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September 14th, 2023 | 08:05 CEST

Almonty Industries, Covestro, Bayer AG - Which stocks are taking off?

  • Mining
  • Tungsten
  • Electromobility
  • Pharma
  • Innovations
Photo credits: Covestro AG

Energy, pharmaceuticals and defence are the performance candidates of the hour. To support further economic growth, countries like South Korea and France are turning to nuclear power, which requires the metal tungsten. Almonty Industries, which has specialized in the mining and processing of this rare metal since 2009, is particularly eye-catching here. The current takeover talks of the DAX-listed group Covestro show how valuable know-how can be. The Abu Dhabi-based oil company Adnoc is very interested in Covestro's specialist knowledge of plastics for e-mobility, building insulation and adhesives. Bayer AG also demonstrates significant expertise. Researchers at its US subsidiary BlueRock Therapeutics have achieved a breakthrough in treating Parkinson's disease. Find out which shares are now taking off here.

time to read: 5 minutes | Author: Juliane Zielonka
ISIN: ALMONTY INDUSTRIES INC. | CA0203981034 , COVESTRO AG O.N. | DE0006062144 , BAYER AG NA O.N. | DE000BAY0017

Table of contents:

    Lewis Black, CEO, Almonty Industries
    "[...] While tungsten has always played an important role in the chip industry, it is now being added to batteries for e-cars. [...]" Lewis Black, CEO, Almonty Industries

    Full interview


    Almonty Industries - Analysts place a "Buy" rating on the stock

    Tungsten, an exceptionally tough and resilient metal, is finding its use in growing key industries today, from defence to energy and medicine.

    Because tungsten is one of the hardest metals, it is used in the construction of tanks and munitions. The nuclear industry also benefits from tungsten. In nuclear reactors, tungsten is used to make components that must withstand extreme temperatures and radiation. Nuclear energy is one of the lowest CO₂-emitting energy sources. Economies that push the expansion and maintenance of this energy supply can outpace other countries in the future when it comes to competitiveness.

    South Korea, as a democracy in East Asia, has high tungsten deposits. Canadian mining, exploration and development company Almonty Industries is working here on one of its flagship projects to extract the valuable metal. Almonty Korea Tungsten ("AKT") will be the largest tungsten mine outside of China after its planned restart in 2024. Almonty Industries owns four tungsten mines in various stages of development. In addition to South Korea, it also has projects in Spain (Los Santos) and Portugal (Panasqueira).

    Furthermore, the construction of its tungsten oxide processing plant in South Korea ("Sangdong Downstream Extension Project") with an annual capacity of 3,000 to 4,000 t will increase profitability and supply the South Korean battery industry. South Korea is a global market leader with brands such as Hyundai and Kia in the automotive industry and Samsung in the electronics and medical technology sectors.

    Analysts at Sphene Capital recommend buying the Almonty share. At CAD 12.6 million (H1/2022: CAD 13.3 million) and CAD -3.8 million (H1/2022: CAD -3.9 million), both revenue and pre-tax loss in H1/2023 are in line. 100% of sales were generated at the Panasqueira mine in Portugal, with the Los Santos mine opening soon.

    Through the issuance of shares (CAD 5 million) and long-term debt (CAD 4.8 million, net of repayments), Almonty Industries financed free cash flow for the first 6 months. This amounted to CAD -10.3 million (H1/2022: CAD -5.8 million). Those wishing to ask CEO Lewis Black questions in person can do so at the upcoming 8th International Investment Forum (IIF). Black will be presenting live online to international investors. Click here to register.

    Covestro AG - Takeover price of EUR 70 per share under discussion

    The acquisition sum offered by Abu Dhabi-based oil company Adnoc to the German plastic manufacturer is said to be EUR 11.6 billion. The supervisory board of the German DAX-listed company has given the green light for open-ended negotiations. Covestro was floated as a separate company by Bayer AG on the German stock exchange in 2015. If the Arabian oil company's coup succeeds, access to more advanced materials for electric vehicles, thermal insulation and coatings for buildings, adhesives and engineering plastics will go to the United Arab Emirates.

    According to insiders, the oil tycoon from the United Arab Emirates (UAE) is said to have made an unofficial offer of EUR 55 per Covestro share. Adnoc then made a share offer of EUR 57 in July, but Covestro rejected it. The oil company had hinted at a possible increase to EUR 60 per share. The volume of the transaction would amount to EUR 11.6 billion.

    "It is very pleasing that Covestro has entered into negotiations with Adnoc. This is a good sign and shows that Covestro's management is acting in the interests of the owners," fund manager Arne Rautenberg of fund company Union Investment told news agency Reuters.

    "Now it is a matter of evaluating both the offer price and the strategic orientation, site guarantees, etc." The fund company, which is one of Covestro's 20 largest shareholders, together with another major shareholder - who wished to remain anonymous - advocated formal talks between the two companies at the end of August.

    At a possible purchase price of EUR 70 per share, Baader Helvea analyst Markus Mayer assumes a takeover probability of 30%. "This probability could increase with Friday's news." Covestro wants the talks to focus primarily on implementing its strategy, which includes appropriate corporate governance arrangements.

    Bayer AG - Stem cell therapy shows improvement in Parkinson's symptoms

    Bayer has demonstrated progress with its Parkinson's therapy in a study by its US subsidiary BlueRock Therapeutics. At an international symposium in Copenhagen this week, Bayer reported that 7 participants in an early study of 12 patients had their symptoms under control for just over two hours longer per day. Smaller improvements were achieved with lower doses. Patients from the US and Canada tolerated the treatment well, and no significant side effects occurred.

    To compensate for the nerve cell damage caused by the disease, cells are transplanted into the brains of the subjects as the main component of the therapy. For this purpose, human embryonic stem cells are converted into nerve cells that produce dopamine. Drugs are also administered to prevent the immune system from attacking the brand new cells. Human embryonic stem cells are a purely laboratory-produced product. In 1981, embryonic stem cells were first isolated from mice, and in 1998, human stem cells were grown for the first time.

    To stop the disease and change its course, Bayer is relying on its cell therapy. The Company announced that a Phase II trial with additional subjects is being launched. Patients are expected to be recruited in the first half of 2024.

    While CEO Bill Anderson is putting everything in place internally to get the Company back on track economically, research into precision medicine is steadily advancing to improve patients' quality of life. Analysts describe Bayer as a turnaround candidate and consider the tradition-rich company to be severely undervalued. The share price is currently EUR 48.80.

    With four mines in production, construction and development, Almonty Industries is one of the world's leading tungsten producers outside China. Founded in 2009 in Toronto, Canada, the Company focuses exclusively on the exploration, mining and processing of tungsten in democratic countries. CEO Lewis Black knows that competitor China can offer better prices with cheap wages. Black is therefore focusing on innovative technology to further optimize the production processes. Adnoc's bid to Germany's Covestro AG is also currently being optimized. The DAX-listed company, which was independently listed by Bayer in 2015, is in open-ended negotiations with the Abu Dhabi-based oil company. Analysts see a possible share price of EUR 70 for the takeover offer. This would transfer innovative know-how in modern plastics, adhesives, and coatings to the acquiring company in the United Arab Emirates. Bayer AG is also demonstrating modern and innovative approaches. Its subsidiary in the US is making progress in alleviating the symptoms of Parkinson's disease. Thanks to stem cell therapy, the first patients are able to experience a better quality of life for two hours more a day than before. Around 6.1 million people worldwide suffer from Parkinson's disease, with around 400,000 in Germany alone.

    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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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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