Averting power outages, starting the battery revolution! BASF, Altech Advanced Materials, BYD, and VW

BASF - Analysts are becoming more positive

BASF SE from Ludwigshafen is one of the world's largest battery materials manufacturers. However, the Company has been shaken up in Germany for two years due to high gas prices. In the weeks leading up to the Annual General Meeting in April 2024, the share price rose by a full 23% to just under EUR 55. The high dividend of an unchanged EUR 3.40 seemed tempting, even though the Ludwigshafen-based company's operating business has deteriorated dramatically. Although the Company reported earnings per share of EUR 0.25 in 2023 after a horror year in 2022, revenue fell from EUR 87.3 billion to EUR 68.9 billion. After the dividend, the share price lost the entire premium again.

For the current year, the Company now expects to consolidate at a low level in operational terms, with revenue of EUR 68.2 billion again, but at least profits are expected to rise to EUR 3.03. This means the generous dividend would no longer have to be paid from the Company's assets. BASF is now looking to relocate large production facilities abroad, but the main plant in Ludwigshafen and research and development are to remain in Germany. While this is a tragedy for the local site, it will soon lead to ringing cash registers for shareholders.

At the depressed share price level of around EUR 44, analysts are now becoming more optimistic again. Berenberg is sticking to its "Buy" rating and has set a target price of EUR 54, with the potential outsourcing of the "Coating" division inspiring enthusiasm. UBS also votes "Buy" with a price target of EUR 58 but sees high risks in the second half of the year. Investors will receive more figures on July 26. Until then, it is best to remain patient.

Altech Advanced Materials - Focus on the medium-term start of production

The Altech Advanced Materials stock has been quieter recently. After a promising, positive feasibility study at the beginning of the year, the German battery innovator is now looking for approvals and subsidies from Germany and the EU. Additional investments are needed before the first units roll off the production line at the Schwarze Pumpe site. The focus is on a new sodium chloride solid-state battery for intermediate energy storage in the grid, which originates from the joint venture project with Fraunhofer called CERENERGY®. In addition to the existing pilot plant for the new sodium-based battery, the patented Silumina Anodes™ coating process is also set to be industrialized in the future.

Altech recently published its half-year figures. The first half of the 2024 financial year was naturally characterized by set-up and development costs, resulting in a planned loss of EUR 0.82 million. Revenues were minimal, but a provision for impending losses in the amount of EUR 0.19 million was reversed. The preliminary balance sheet, according to HGB, as of June 30, 2024, shows equity of around EUR 7.87 million, an increase of 56% compared to the end of 2023. The Management Board continues to expect a loss of around EUR 1.6 to 2.1 million for 2024 as a whole but remains extremely confident.

Altech Advanced Materials is now sufficiently capitalized, as 62% of the balance sheet total of EUR 12.75 million consists of equity. At the end of June, the cash balance was EUR 1.22 million and it now depends on the subsidies applied for, which are likely to flow soon due to the full-bodied promises on the energy transition from Berlin and Brussels. Risk-conscious investors can currently enter the future value at a valuation of EUR 31.4 million. If the battery innovations quickly conquer the market, a dream return beckons.

BYD versus VW - And the winner is China

Anyone currently wondering about the uneven course of the two major vehicle manufacturers, VW and BYD, should take a closer look at their strategic positioning in the promising e-mobility market. While BYD is only laughing about the EU's punitive tariffs because they will no longer be relevant anyway with the opening of plants in Hungary and Turkey from 2026, the VW Group is still struggling with its electric strategy. Software errors, delivery delays, and the cancellation of the scrapping bonus are destroying growth hopes in Wolfsburg for the current year.

The VW Group is turning to the US start-up Rivian for help and hopes to find support in programming sensible software control systems there. All of this is taking time and swallowing up billions, while BYD already has entire shiploads unloaded in Europe daily. In terms of price, BYD is, on average, 20% cheaper in the market and even impresses traditional German combustion engine enthusiasts with its strong performance and technical appeal. The Chinese vehicle works and solves the everyday problems of short-distance urban traffic with parking shortages and diesel driving bans. It is clear that the Chinese innovator will continue to score points until the German premium manufacturers can deliver a low-cost equivalent. VW is likely still around two years away from doing so, which is why BYD is worth significantly more on the stock market than the Wolfsburg-based company. A 2024 P/E ratio of 18.5 versus 3.5 does not seem to bother anyone either. Nevertheless, we think both protagonists are worth buying.

The energy transition in Germany is creating both winners and losers. While the topic of hydrogen is barely getting off the ground, battery technology is now clearly the focus of investors. This is because surplus alternative energy needs to be stored in intermediate storage systems. BASF, BYD, Volkswagen, and Altech Advanced Materials have different approaches but share a common vision: an electrified future. Portfolios should be well diversified to significantly reduce any risks.