Hydrogen Supplier Iwatani Shares Soar Post Carbon Neutrality Goals By Japanese Government

After the government promised the day before to provide the industry trillions of yen to help the sector grow supply of the gas to help reach carbon neutrality, shares in Iwatani, Japan's biggest hydrogen supplier, hit a new high on Wednesday.

Major industries, including energy, automobiles, steel, and chemicals, are investigating how to switch to hydrogen in order to cut carbon emissions. Hydrogen has been hailed as a clean substitute for fossil fuels.

According to the government, Japan plans to invest 15 trillion yen ($107 billion) over 15 years to increase the nation's hydrogen supply from 2 million tonnes presently to 12 million tonnes by 2040 and 20 million tonnes by 2050.

In contrast to Japan's Nikkei share average index, which was 1.82 percent lower, Iwatani's shares on Wednesday reached an all-time high of 7,800 yen a share before closing at 7,658 yen, or 7.1% higher, also a historic high.

"We'd expect Iwatani to benefit from Japan's revised hydrogen roadmap; using subsidies to lower the price of hydrogen to match costs of fossil fuels," analysts at Jefferies wrote in a report on Wednesday.

They maintained their Buy recommendation while increasing Iwatani's target price by 19% to 9,500 yen per share from 8,000 yen earlier.

The supply chain plan unveiled by the government should start yielding commercial production by around 2030, Jefferies said, and increased supplies should lower the hydrogen price from 100 yen per cubic meter now to 30 yen in 2030 and 20 yen in 2050.