The main drivers behind investment in clean technology may be unrelated to the broader economy, but the performance of UK listed cleantech stocks during the period of stock market turmoil in January demonstrates that clean technology companies are not immune to the tougher market conditions.

First published on the Cleantech Investor website, February 2008. ©  Cleantech Investor Ltd.

The credit crunch: cleantech not immune

Growth in the clean technology sector is being driven by the challenge to find technologies which might contribute to abating climate change or to improving energy security. As such, a possible recession in the US is unlikely to have much impact upon the sector. However, some of the early stage pre revenue clean technology companies – like all early stage technology companies - are likely to find it more difficult to raise funds for investment in the wake of the credit crunch. So it is not surprising that clean technology companies listed on the London stock markets suffered from the general market malaise in January. The majority of the share prices of the clean technology stocks in our universe stood at a lower level at the end of January 2008 than they had at the end of December 2007. Over 100 of the stocks on our list recorded falls in their share prices. However, more than 30 stocks managed to buck the trend and move higher during the month. And 15 ended January unchanged from their end December value.

Electric vehicle stocks suffer

Of the losers, more than half lost more than 10% in value during the month of January. The greatest decline was suffered by electric scooter company, Vectrix Corporation. Having already lost 78% of their IPO value by the end of December, Vectrix shares suffered a further 47% fall in January.

Also in the electric vehicle sector, Tanfield Group, which owns electric van manufacturer, Smiths Electric Vehicles, was a notable. Tanfield Group shares lost 30% over the month of January. However, in contrast to Vectrix, Tanfield shares had ranked as strong performers during 2007, having chalked up a 97% rise in price over the year. So the fall in the value of Tanfield’s share price during January might be attributed in part to profit taking. The severity of the share price decline, however, was such that the management felt the need to release a statement confirming that the prospects for the group are healthy.

Profit taking also appears to have been a factor behind a 25% fall in the price of shares in solar company, Romag Holdings. Romag shares had put in a strong performance over 2007, gaining 99%. Much of the strength in the Romag share price was seen in December, after the company announced strong results, driven by growth in sales of its PowerGlaz product.

Other significant share price declines over the month of January included a 41% fall in the price of Eurotrust A/S, a 30% fall in the price of Prometheus Energy (after a 75% decline during 2007); and a 29% decline in the price of Plantic Technologies.

ReneSola shares suffered a 35% slide during the month. ReneSola shares were listed on the NYSE at the end of January through an IPO at a price of US$13.

Virotec takeover talks

Bucking the trend, amongst the 30 plus stocks recording gains in price during January, the star performer was Virotec International. Virotec’s management have confirmed that they have received a takeover approach, although the discussions are said to be at an early stage. This news, and the confirmation that Virotec has received an important contract for its land remediation business in Australia, saw the share price surge in late January.

IPSA Group South African deal

The second best performing stock was IPSA Group: its share price recorded a 63% gain in January, after an announcement that the company had signed a memorandum of co-operation with the Government of South Africa for a public-private partnership role at the Coega Industrial Development Zone. The project will involve the conversion of LNG to electricity and will be eligible for CERs (Certified Emissions Reductions), under the CDM (Clean Development Mechanism).

Positive trading statement from HydroDec

The third best performer during January was HydroDec. HydroDec’s share price gained 55% over the month and the company released a very positive statement on trading at the end of the month, confirming that it expects to confirm the signing of an offtake agreement for its sustainable transformer oil shortly. HydroDec also announced that it is in discussions to accelerate the construction of its Mississippi facility; and that it expects to receive further orders from Turkey for its Superfine transformer oil (HydroDec recently made its first shipment of Superfine Transformer Oil to a Turkish company).

Landkom shares boosted by EU biofuel target news

Elsewhere, Ukrainian rapeseed biodiesel feedstock company, Landkom International, saw a 30% gain in its share price over the month. Landkom looks set to be a beneficiary of the biofuel targets proposed by the EU.