50% profit margin? JinkoSolar, Nel ASA, and Desert Gold shares

Desert Gold: Low mining costs and high gold price

One of the most interesting gold stocks at the moment is likely to be Desert Gold Ventures. In recent years, the Canadian company has successfully explored its prime site in West Africa and plans to start production next year. So far, 1.1 million ounces of gold have been discovered in the 440 sq km area. At the current share price, these are valued at just over USD 10 per ounce. And for the resource, only 5 of 27 gold zones had to be analyzed. The actual gold reserves will likely be significantly larger, as Desert Gold's land is strategically located between well-known gold producers such as B2Gold, Barrick Gold, and Endeavour Mining.

In a recent interview with kapitalerhöhungen.de Desert CEO Jared Scharf provided an exciting overview of the Company's current development and the planned start of gold production. According to Scharf, gold production in two open-cast mines with a total of approximately 200,000 ounces of gold is set to start as early as the second half of 2025. Due to the efficient heap leaching process, production costs per ounce of gold are expected to range between USD 800 and 1,300. Given the current gold price of around USD 2,600 per ounce, the profit margin would likely exceed 50%. Even if the price of gold were to fall significantly, Desert Gold is expected to remain highly profitable.

"The cash flow from production would further enhance our exploration efforts and also allow the Company to pursue other strategies such as acquisitions, dividend payments, or share buybacks. This is, of course, a slightly longer-term outlook," said Desert CEO Jared Scharf in the interview. In addition to production, Desert is also working on expanding the gold resource since, as mentioned, most of the gold zones have not yet been examined in detail. But one of the big neighbours may also strike. Whatever the case, the prospects for a significantly rising share price look promising.

Those who want to learn more and listen to Jared Scharf can register for the virtual and free International Investor Forum, IIF, on October 15, 2024. Desert Gold will present alongside other interesting small and mid-cap companies such as Gerresheimer and Indus. Register here).

JinkoSolar: Positive cash flow despite industry crisis

JinkoSolar is also active in Africa. A manager at the Chinese company said that the photovoltaic market leader has delivered a total of 5.2 gigawatts of solar modules and 100 megawatt hours of energy storage systems to the continent over the past three years. This would give them a market share of around 15%. The potential for solar energy in Africa is huge. With large areas, many hours of sunshine, and still limited access to electricity, the continent is predestined for solar power.

Of course, other markets are more crucial for JinkoSolar's development. Globally, the solar industry is struggling with overcapacity and falling module prices. As a result, JinkoSolar, the largest manufacturer of solar modules, also had to accept a 21% decline in revenue and a net loss in the second quarter of 2024. For the full year 2024, Jinko aims to deliver between 100 and 110 GW and still achieve a positive operating cash flow. Despite this, analysts from Jeffries have reduced their price target from RMB 10.68 to RMB 8.28 following the quarterly results. The recommendation remains "Buy".

JinkoSolar's stock also jumped last week on the back of the China euphoria and gained almost 50%. However, the stock has corrected significantly from the interim high of EUR 30 and is trading at around EUR 23.

Nel: US hopes crumble

Such price jumps are also the norm for Nel. However, in recent months, the trend has been south too often. Meanwhile, the shares of the former hydrogen superstar are trading below EUR 0.40. This means they have halved this year alone and lost almost 90% since the all-time high at the beginning of 2021. Is there any improvement in sight?

First, it is important to note that the Company is still valued at around NOK 7.5 billion, which is more than EUR 500 million. It is not foreseeable that Nel will make a profit in the foreseeable future, and revenue growth is slowing. Most recently, a potential major order in the US was also lost. Hy Stor Energy has canceled a capacity reservation agreement for over one gigawatt of alkaline electrolysis that was concluded in April 2024. Although the setback has no impact on the order backlog because it was only a reservation, it does call into question Nel's US strategy. The Norwegians have high hopes for their expansion into the US.

This week, JPMorgan analysts lowered their price target for Nel shares from NOK 5.40 to NOK 4.70. Due to the lack of upside potential, the recommendation is consistently "Neutral". When the quarterly figures are released, investors should pay particular attention to the development of the order backlog. Nel will publish its Q3 figures on October 16.

In the case of hydrogen stocks, the wheat is being separated from the chaff, and the old favourites Nel and Plug Power seem to be losing ground. By contrast, Desert Gold is facing exciting months. With the start of production, the Company will move up into a new league and, with it, the share price. JinkoSolar is the top dog in a weakening solar industry.