July 18th, 2022 | 15:06 CEST
BASF, Meta Materials, Nordex - Shares under pressure, but with positive prospects
Table of contents:
BASF - Strong first half
BASF is the world's largest chemical group. Last year, the Ludwigshafen-based Company had around EUR 79 billion in sales and generated a profit of approximately EUR 7.7 billion. Innovations have made the group the leading chemical company. In 2021, EUR 2.2 billion was spent on research and development. Around 10,000 employees work on the future of the Company. In 2021, the Group secured 820 new patents. Despite all the good prerequisites, the share only knows one direction, and that is south.
The reason is not the Company itself but the uncertainty surrounding the energy supply in Germany. Nord Stream 1 has been undergoing maintenance since June 11, and some assume that no more gas will flow to Germany even after the planned maintenance work. That would indeed be a disaster for the energy-hungry group. The share would then presumably be further punished. Yet the preliminary 2nd quarter business figures presented on July 11 were strong. Sales climbed by EUR 3 billion year-on-year to just under EUR 23 billion. EBIT was level with the prior year at EUR 2.3 billion despite the Ukraine crisis and inflation.
Analyst expectations were thus clearly exceeded. However, management still did not want to raise the outlook. EBIT of EUR 1.5 to 2.1 billion is expected in the 2nd half, as EUR 5.1 billion was already achieved in the first half. At the current share price of EUR 41.45, the dividend yield is 8.2%, provided that EUR 3.40 continues to be paid. That is very good for such an excellently positioned company. If Germany delivers the turbine repaired by Canada to Russia and Russia meets its delivery obligations, the share price should pick up. In the long term, you cannot go wrong with BASF shares.
Meta Materials - Acquisitions and collaborations
NASDAQ-listed Meta Materials is in the process of commercializing a materials breakthrough. The developer of high-performance functional materials and nanocomposites has managed to move development out of the lab and into volume production. The possibilities with metamaterials are almost unlimited and can become a real gamechanger in many areas. The Company's announcements since the end of May also show this. That is when a collaboration was announced with NYSE-listed PPG to develop smart devices for ophthalmology and augmented reality applications. Together they are trying to develop a dimming function to adapt faster to the lighting conditions. In line with this, PPG also unveiled the most transparent antenna in eyeglass lenses at AWE USA 2022, using its ARfusion lens casting system to implement this technology.
On June 17, the acquisition of Optodot was completed. With this, Meta takes over 67 granted patents and 22 pending patents. The Company develops nanocomposite battery separators and infrared optical coating technologies. Combined with the acquisition of Plasma App, the Company can bring its technologies to a collaboration with battery developer, Coulometrics, announced in early July. The goal is to make Li-ion batteries safer and more efficient. PLASMAfusion films are coated with copper current collectors that isolate short circuits within the battery. It also requires less copper, thus saving weight. Safety testing of the batteries will also include Meta Materials' proprietary ceramic NPORE technology, which has excellent heat resistance.
Corporate Knights have included the Company in the list of the 50 fastest growing sustainable companies out of 5,115 companies. The rapid growth and development requires money, and so a placement of about 37 million shares at USD 1.35 and warrants at USD 1.75 was completed on June 28. The total proceeds amount to approximately USD 50 million. As a result, the share came under pressure and is currently trading at USD 0.962. The Company now has a few irons in the fire, and a single breakthrough in one area will cause the stock to jump significantly.
Nordex - Major orders, but stock remains under pressure
For the traffic light coalition, it has been clear since the Ukraine crisis at the latest that the expansion of renewable energies must be accelerated. Wind power also plays an important role in this, and the expansion is to deliver 115 gigawatts by 2030. These are ideal conditions for the German wind turbine manufacturer Nordex. However, the Group is affected by supply bottlenecks, increased raw material prices, higher transport costs and rising interest rates. These issues cloud the picture because the Company's weak spot is its margins. These have always been very thin and have now been more than eaten up by cost increases.
Yet the Company commissioned its first N163/6.X turbine in the Netherlands in May. One turbine can produce more than 6 megawatts. More power with lower noise emission values shows the innovative strength of the Company. However, these turbines cannot be built in Germany, as under the Renewable Energy Sources Act only turbines up to 6 megawatts are permitted. Even large orders, such as the recent order from Brazil for 80 turbines, are not helping the wind turbine manufacturer get back on its feet at the moment.
On the contrary, the group had to carry out a second capital increase within a very short time. After collecting EUR 139 million from the major shareholder Acciona, the most recent capital increase with subscription rights amounted to EUR 212 million. EUR 5.90 is due for each additional share. Acciona is also fully participating in this capital increase. These capital measures caused pressure on the share, which is currently available for EUR 8.25. Even worse, the stock was kicked out of the SDAX and TecDAX because they were unable to complete their reports in time due to a cyberattack. The future for wind energy is green. Now Nordex just needs to turn the tide.
In turbulent times, keeping a cool head and picking the right stocks is essential. BASF has already mastered many crises, and the current crisis will also help the Company move forward. Meta Materials is a high-tech growth company on the way to the top. The share has significant upside potential if a first major order is landed. Nordex had to leave the SDAX and TecDAX. If the resumption succeeds, this will ensure purchases. But even more important is that the Group improves its margins and thus gets back into the green.
Conflict of interest
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