December 7th, 2022 | 10:46 CET
Bayer, BYD, TubeSolar: Stocks for the year-end rally and beyond?
Table of contents:
"[...] We know exactly what we are doing and are implementing what we consider to be a proven technology in an industrially applicable and scalable way. [...]" Uwe Ahrens, Director, Altech Advanced Materials AG
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
TubeSolar: The new German solar star?
Perhaps the most exciting solar stock in Germany is TubeSolar AG, and analysts see considerable upside potential. The spin-off of part of OSRAM/LEDVANCE's former fluorescent tube manufacturing facility in Augsburg, Germany, uses patent-protected technology to combine photovoltaic thin-film tubes into unique modules. The advantages over conventional silicon modules are many: weight, geometry, material usage, yield, long-term stability and recycling. The first highly automated production line with an annual capacity of 20 MW is scheduled to go into operation this year. Subsequently, construction of the second and third production lines will begin successively. Thus, the production capacity will be increased more than tenfold to 250 MW by the end of 2025.
First Berlin Equity Research advises buying the TubeSolar share. Following TÜV Rheinland's certification approval, the analysts have slightly raised the price target from EUR 7.50 to EUR 7.80 in the latest study. The stock is currently trading at EUR 4.30. The Augsburg-based company's patented technology has unique selling points thanks to its unique design, which gives the Company a clear competitive advantage over conventional flat modules in both the agri-photovoltaic and green roof sectors. The modules have rain and light transmission, uniform partial shading and protection against heavy rain and hail. The partial shading protects plants from excessive sunlight and dehydration, especially in sunny arid regions. The relatively low module weight and low wind load enable cost-effective elevation. As a result, the TubeSolar modules enable, for example, the simultaneous use of an area for agriculture and electricity production. As production capacity expands, sales are also expected to grow exponentially in the coming years. For 2024, First Berlin's sales estimate is EUR 60.5 million. In 2025, this figure is expected to rise to EUR 159.5 million - and the trend is set to continue. In 2025, an operating result of EUR 46.3 million is expected. Earnings per share are then expected to be EUR 0.92. In 2026, earnings per share will already be EUR 2.17.
Important for shareholders: The next expansion steps have been financed. At the beginning of December, TubeSolar successfully implemented a capital increase at EUR 4.25. In the process, the Company received around EUR 8 million. In addition, loans were converted into shares. The Company's balance sheet is correspondingly clean. As a result, the stock can now take off again.
Bayer: Share soon at EUR 70?
Bayer shares could also continue to take off. Numerous - though not all - analysts see further upside potential. Most recently, Berenberg renewed its buy recommendation. The analysts spoke with Bayer CFO Wolfgang Nickl at the "Berenberg European Conference 2022". He probably did not express much euphoria, but this is not surprising given the global challenges. According to the report, Bayer expects positive effects from seed price increases in the double-digit percentage range in the agricultural segment in 2023. In the pharmaceuticals segment, Bayer intends to focus on products that have already been launched, such as the prostate cancer drug Nubeqa. Overall, analysts are positive about the prospects for the DAX-listed group. For the current year, they expect earnings per share of EUR 7.70.
Last week, Jefferies also confirmed its buy recommendation for the Bayer share. The price target is EUR 70. In addition to the strong agricultural business, the analysts expect positive effects from the currency side.
Two analysts are thus giving the Bayer share a helping hand after a study by Bank of America caused the price to drop significantly last week. After the recent price rally, the analysts no longer saw any potential and downgraded the stock from "buy" to "hold". The price target was lowered from EUR 78 to EUR 58. The analysts do not believe Bayer will be able to compensate for inflation in the pharmaceuticals sector through higher prices. In addition, not all problems have been solved in the agricultural sector. They are thus alluding to the glyphosate trials. These have been somewhat ignored by the capital market in recent months.
BYD: Sales up, share down?
Fundamentally, BYD is doing well. The Chinese carmaker reports new sales records every month and is almost exclusively active in its home country. In November 2022, a total of 230,427 vehicles were sold - in October, 217,816 units were sold. At around 114,000 vehicles, pure electric cars already contribute almost half of the success. The other half are plug-in hybrids. BYD has taken cars with pure combustion engines out of the program. In addition, global expansion is underway. Markets such as Germany are expected to contribute to BYD's growth as early as next year. Numerous new models have also been presented in recent weeks and months. Nevertheless, analysts are skeptical for 2023.
According to the analysts at Jefferies, the "honeymoon" for electric vehicles in China is coming to an end. While BYD and Li are their top picks among electric carmakers, the market environment should become more challenging for all of them. Jefferies expects the new car market in China to shrink by 10% next year. "Only" 20 million vehicles are expected to be sold in the Middle Kingdom. However, sales of electric cars are expected to increase by 31% to 8.5 million vehicles. So this is actually positive for top dog BYD. But: At the same time, new competitors will also enter the market and established manufacturers have announced many new models. In addition, subsidies are expected to decrease, and lithium prices are expected to rise further. Accordingly, analysts expect intensified price wars and pressure on margins. Tesla's recent price cuts give a taste of what could be in store in the coming year.
Anyone who believes in the energy transition should have TubeSolar on their watch list. The German solar newcomer could become the surprise stock of the coming years. At Bayer, the optimists are in the majority. However, the glyphosate issue can boil up again at any time. BYD is one of the market leaders in the electric car sector. However, competition could become brutal in the coming years.
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.
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.