammonia, two key areas to reducing the approximately 500 million metric tonnes of CO2 emitted annually from ammonia production (1.8 per cent of global CO2 emissions in 2019).
IAMMs also benefit from high-efficiency specs, which allow for the fertilization of more than 10,000 acres per year with just one unit, and vertically integrated engineering, procurement and construction, which dwindles order turnaround time to within a year, compared with an industry average of more than three years.
Led by a management team with more than 200 years of combined ammonia industry experience, we think IAMM’s increased cost savings and efficiency, backed by a global tailwind toward sustainability, are a clear value-add that industry players of any size would want to have in their back pockets. And given the machines’ hefty up to US$5 million price tag, the company is likely only one deal away from reversing its stock’s abysmal 88.71 per cent drop year-over-year.
Morningstar’s Quantitative Equity Research Report echoes our view, granting AmmPower a fair value of C$0.07 per share, which amounts to a 44.17 per cent discount from the closing price of C$0.035 on March 5, 2024. That said, the research firm tempers its optimism by rating the uncertainty surrounding AmmPower’s business plan as very high to extreme, meaning its fair value estimate for the company may change by 35 to over 80 per cent from quarter to quarter.
LSEG’s Stock Reports Plus analysis is similarly hedged, ranking the stock a 6 out of 10 based on earnings, fundamentals, relative valuation, risk and price momentum, capturing the coin flip nature of investing in a promising technology with no sales.
The takeaway here is that it’s very early days to assess or invest in AmmPower, since its technology, although demonstrated, has yet to prove itself in the marketplace, making it essential for you to perform a full due diligence process before interpreting this tanking stock as undervalued.
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