Powerhouse Energy Group Share Price Forecast December 2021 – Time to Buy PHE?

Shares of electric utility company Powerhouse Energy Group (LSE: PHE) are in the red today, currently trading at 4.400p  at the time of writing. The shares haven’t had a good 2021, and are down 56% since the start of the year. While the company’s 12-month performance is still positive with a 25% return, its latest interim results failed to ignite the share price. Is this decline a buying opportunity for investors?

Powerhouse Energy Group – Technical Analysis

According to the financial statement released by Powerhouse Energy Group, the market cap of the company is at £18.172 billion with total assets worth £5.628 billion. Revenue for 2020 was at £10.00 million with a profit margin of -15837.74%. Revenue for the first 6 months of last year came in at just £0.1 million compared to today’s valuation. The company incurred losses for the year to December 2020 of £16 million due to development expenditure.

Moving averages such as Exponential Moving Average (10)(4.727),  Simple Moving Average (10)(4.725),  Exponential Moving Average (20)(4.722),  Simple Moving Average (20)(4.818) and Exponential Moving Average (30)(4.664) are indicating a sell action. Oscillators such as Relative Strength Index (14)(47.335),  Stochastic %K (14, 3, 3)(10.241),  Commodity Channel Index (20)( −44.624),  Average Directional Index (14)(23.963) and Awesome Oscillator(0.026) are neutral.

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Recent Developments

Powerhouse Energy is a rather young waste-management enterprise known for its proprietary chemical recycling process called DMG. With the help of DMG, end-of-life plastics are converted into hydrogen-rich synthetic gas that can replenish fuel cells. It thus provides the dual advantage of providing an alternative source of low-cost energy and helps tackle pollution. Investors are naturally excited about this company as the waste-to-energy market is expected to reach $55 billion by 2027. This helped the share prices reach the highs that they initially did. However, the technology remains unproven which has led many investors to value the company higher than it is.

Powerhouse Energy has issued a new exclusive licensing agreement with Hydrogen Utopia International (HUI) which will allow HUI to deploy Powerhouse’s DMG technology across Hungary and Greece. The modular design of this equipment allows production to be easily scaled up. Powerhouse will receive an initial payment of €250,000 followed by a continued licensing fee for each plant. The company is also planning to develop a second DMG site within the UK of a similar scale to the Protos project in collaboration with its existing partner, Peel Group. This second plant has the potential to 250,000 UK homes as well.

Should You Buy PHE Shares?

The company has begun construction of its flagship plant, Protos, which will take some time to be completed. Once operational Protos will be able to convert up to 4.9 million tonnes of plastic each year into 140 Megawatts of electricity enough to power 250,000 homes. Its latest interim results reveal that the company has £10.9 million of cash on its books, which can easily cover its short-term expenses.  Its engineering services have generated a small-but-growing revenue stream of £373,306. All of these signs point out that Powerhouse Energy has enough cash to keep itself afloat for years to go. The shares of PHE might increase in value once Protos is operational. Considering this, PHE shares can be a good addition to investors interested in long-term returns. As its value is driven by expectations, the shares could be sent plummeting with the slightest sign of trouble.

 

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