September 14th, 2022 | 13:05 CEST
Analysts are bullish on BYD, less bullish on Varta and news from Infinity Stone Ventures
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"[...] 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
Infinity Stone: Critical raw materials for a hot autumn
Canadian producers of critical raw materials have been the focus of investors, and not just since the trip by German Chancellor Olaf Scholz and Economics Minister Robert Habeck. However, the visit has once again increased their importance. Among the listed companies in this sector is Infinity Stone Ventures. The Company has acreage in mining-friendly Ontario and Quebec and specializes in the exploration of commodities critical to electric mobility: Lithium, Copper, Manganese, Graphite, Cobalt and Nickel. Recently, its land holdings in a lithium district in Quebec were expanded to over 3,850 hectares.
Specifically, these are two new properties in the James Bay lithium district. On these, 21 pegmatites have already been identified in the past. The 2,568 hectares are located near Patriot Battery Metals' lithium project. Infinity's existing Taiga and Hellcat projects are also nearby. A team has already been dispatched to analyze the area further. Accordingly, further details are expected to be released soon. "Infinity Stone is aggressively expanding its presence in the rapidly developing James Bay lithium district by staking additional claims with strategic exploration potential," says Zayn Kalyan, CEO of Infinity Stone." With the acquisition of Hellcat and the newly identified pegmatites at Camaro, the coming months will be very active on the exploration front." The Company has also announced news about its existing projects. With positive newsflow, the stock could be in for a hot fall. The market capitalization is currently only just over CAD 20 million. The Company is still at an early stage, but companies like Rock Tech Lithium or Standard Lithium show what is possible.
Varta: Analysts see few prospects
In contrast, investors at Varta are waiting in vain for news on electromobility. After the battery manufacturer disappointed in its core business in the first half of the year due to supply chain problems and high raw material prices, things are expected to improve in the second half of the year. Even if this should be the case, this alone is unlikely to lead to a rising share price. For that, it finally needs details on its expansion in the field of batteries for electric cars. Analysts remain skeptical, like the experts at researchanalyst.com: With the current business plan, the share is still not cheap, with a 2022 P/S ratio of 3; the estimated P/E ratio will also increase significantly. The recently burdened chart situation and the great uncertainty about the development status are also not off the table. Furthermore, it must be feared that the second half of the year will also run without any significant improvements. Management would be advised to address market expectations and explain the status quo in the e-mobility segment in more detail. (link to update https://researchanalyst.com/de/updates/aktien-news-varta-mit-sinkenden-umsaetzen-und-neuer-guidance). AlsterResearch is also disappointed by the current development at Varta. The old margin level is difficult to achieve and the competitive pressure remains high. The analysts lowered their price target for the share from EUR 83 to 65. The stock is currently trading at EUR 66.
BYD: Digesting Buffett shock
A winner of electromobility is BYD. The Chinese vehicle manufacturer is simultaneously active in battery production, passenger cars and commercial vehicles in three future markets. In terms of e-car deliveries, BYD has recently overtaken industry star Tesla - although it currently sells vehicles practically only in China. But foreign expansion is underway. However, despite the good operating performance, the partial sale by investment legend Warren Buffett recently caused the share price to slide. But now, the share seems to be recovering, and analysts are optimistic. Citigroup, Credit Suisse and Macquarie have renewed their buy recommendations for BYD shares. The price targets range from HKD 357 (Macquarie) to HKD 640, by Citigroup analysts. Barclays is a bit more cautious in an initial report, but by no means in tone. The analysts recommend BYD shares with a target price of HKD 314 and an "Overweight" rating. "With very competitive products, both in terms of quality and price, Chinese electric cars have a good chance to capture a significant share of overseas markets over time," CNBC quoted Barclays analyst Shao as saying. The stock is currently trading at around HKD 228.
BYD is consistently continuing its positive operational development. The Buffett shock seems to be digested, but further selling by the investment legend is not ruled out. Varta is not only battered on the chart but also operationally. Infinity Stone is active in a strategically important area. If the newsflow is positive in the coming weeks, the share should be able to profit from this.
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