Will H2APEX Group (ETR:H2A) Spend Its Cash Wisely?

H2APEX Group (ETR:H2A), a leading developer and operator of green hydrogen plants, has seen significant revenue growth and is actively participating in tenders for hydrogen plant projects. With a strong cash position and plans for future investments, the company faces the challenge of allocating its capital expenditures (CAPEX) effectively. This article explores whether H2APEX Group will spend its cash wisely by examining its recent CAPEX trends, key investment opportunities, and strategic objectives.

H2APEX Group has allocated its capital expenditures (CAPEX) in the following ways in recent years:

* In 2024, CAPEX as a percentage of current assets was 76.34%, and as a percentage of EBITDA, it was -72.53%. This indicates a significant investment in the company's operations and projects.
* In 2023, CAPEX as a percentage of current assets was 30.16%, and as a percentage of EBITDA, it was -48.72%. This shows a lower level of investment compared to 2024 but still significant.
* In 2022, CAPEX as a percentage of current assets was 90.06%, and as a percentage of EBITDA, it was -291.99%. This indicates a high level of investment in the company's operations and projects.
* In 2021, CAPEX as a percentage of current assets was 146.47%, and as a percentage of EBITDA, it was 2,170.6%. This shows an extremely high level of investment, which could be attributed to specific projects or acquisitions.

Looking at the expected CAPEX trends in the near future, H2APEX Group is planning to invest in the large-scale 100 MW H2ERO project, with an expected investment volume of EUR 213 million. This project is expected to generate yearly recurring revenues in the mid double-digit million Euro range once it is operational in 2028. Additionally, H2APEX Group is actively participating in tenders for hydrogen plant projects and expects future awards, which may lead to further CAPEX allocations.

Key investment opportunities and projects that H2APEX Group is considering include:

1. H2ERO Project: This large-scale 100 MW green hydrogen project aligns with the company's strategic objective of generating recurring revenue from its own operation of hydrogen plants and the sale of green hydrogen.
2. Hy2Infra Project: H2APEX's H2ERO project is part of the Hy2Infra project, which is one of the three important projects of common European interest (IPCEI) in the hydrogen value chain. This project aligns with the company's strategic objective of expanding its project pipeline and becoming a leading market player in the realization of hydrogen plants in Germany.
3. Tenders for Hydrogen Plant Projects: H2APEX is actively participating in tenders for hydrogen plant projects and expects future awards. This aligns with the company's strategic objective of developing, building, and selling or operating green hydrogen plants with an electrolysis capacity below 1 GW.
4. Revenue Growth and Expansion: H2APEX saw a significant revenue increase, reaching EUR 25.2 million in the first three quarters of 2024, showcasing a sixfold growth compared to the previous year. The company revised its revenue forecast upwards to at least EUR 28 million for 2024, reflecting an 83% growth compared to 2023. This growth aligns with the company's strategic objective of becoming an internationally established developer and operator of hydrogen plants.

In conclusion, H2APEX Group has a strong cash position and plans to invest in key projects and opportunities that align with its strategic objectives. The company's recent CAPEX trends indicate a significant level of investment in its operations and projects, with a focus on the H2ERO project and other potential hydrogen plant projects in the near future. While the company faces challenges such as supply chain issues and potential liabilities related to the Zantac drug, it remains well-positioned to capitalize on the growing demand for green hydrogen and generate steady growth. Investors should monitor H2APEX Group's progress and assess whether the company is spending its cash wisely as it pursues its strategic objectives.