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February 2nd, 2022 | 12:45 CET

Bayer, Almonty Industries, HeidelbergCement - Delivered

  • Tungsten
Photo credits:

To start, the good news, the inflation rate fell in January for the first time since December 2020. However, the level of 4.9% remains at a threateningly high level, and economists had expected a sharper fall. The main reasons for the inflation are the continued exorbitant rise in energy prices and rising commodities prices. High inflation is reducing consumers' purchasing power. In addition, rising production costs are squeezing companies' margins.

time to read: 3 minutes | Author: Stefan Feulner

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


    HeidelbergCement - Surprisingly strong

    It was foreseeable that the past year would be good for the HeidelbergCement building materials group due to the boom in the construction industry. However, the year-on-year increases were higher than expected, both from the Company's point of view and that of analysts. In the preliminary annual figures, sales of around EUR 18.7 billion were announced, corresponding to a year-on-year increase of around 8%. Originally, the Heidelberg-based Company assumed a slight growth in revenues before exchange rate and consolidation effects.

    EBITDA increased by almost 6% compared to 2020 to just under EUR 3.9 billion. EBIT, adjusted earnings before interest and taxes, rose by around 12% to EUR 2.6 billion in 2021 and was significantly higher than the experts' estimates. The reasons for the better-than-expected results are likely to be the cost-cutting measures introduced to counter energy price increases. In addition, price increases are likely to have been responsible for the good margins.

    Further savings of around EUR 500 million are planned for 2022. In addition, HeidelbergCement's focus is to be on the most profitable markets. Businesses in Spain and the USA, among others, have already been sold in the past. The Company will announce the full figures on February 24, 2022.

    Analysts reacted positively to the announcement of the preliminary figures. Thus, the Hamburg-based private bank Berenberg reiterated the price target of EUR 90 with a buy verdict. The building materials group thus provided a positive surprise, wrote analyst Harry Goad. The analyst sees the fact that the low point of the energy-related margin decline in 2021 has been passed as a positive signal. That suggests that the group should now successfully push through price increases that have become necessary because of inflation, he added.

    Almonty Industries - Producer for the western world

    There has also been a sharp rise in demand for tungsten, a whitish heavy metal. Because of its high melting point, the most important application of tungsten is in the lighting industry as a filament in incandescent lamps and as an electrode in gas discharge lamps and in electron tubes. Its second significant use is as an alloying metal in ferrous metallurgy. It forms tungsten carbides in tool steels, which increase secondary hardness. Due to its high density, the metal is also used in classic sectors such as oil and gas, mining and chemicals, and new applications such as charging stations for e-cars, 5G networks and semiconductors.

    Tungsten, a strategic metal, also faces the problem of limited supply and a quasi-monopoly from China, which dominates around 85% of global production. For the first time in three years, the price of tungsten APT (ammonium paratungstate) has exceeded USD 300 per metric ton unit (mtu). With the world's largest tungsten mine currently under construction, the Sangdong mine in South Korea, supply chains for tungsten concentrates are expected to ease from the end of the current year. Around 50% of the world's tungsten supply outside China will then be produced by Almonty's wholly-owned subsidiary, Woulfe Mining.

    In addition to tungsten mining, the deposit offers additional potential from a larger molybdenum deposit that will be explored in more detail this year. In addition, Almonty Industries has great potential with two further projects in Spain and Portugal. The Company is currently valued at around EUR 125.00 million. In view of the further increasing raw material prices, this is a more than exciting investment object.

    Bayer AG - Promising formation

    The bottoming phase in the area around EUR 42 could soon be a thing of the past. A breakout above the prominent resistance area at EUR 57.71 would generate a new, significant buy signal. Despite the open flanks in relation to the glyphosate legal dispute, the next price target would be around EUR 80.00.

    Even more optimistic, and from a fundamental perspective, is the US bank Citigroup. The price target was raised from EUR 48 to currently EUR 70. Analyst Peter Verdult sees improvements in all areas at the Leverkusen-based Company.

    HeidelbergCement has beaten both its own and analysts' forecasts and is looking forward to the current year despite rising raw material prices. Almonty should perform after completion of the world's largest tungsten mine. Bayer is on the verge of a fresh buy signal.

    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.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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