CFU - Ceramic Fuel Cells

[Dono]

I can't believe the concensus on this forum that the Bluegen is priced too high, to be honest I am disappointed they are not selling it for more!

let me ask you if you have 100 units do you:

a) sell them for 10k each to collect a million - build cost...
or
b) sell them for 55k each and collect 5.5 million - build cost

It is not like they have an unlimited supply of these devices or the infrastructure already setup to install all of the orders, for each country they sell into they need to co-ordinate with new partners for installations and support. It seems this announcement in the US represents another new partner.

All the rest of the analysis about making your money back on feed in tariffs etc is irrelevant so long as the demand is there. Until production ramps up and they get a decent back log of these units why drop the price?

Australia is also competing with the other countries in the world to buy the Bluegen (A number of which have feed in tariffs / and government discounts). They may consider the product reasonably priced when considering these factors... again why sell it cheaper in Australia just because Australian's don't get a feed in tariff / government discounts.

I am sure if someone made a serious volume bid there would be discounts in play

At the moment no other company has a factory producing fuel cells and CFU's closest compeditor Ceres has stated to be still a year off production at least

These are all my opinions maybe there is some sales / marketing priciple that I don't understand but to me CFU's strategy makes perfect sense.

 

[DAZT49]

Dono,
So you would be quite happy to go down to Harvey Norman ,shell out $55k which will take you 55 years (well a long time)to pay for it?
I think prospective buyers would baulk at that price
For me a better plan is to introduce it at a cheap price and ramp up the price as demand outgrows supply.
While I am no great solar fan, as pricing is being hidden away in the government subsidy...
Quote
"With a 1.5kW solar PV system fully installed from $2499*, you could cut your electricity bill by around $726^ every year. That's an incredible 29%^ return on your initial investment "

I guess it will all come out in the wash but $55k

 

[Knobby22]

The first flat screen TVs were $30,000.

Early adopters alsways pay more.

They are not mass produced yet. The company should be charging as much as they feel the market will bear.

 

[frankblack]

The first flat screen TVs were $30,000.

Early adopters always pay more.

They are not mass produced yet. The company should be charging as much as they feel the market will bear.

Hear hear, I am glad some of the believers are back providing some balance.
Must be the positive market at the moment.

 

[mr. jeff]

Don't get me wrong, their fuel cell units are great products and very promising, our government will come to the party soon, but until they can actually start signing up customers and delivering LOADS of these units, CFU is in struggle town as it has been for quite some time. I believe that the huge amount of engineering that has gone into this will pay off in the long run, and it is getting closer and closer to coming to fruition.

The relationships they are building are fantastic and very important for their future distribution and support networks, I agree; I do think they are going about it in an interesting(!) way, but they need a product that is accessible to customers, not for testing and trialling.

I can't find the exact figure, but they have a market cap of 220M approx. and about 1 billion shares out there. Thats before next quarter's capital raising. And their cash flow - it's all brackets because they are still struggling with their product.

Watch me eat my words very quickly when they announce the first volume order at a lot lower price when production begins. As Peter Lynch always says, then "it's off to the races". Want earnings, not media releases!

One question I will ask, has anyone got any info on where CFU is up to with production, their plant in Germany, current sales plans and forecasts etc.? I feel there is a lack of info, and relatively no negatives in the ASX releases (where avoidable).


Pantene. It won't happen overnight, but it will happen.

 

[Smurf1976]

The first flat screen TVs were $30,000.

Early adopters alsways pay more.

They are not mass produced yet. The company should be charging as much as they feel the market will bear.

Looking at similar situations...

Solar HWS at $3000 (above the cost of a normal water heater) with a saving of $180 a year captured only a small share of the market, and then only in places where the savings were larger than average.

Solar HWS at $1500 saving $300 a year is still struggling, but is making inroads slowly.

Solar rooftop PV at $10,000 saving $240 a year attracted only a very few customers, most of them either hardline greens or engineering / electrical types with cash to spare.

Solar PV at $4000 saving $240 a year attracted a small but significant number of customers, again mostly deep greens or those with a fascination for things electrical.

Solar PV at $2500 saving $360 a year is still struggling, but is certainly selling in reasonable volume. In NSW where it will return around $900 a year, it's still not mainstream although it is clearly becoming more popular.

Solar PV at $0 saving $240+ a year resulted in a flood of orders and the scrapping of the government scheme that enabled this deal to occur in the first place. There's plenty of people around who didn't believe that it was real, that it really was at no cost to them, who aren't happy that they didn't act before the gate slammed shut.

If the BlueGen is to sell in large volume in the Australian market then I'd estimate that it needs to produce at least a 20% annual return on investment, and cost no more than $5000 (at the extreme) upfront. Anything less than that and it will remain a niche product along with geothermal heating, condenser dryers and so on unless government actually forces installation of them.

With the exception of slow combustion heaters in Tasmania during the early 1980's, an unusual circumstance driven by the oil price shock and politics surrounding electricity generation at the time, I can't think of a single example of any energy saving technology that has been rapidly embraced by consumers in this country. Not one. Even energy saving lighting with minimal upfront cost went nowhere for 20 years until government mandadted it. Other than that, to the extent that consumers chose efficiency they did so due to some other benefit with energy efficiency being a secondary benefit.

 

[Dono]

Dono,
So you would be quite happy to go down to Harvey Norman ,shell out $55k which will take you 55 years (well a long time)to pay for it?

Of course not, but that is beside the point... there are rich people / companies that will. No one is going to place an offtake agreement of a thousand units without testing it themselves and seeing how it works etc. This opportunity to test the unit costs 55k.

IMHO the sale of the 30 Blugens for the Aurora project was a marketing ploy to get the Government on side, every other sale has been to a big utility that has the capacity to take on a big offtake agreement later on.

from the last quarterly update:

Inventory components for BlueGen units are being built up to meet expected future demand. At year end the value of these items in inventory was AUD 1.3m (GBP 0.7m).

if you consider this inventory at 55k, it means there is only 23 Units to sell sitting on the shelf.

At full capacity the factory can produce 10,000 fuel cell stacks per year (also from last quarterly update seems there is an issue with the furnaces so not at full capacity), I don't know how fast they can turn these fuel cell stacks into fully fabricated Bluegen units...

I tell you what If they start selling them at 10k a pop I will buy them and sell them on ebay for double the price

my

 

[Miner]

great interaction and debate on the high price of CFU.
Two dumb questions :

1. who will invest ona product @$55K from Harvey Norman (Yes I realise it is not sold through normal retail franchise).
2. why CFU share price is at a rising trend

?

Best of luck

 

[frankblack]

great interaction and debate on the high price of CFU.
Two dumb questions :

1. who will invest ona product @$55K from Harvey Norman (Yes I realise it is not sold through normal retail franchise).
2. why CFU share price is at a rising trend

?

Best of luck

Answer,
most people here dont understand what CFCL is about,
what their product is, because it isnt the 'Bluegen",
what its all about,
and how big this is in the world outside of Australia.

 

[brty]

Dono,

I tell you what If they start selling them at 10k a pop I will buy them and sell them on ebay for double the price

That is one of the most ridiculous statements I have read on this forum. However it does beg the question of what price these units would sell to the public.

As the units are currently leased, with the contract including maintenance and renewal of the fuelstack, then attributing a yearly price would seem appropriate. The unit will produce 17520 kwh/year at a cost for the gas (retail) of ~$1545. The electricity produced at my current retail rates of 23c/kwh for peak and 10c/kwh off-peak is worth......
peak ~8760 kwh/y x .23 = $2014
off-peak ~8760 kwh/y x .10 = $876

Total = $2890 value of electricity - $1545 cost of gas = $1345

On economic terms the unit is 'worth' $1345 per year plus some hot water.
Early adopters, who are probably already green and have solar hot water, will not get much advantage from the hot water.

Sorry Dono but....

I can't believe the concensus on this forum that the Bluegen is priced too high, to be honest I am disappointed they are not selling it for more!

that statement is also not in the real world.

The BlueGen unit uses 110,000 Mj of gas a year, it is not 'renewable energy', just a little more efficient than conventional gas generation and therefore will not appeal to the 'really green', and utility companies are not stupid.
There are no grounds at the current price for any large orders, and so far with the units being on the market for 16 months, there are no large orders.

brty

 

[pixel]

I tend to agree with you, brty;
and it seems an increasing number of market participants come to a similar conclusion - seeing that a strong line of resistance appears to block any further advances above 23c - at least for now.
I had collected quite a large position - but I fed it back today at between 23 and 22.5c. Sure, I could be wrong, and it wouldn't be the first time.
But then again, I also concur with your signature tune about making money by selling too soon

 

[Dono]

HaHa Alright the ebay comment was a joke, guess that didn't translate on this forum, next time I will use the winking emoticon

Seriously though I still think they should maximise their sales while they are still building their stock pile. Once the factory gets in full swing (10,000 units per year) then sure lower your price point. To me the pricing is a factor of economies of scale, get the factory producing 10,000 a year and the price will fall, expand the factory to 160,000 a year production and it will drop again, most likely compeditive with solar. The common ETA for other stationary fuel cells to market is 2012, so CFU is definately ahead of the curve.

The problem is, they need to sell more units however according to the last quarterly they havn't built them yet. At this burn rate it is a serious issue.

There are no grounds at the current price for any large orders, and so far with the units being on the market for 16 months, there are no large orders.

from comsec announcement 28/09/2009 page 14

Commercial
The key commercial risks – and mitigation strategies – are described below.
The Company needs to sell products to generate revenue. There is a risk that large utility
customers may take too long to buy products in volume. The Company is mitigating this risk by:
• Agreeing ‘forward orders’ whereby a utility customer agrees to order a certain number
of units provided certain milestones are met. In February 2009 the Company signed an
agreement with E.ON UK including a forward order profile whereby subject to
performance and price targets, in return for maintaining exclusivity for the UK market
E.ON agrees to place an order for 100,000 units over a six year period from 2012.
• Recruiting more utilities and appliance partner customers.
• Recruiting other types of customers who can place orders more quickly.
• Developing additional products (like BlueGen) that can be sold into additional markets
(like Australia and North America) and to different customer segments in the European
market.

100,000 units is not bad...(obviously conditional) and there are doubts CFU has funding to make it to 2012.

I personally think CFU is in the balance, maybe others here are right, by dropping prices they may be able to secure the big order, but I am sure if a large utility said they want to buy 10,000 etc they would be able to negotiate a decent price.

 

[Knobby22]

...and a big European or Japanes order will occur sometime this year in my opinion, maybe next week, and you can imagine what that will do for the SP.

 

[brty]

Maybe its just me but there is a huge difference in my world between....

this from Comsec......

In February 2009 the Company signed an
agreement with E.ON UK including a forward order profile whereby subject to
performance and price targets, in return for maintaining exclusivity for the UK market
E.ON agrees to place an order for 100,000 units over a six year period from 2012

.

The positive light shone on the above that morphed into this....

100,000 units is not bad...(obviously conditional)

....and the reality of what is in the Feb 09 announcement.....

A minimum order of 100,000 units over six years from 2012 would be required from E.ON to continue to retain exclusivity.

There is no order for 100,000 units, there is no agreement by anyone to order that many. The 100,000 is just a performance hurdle of orders if the company wants to maintain exclusivity, nothing more.

Perhaps the thread should look at what the company is likely to do in the short term, instead of wishful thinking making up non existent orders.

My take of the short term future is a capital raising, and I'm thinking in the order of $30m. This could be by a 1 for 5 issue at around 15 cents, providing the price holds at current levels. As the share price is reaching resistance at the 23-25 cent level, then you would expect the capital raising to be fairly soon. If they wait too long then the next quarterly cash flow report will start to echo warning signals of running out of cash.
At what price would you the holders of stock be willing to fork out more for more shares in an offer??? Can they get away with more than 15 cents a share??

brty

 

[frankblack]

Perhaps the thread should look at what the company is likely to do in the short term, instead of wishful thinking making up non existent orders.

My take of the short term future is a capital raising, and I'm thinking in the order of $30m. This could be by a 1 for 5 issue at around 15 cents, providing the price holds at current levels. As the share price is reaching resistance at the 23-25 cent level, then you would expect the capital raising to be fairly soon. If they wait too long then the next quarterly cash flow report will start to echo warning signals of running out of cash.
At what price would you the holders of stock be willing to fork out more for more shares in an offer??? Can they get away with more than 15 cents a share??

brty

Perhaps you shouldnt be so pessimistic, and make up non existent capital raisings.
In the short term, some people in this thread believe there will be orders,
and there is more positive news to come.

 

[brty]

Frank,

Perhaps you shouldnt be so pessimistic, and make up non existent capital raisings.

Made-up, yes, just my take on where/how the company will continue. They need funds.

Where do you think the funds are going to come from??

Did you miss this bit from the most recent quarterly statement....

Total of 12 integrated units and BlueGen products installed and operating in five countries

It means that most of the 50 sold are not yet delivered, up and running. Therefore the purchasers of those units will need time to assess the operation. This takes time.

Time the company does not have at the current cash burn rate.

Where do you think the money will come from??? made up sales?? wishful thinking??

there is more positive news to come

What is this news?? Where and how did you get it??

brty

 

[frankblack]

Frank,



Made-up, yes, just my take on where/how the company will continue. They need funds.

Where do you think the funds are going to come from??

Did you miss this bit from the most recent quarterly statement....



It means that most of the 50 sold are not yet delivered, up and running. Therefore the purchasers of those units will need time to assess the operation. This takes time.

Time the company does not have at the current cash burn rate.

Where do you think the money will come from??? made up sales?? wishful thinking??



What is this news?? Where and how did you get it??

brty

My comment was based on yours, where you think belief in orders is made up, so belief in capital raisings is just as made up.
Yet none of us really knows, there is no proof either way.

 

[brty]

Frank,

Could you please answer the question that I asked previously,

They need funds.

Where do you think the funds are going to come from??

You have already stated that the current price of the units is unbelievable, they have a cash burn rate that leaves only ~6 months of funds.

If a capital raising is not on the cards then where will the money come from to continue?? What are the alternatives??

brty

 

[frankblack]

Frank,

Could you please answer the question that I asked previously,



You have already stated that the current price of the units is unbelievable, they have a cash burn rate that leaves only ~6 months of funds.

If a capital raising is not on the cards then where will the money come from to continue?? What are the alternatives??

brty

If we can agree there is about 6 months of time to go before the money runs out, while that is not forever, it could be long enough to secure orders for CFCLs fuel cell stacks.

Some money may come from royalties, for the use of their patents.?

There is always the lost millions still before the courts. If CFCL can get some sort of a settlement, could buy even more time.

And going to the bank to get a loan, is that just out of the question.?
I think not.

As I have been saying, really, we dont know.
You are calling it your way, and may be proved right in the end.
However, all I am saying is since you dont have any proof your guess is as good as mine or any-ones here.

Dont get me wrong, I am happy to listen to your thoughts/ideas/whatever,
any news you have, that is what I do.
I am even happier to reply with mine, that is the way it should be.

So how are you calling the feed in tariff for the Bluegen in Victoria.?
Likely or not.?
I would see a positive outcome adding some more to the share price,
dont you.?

Thats why I am still in.

 

[Smurf1976]

It means that most of the 50 sold are not yet delivered, up and running. Therefore the purchasers of those units will need time to assess the operation. This takes time.

Time the company does not have at the current cash burn rate.

Generally speaking, utilities or large energy users tend to be very thorough when contemplating any technology they are not familiar with. That applies even to systems already proven elsewhere.

Just a few years ago a significant Australian electricity generator undertook substantial "real world" testing of diesel engines so as to work out their actual fuel efficiency. They were considering some large units for peaking / backup generation at the time and weren't happy to take someone else's numbers on fuel efficiency, maintenance requirements etc. So they leased some of the same units they were looking at and put them into operation...

Utilities are generally fairly conservative. They won't likely be ordering anything more than a trial batch of BlueGen's until they've done their own "real world" testing over a number of years (ie until they break or at least need a major overhaul).