September 13th, 2022 | 10:15 CEST
Back to basics: JinkoSolar, Alpha Copper, Varta
Table of contents:
"[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper
JinkoSolar: Be careful with these risks
JinkoSolar's stock has gained about 26% over the past year. In recent months, some disillusionment has set in around the Company. The reason: solar companies like JinkoSolar may have a special boom, but they are still cyclical. When commodity prices rise sharply, margins dwindle. Since competition is fierce, the costing of companies like JinkoSolar must "breathe." This is also true because current PV modules can all score with comparatively similar good quality. That makes it easy for buyers to pay attention to the price. The price is also a good argument for craftsmen responsible for selling modules in this country. Customers ultimately decide based on how much a PV system costs, including materials and installation. Companies are aware of this.
Nevertheless, the general big picture is rosy for companies like JinkoSolar, with demand up more than 100% in the second quarter of 2022. However, this particular economic situation has long been priced into the stock. JinkoSolar is well positioned due to its market position, but investors should not forget that the stock is more cyclical than many think. The equity ratio of around 14%, which is not exactly lush, also carries risks. For example, if interest rates in China also started to rise. Caution is advisable with the JinkoSolar share.
Alpha Copper: The profit lies in the purchase
Investors were also cautious about the Canadian copper company Alpha Copper. In the wake of general economic concerns, investors took to their heels and sent the Alpha Copper share into negative territory in recent weeks. In the meantime, the share price has fallen below its stock market debut in May of this year. Operationally, the Company, which originally operated two copper projects in the Canadian district of British Columbia, has recently made further progress: In August, Alpha Copper announced the acquisition of CAVU Energy Metals and, thus, two additional copper-related projects. What is special about the acquisition in a weak market environment is that the two new projects, Star and Hopper, have already been drilled extensively and shine with grades of up to 1.4% copper.
Exploration work is currently taking place on the Indata project and is expected to be completed by the end of the year. Okeover is also expected to make progress this year. Alpha Copper thus offers access to no less than four promising copper projects. Copper is one of the most important metals in an electrified world. Both classic industry and GreenTech are inconceivable without copper. The wave of selling in the wake of recession fears may be unjustified - after all, Alpha Copper is far from potential production and more of a bet on the future. Given its projects in promising locations and the Company's clear direction, Alpha Copper could become the leading wolf among Canadian early-stage copper companies. Anticyclical investors, in particular, should have the stock on their radar.
Varta: Has the market not understood the stock?
One item that has felt like it has barely moved on the radar for years is Varta's stock. Varta is world-renowned for its button cells for hearing aids and consumer electronics. The very big players in the industry, such as Apple, rely on the German manufacturer. A long time ago, they wanted to take a swing towards batteries for e-cars. But the plans have long since become a kind of running gag in investor circles - little has happened so far. In February, the Company founded Pertrix, a subsidiary for this e-car business. At the end of May, it received its first order for a battery cell for e-cars with a 6-minute fast-charging capability. The cell is to act as a kind of booster in sports cars, among other things, and not be the sole energy supplier. The news did not provide any impetus to the Varta share price - the value recently supported in the direction of the EUR 60 mark. The share has thus been in a downward trend for a year.
All beginnings are difficult. That could explain Varta's entry into the e-car business. However, it is also possible that the market has not yet fully understood the potential of the technology. The JinkoSolar share is by no means a sure-fire winner either - margins are quickly squeezed in the solar sector. Alpha Copper, on the other hand, has no operational problems to contend with. While things can go wrong in the search for copper, at the current stage, the primary objective is to highlight opportunities. If this succeeds, the market could reward the newly gained perspective. If the drilling results are good, the current fear of recession should roll off Alpha Copper in the medium term.
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.
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