Close menu




February 15th, 2022 | 13:35 CET

Almonty Industries, Mercedes-Benz Group, Varta - Highs and lows, what to do?

  • Tungsten
Photo credits: pixabay.com

Without raw materials, life in many sectors of the economy comes to a standstill. The economically most important raw materials with a high supply risk are referred to as critical raw materials. The European Commission counts 30 elements in this group, including tungsten and lithium. Demand rising sharply above supply has caused prices to increase significantly for some time. Raw material producers are on the winning side. Buyers have to do their homework.

time to read: 3 minutes | Author: Carsten Mainitz
ISIN: ALMONTY INDUSTRIES INC. | CA0203981034 , MERCEDES-BENZ GROUP AG | DE0007100000 , VARTA AG O.N. | DE000A0TGJ55

Table of contents:


    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview

     

    Almonty Industries - Only a few months to go

    Tungsten is the chemical element with the highest melting and boiling point and is used in many industries. In general, China dominates the supply situation for critical raw materials, which is also the case for the whitish transition metal tungsten. Canada's Almonty Industries is well on its way to soon becoming a globally significant tungsten producer, thus making supply chains more secure.

    Almonty plans to start its Sangdong mine in South Korea in the fourth quarter of this year. The mine hosts one of the world's largest tungsten resources and has the potential to produce 50% of the world's tungsten supply outside of China. According to recent company reports, 15% of the mine has already been constructed. The Canadians said that underground development is over 27% complete, six months ahead of schedule.

    Recently, the Company also informed, after an extensive due diligence process was successfully completed, that it would soon receive a KfW loan of USD 75.1 million on favorable terms.

    A purchase agreement with the Austrian Plansee Group, also a significant shareholder of the Canadians, was concluded a few months ago with a term of 15 years. Almonty receives an attractive minimum price which will be reflected in a sales volume of at least CAD 750 million.

    The tungsten price has increased by 45% to USD 338 per mtu (metric ton) in the last 12 months. Demand remains high, especially from the semiconductor and battery sectors. With a market capitalization of CAD 191 million, the share also offers good opportunities from a timing perspective. If you want to know more: On 17.02. CEO Lewis Black will be at the IIF via Zoom and will report, live.

    Mercedes-Benz Group - Better than expected

    Good preliminary key data for the past fiscal year have excited analysts and the stock market. The private bank Berenberg raised the price target for the shares to EUR 90 - corresponding to an upside potential of 20% - and confirmed its "Buy" rating. According to the experts, the carmaker exceeded the consensus estimate, especially with its operating result (EBIT), and is moving towards a sustained double-digit margin.

    Buoyed by a solid final quarter, the southern German Company achieved an adjusted return on sales of 12.7% in the Mercedes-Benz Cars & Vans segment, thus exceeding its self-imposed target range of 10 to 12%. Adjusted operating profit (EBIT) is expected to be in the region of EUR 14 billion.

    Mercedes-Benz Group is clearly focusing on the future of electromobility. CEO Ola Källenius stated in the context of the recently published figures, "Our good result is the result of products that are in high demand as well as the focus on profitable growth and cost discipline. As the world's most valuable luxury car brand, we are accelerating into an all-electric, software-driven future."

    Varta - Share price weakness continues

    After falling below the EUR 100 mark, share prices have now also slipped below the EUR 90 mark. That means the Germans are still valued at EUR 3.5 billion. The 2022 P/E ratio is 27, and the 2023 P/E ratio is 25. After the price drop, an upside potential of 21% is calculated based on the average analyst price target.

    While Varta is still the global market leader in microbatteries, competition from Asia is getting stronger, putting pressure on margins. The upcoming entry into the production of large batteries for e-cars presents opportunities and also significant risks, given the existing strong players. On March 31, the Group will publish its figures for the past fiscal year. We are eagerly awaiting the outlook.


    Almonty Industries has exciting months ahead. The share is likely to attract great investor interest with the start-up of the tungsten mine. Business at Mercedes-Benz is running smoothly, and analysts see further upside potential. Varta's shares are subject to the greatest uncertainty.


    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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    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.

    About the author



    Related comments:

    Commented by Fabian Lorenz on February 28th, 2024 | 07:45 CET

    Strong price targets! Super Micro Computer, Bayer, Almonty Industries

    • Mining
    • Tungsten
    • chemicals
    • AI

    Is it time to invest in Super Micro now? Yes, say several experts. Despite the massive price rally, the AI share offers further potential. There are good reasons for this, and the target price is USD 1,300. There are also good reasons for the Almonty Industries share to perform well in 2024 and beyond. The Company focuses on tungsten, a scarce and coveted resource in Europe and North America. Sales and profits are expected to rise sharply, leading to a revaluation of the share. Analysts also see significant potential for Bayer shares. The spin-off of over-the-counter medications, including Aspirin, is expected to drive the share. However, there are some question marks.

    Read

    Commented by Stefan Feulner on February 20th, 2024 | 08:15 CET

    Rheinmetall, Almonty Industries, Applied Materials - From high to high

    • Mining
    • RareEarths
    • Tungsten
    • armaments

    The rally in chip stocks continues unabated. After ARM opened its books last week, investors bought as if there was no tomorrow. This week's figures from top dog Nvidia promise to be exciting. Will the share continue its upward trend, or will Wednesday herald an extended correction? Defense stocks are also at the forefront of the outperformers. As orders in the sector continue to rise, investors should take a look at the producers of the raw materials needed for the systems.

    Read

    Commented by Juliane Zielonka on February 16th, 2024 | 07:15 CET

    Almonty Industries, thyssenkrupp, Rheinmetall: Three metal industry shares in focus

    • Mining
    • Tungsten
    • armaments
    • Steel

    The metal industry contributes globally to the development of various sectors through continuous innovation driven by mining, R&D and technological advances. Tough times lie ahead for thyssenkrupp. During the Annual General Meeting, CEO Miguel López emphasized that energy costs for steel production will account for up to half of total costs. Quo Vadis, Germany, as a business location? So, let's take a look at South Korea, another renowned steel producer. The tungsten mining company Almonty Industries is positioning itself as a pioneer here, aiming to cover 7% of the global market. Its strategy involves mining in democratically governed countries and establishing first-class trade partners such as the US and South Korea. Given the geopolitical tensions, in which 90% of tungsten production comes from China and Russia, investors should analyze Almonty more closely. Meanwhile, Rheinmetall, an arms manufacturer, is enjoying full-order books and, for the first time, is exploring a completely new technology division for its portfolio expansion.

    Read