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September 5th, 2022 | 10:58 CEST

Bayer, Almonty Industries, SAP - New opportunities after the sell-off

  • Mining
  • Tungsten
Photo credits: pixabay.com

The scent of a perfect end to the week was in the air. Positive labor market data from the US drove global stock market indices, and Germany's leading index DAX went through the psychologically important 13,000-point mark like butter. But then came the gas shock with the announcement that Gazprom does not intend to ramp up gas deliveries via Nord Stream 1 again. And just like that, all the gains made dissolved into thin air. The DAX alone will likely start the new week today deep in the red at around 12,700 points. This threatens a new test of the year's lows, which in turn could allow new anticyclical entry opportunities in selected stocks.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: BAYER AG NA O.N. | DE000BAY0017 , ALMONTY INDUSTRIES INC. | CA0203981034 , SAP SE O.N. | DE0007164600

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

     

    SAP AG - Right on the button

    SAP's share price performance since the outbreak of the Corona pandemic in March 2020 can be classified as disappointing. While the DAX can still boast a performance of just under 60% since the crash low despite a correction that has been underway for months, the Walldorf share must defend the prominent support at EUR 82.13 with all its might in order not to slip into significantly lower regions. This zone is all the more important because, in addition to the Corona low, the lowest quotations of 2018 and 2019 are also located in this area. However, there is no all-clear from the indicators side.

    Thus, the trend-following indicator MACD on a weekly basis even faces a sell signal. A break of the triple-tested area would result in a follow-up potential to around EUR 74.58. Various analyst firms take a positive view of the change in the CFO chair. The Swiss bank UBS has reiterated its Buy rating for SAP with a view to the new CFO Dominik Asam, with a price target of EUR 107. The Hamburg-based private bank Berenberg also positively viewed the former Airbus CFO's move to the software group and renewed its assessment with a Buy rating and a price target of EUR 110.

    Almonty Industries - On track despite obstacles

    In addition to the already existing oil and gas crisis due to the sanctions against Russia, a much greater disaster could be in store due to a further escalation of the Taiwan conflict. Because if the German government sticks to its position, it would also have to sanction China after a possible start of a conflict, which would mean fatal consequences for the procurement of critical raw materials. There is no question that we are dependent on the Middle Kingdom. The largest Asian economy controls the entire value chain for rare earth metals, and China is also responsible for around 85% of global production of the critical metal tungsten. Tungsten is considered an essential metal for the high-tech industry and is used not only in energy and lighting technology but also in the aerospace and defense industries as well as in telecommunications and medical technology.

    As is now the case with oil and natural gas, Western allies are looking for alternatives outside China. Here, the Canadian company Almonty Industries stands out. Based in Toronto, Canada, Almonty's main business is mining, processing and shipping tungsten concentrate from its Los Santos mine in western Spain and its Panasqueira mine in Portugal. It is also developing its Sangdong tungsten mine in South Korea. When fully commissioned, the Sangdong mine at the Almonty Korea Tungsten deposit will be responsible for 50% of the world's tungsten supply outside China.

    In recent weeks, despite high hurdles, further important goals were achieved. Firstly, Almonty Industries received the second tranche in the amount of USD 4.1 million from the financing loan from KfW IPEX-Bank. The total volume amounts to USD 75.1 million. Secondly, the miners in charge braved the heaviest rains in decades in the region. According to CEO Lewis Black, the mine has achieved an important milestone with the hanging wall gallery of -1 level being reached. This is significant because it allows Almonty to access previously constructed infrastructure that can be rehabilitated, such as the drainage adit or the vertical shaft, and opens up further exploration in the Ore Zone. The Company said an engineering review conducted after the storm had demonstrated no impact on infrastructure.

    The Almonty Industries share has lost about a quarter of its value since the start of the year as part of the broader market correction. Due to the scarcity of the critical raw material, the Company should benefit in the long term.

    Interested investors should mark their calendars for Tuesday, September 27, 2022. CEO Lewis Black will present live at 4 pm on this day at the 4th International Investment Forum IIF. You can register for the virtual event at ii-forum.com.

    The Sangdong mine in South Korea is expected to account for 50% of ex-China tungsten production in the future. Source: Almonty Industries

    .

    Bayer AG - It is getting tight

    The chart of the pharmaceutical and agricultural giant Bayer also continues to be depressed. At the EUR 48.20 level, there is an upward trend that has been in place since November 2020. In the event of a sustained break, the low from last year at EUR 43.90 would be the first port of call, after which the 2020 low at EUR 40.34 beckons.

    There are positive developments to report in the glyphosate litigation. The Leverkusen-based company won another lawsuit concerning alleged cancer risks of the weedkiller Roundup containing glyphosate. A jury in a St. Louis court ruled Thursday that the product from Monsanto, the US seed producer acquired by Bayer in 2018, was not responsible for the plaintiffs' illnesses.

    Analysts are much more positive about Bayer AG's performance than the current share price trend. The US investment bank JPMorgan raised the price target for the shares of the Leverkusen-based company from EUR 75 to 80, and the verdict was confirmed as "overweight". Also positive is the major Swiss bank UBS, which continues to see Bayer shares as a Buy with an unchanged price target of EUR 96.


    After a brilliant price rally, the markets were slowed down by Gazprom's halt of gas deliveries via Nord Stream 1. SAP, as well as Bayer, is fighting for important chart support. Almonty Industries is building the world's largest tungsten mine and should benefit in the long term due to the scarcity of raw materials.


    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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