September 1st, 2022 | 15:13 CEST
ThyssenKrupp, Manuka Resources, K+S - Analysts are optimistic
High energy prices and significant increases in inflation and interest rates are causing headaches for investors. However, the stock market is punishing a number of shares too heavily. Despite the challenging environment, analysts identify several attractive entry opportunities. Stock markets always assess the future; the temporarily distorted perception of opportunities and risks opens up many investment opportunities for forward-looking investors.
time to read: 3 minutes
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Author:
Carsten Mainitz
ISIN:
THYSSENKRUPP AG O.N. | DE0007500001 , Manuka Resources Limited | AU0000090292 , K+S AG NA O.N. | DE000KSAG888
Table of contents:
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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ThyssenKrupp - Analysts give the thumbs up
Although business is good at the German Group, as reflected in the latest quarterly data, the sword of Damocles of high energy prices hangs over the share price. According to the German Steel Association president, Hans Jürgen Kerkhoff, the steel industry is facing additional costs of EUR 500 million a year due to the gas levy.
On the other hand, steel producers are currently in a position to increase prices for flat steel in Europe. Weighing up the overall picture, the analysts at Jefferies arrived at a positive vote and recently confirmed their buy recommendation with a target price of EUR 13.80.
Germany's second-largest steel producer Salzgitter recently reported a record half-year but also prepared investors for a weaker second half. ThyssenKrupp recently presented respectable quarterly figures given the challenging market environment and confirmed its guidance for the current fiscal year. The Group increased its order intake from April to June by 13% to EUR 10 billion. Sales increased by 26% to EUR 11 billion. Adjusted operating profit (EBIT) almost tripled to EUR 721 million. The good performance was based on efficiency improvements, higher revenues and improved margins at Materials Services and Steel Europe.
Manuka Resources - Potential still ignored
The gold and silver producer with corporate headquarters in the Cobar Basin in New South Wales, Australia, owns two producing mines with exploration zones totaling 1,150 sq km located in the Cobar Basin. Back in 2016, the Company acquired the Wonawinta project. The property has a resource of 52 million ounces of silver and 236,000t of lead. By October 2022, Manuka Resources plans to update the resource estimate. The Cobar Basin is rich in commodities, with several producers and explorers located there.
As a second asset, the high-grade Mt Bobby gold project has been in the portfolio since 2019. The open pit mine produced 500,000 ounces of gold in the past, recovering about 15g of gold per ton. Currently, the Company is working on expanding the deposit at depth to extend the mine life.
A few weeks ago, the Australians made an exciting acquisition. By acquiring Trans Tasman Resources Limited, Manuka now owns the South Taranaki Bight, a Tier 1 resource hosting 3.8 billion tons of iron sands, vanadium and titanium. It is planned to start production in 2025. The Company then expects annual profits of about USD 375 million.
The recently reported extension of a credit facility is also positive. Australia's largest silver producer is moderately valued, with a market capitalization of AUD 44 million. Rising precious metal prices have a strong positive impact. However, the market still fails to recognize the value enhancement potential of the recent acquisition.
K+S - Annual targets confirmed
Despite the gas crisis, the Kassel-based company recently confirmed its targets for the current financial year. A continuing high price level for fertilizer prices gives the producer confidence. "We confirm our previous Ebitda forecast for fiscal 2022, even if there are bottlenecks in the availability of natural gas and a gas levy in the fourth quarter, as assumed in our scenario," group CEO Burkhard Loh said recently.
In 2022, the Company is expected to generate an operating result (EBITDA) of EUR 2.3 billion to 2.6 billion. Adjusted free cash flow is expected to be between EUR 1.0 and 1.2 billion. In the second half of the year, the Group expects slightly higher potash prices than in the first half.
In the second quarter, the Group more than doubled revenues to EUR 1.5 billion compared with the same period last year, exceeding analysts' estimates. The main drivers were good business in Northern and Eastern Europe and high demand from the chemical industry. In operational terms, the Kassel-based company shone with an increase in EBITDA to EUR 706 million. The bottom line was an adjusted profit from continuing operations of EUR 436 million. That is almost three times higher than in the previous year.
Due to the reduced share price level, a number of favorable entry levels are opening up for investors. Analysts believe ThyssenKrupp shares have more than doubling potential. K+S shares are still well below their highs. In particular, the shares of Manuka Resources appear to offer good opportunities at the current level following the sharp price correction.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
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