August 13th, 2021 | 12:21 CEST
Alibaba, Kainantu Resources, JinkoSolar - Asia as a global economic engine
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"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Alibaba - Cannot get away from negative headlines
Alibaba is currently not getting out of negative headlines. First, the stock was dragged down by news about government regulations. Now the Company is facing the challenge of dealing with the rape allegations that are in the air. The Chinese newspaper, People's Daily, is already calling out a crisis of values within the group. Heads were rolling within the Company, and CEO Zhang promised a company-wide sexual harassment policy.
On August 3, the group presented its second-quarter figures. Revenue was up 34% year-on-year, and net income was up 8%. Free cash flow was up 43%. So the war chest is well filled, but due to the ongoing uncertainties caused by the government's measures, new business areas are currently not in sight. Some analysts have found a fly in the ointment with the good numbers. They see the cloud division's growth of 29% as disappointing.
Management fears that tax breaks could also be eliminated. That would depress profits by as much as USD 1.7 billion. The stock is currently still in a clear downtrend. Nevertheless, Alibaba remains the flagship company and is currently not in the crosshairs like Tencent, whose primary business model, gaming, is currently under heavy fire from the government. In the long term, the group will continue to grow, and shareholders will also enjoy this.
Kainantu Resources - Gold and copper deposits
Kainantu is an explorer focused on the Asia-Pacific region with two promising gold projects in the high-grade Kainantu gold district in Papua New Guinea. The KRL South project is located 30 km southeast of one of the world's largest K92 gold mines and covers 597 km². Results of auger drilling were announced on May 5. A total of three target areas were defined and up to 40.13 grams of gold per tonne was found. Geologically, there are strong similarities with the already producing mines in the Kainantu mining area.
In addition to the main project, there is also the KRL North project, which is directly adjacent to the property boundary of the K92 mine. The area is 129 km² in size. In addition, the May River copper-gold project, also located in Papua New Guinea, was acquired in mid-June, close to the well-known Frieda River copper-gold project. CEO Salthouse said in a recent interview, "Previous drilling returned 54 m at 1.83 g/t Au, 109 m at 1.53 g/t Au and 96 m at 0.89 g/t, as well as copper-soil anomalies in excess of 2,500 ppm in several areas."
This acquisition shows how well connected management is in the country, and it would not be the first Company that the experienced managers would have made big. Another plus is the partnership with Asia Pacific Energy Ventures Pte, which has already executed major energy projects in Papa New Guinea. One can expect fresh news on the KRL South project in the coming months, as a total of 2,500 samples have been taken there. Investors should limit their orders due to the relatively large spread.
JinkoSolar - Important certificates received
JinkoSolar is one of the world's leading companies in the solar industry. The Company distributes solar products and sells its solutions and services to a diversified customer base in over 160 countries. The group has been pursuing a steady growth path by building more and more production facilities in recent years, despite a major price war and the accompanying pressure on margins.
A study by BloombergNEF shows that more and more smaller competitors are disappearing and the big players are dividing the market shares among themselves. One advantage JinkoSolar has is its technological edge. Being the first to start mass production of solar panels with an efficiency of about 25% is evidence of this. Recently, the Company became the first in Greater China to receive LCA certification and EPD certification, which is a requirement in Italy. Both certifications show that the Company is also concerned with sustainability.
In conjunction with the climate debate, demand for solar energy should remain high. The downward trend has been stopped since mid-May and the share price has been on the rise again. At the end of June, the downward trend was finally broken, and at the same time, a new upward trend was established. As long as the share does not fall below USD 44.26 on a closing price basis, the trend remains intact. However, there seems to be resistance around USD 60, as the share has been struggling at this level for a month.
The economy in the Asia-Pacific region is growing. Especially in China, even though Alibaba is currently still struggling with government regulations. Things are looking better in Papa New Guinea, where Kainantu now owns three promising projects. There, the companies are supported by the government. JinkoSolar currently has nothing to fear from the government side; it is more a matter of increasing margins. We expect further growth in the companies.
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