28. May 2021 | 08:40 CET
Bayer, Osino Resources, Xiaomi - Here is what happens now
Pharmaceutical giant Bayer fails once again in court with settlement proceedings and is now calling for a new plan. A court ruling means a liberation blow for another company, which significantly increases the prospects for the future. Future prospects are also rosy for the precious metal gold due to fundamental conditions such as fear of inflation, loose monetary policy, and continued low interest rates. At the current level, there are excellent long-term entry opportunities with healthy profits.
time to read:
ISIN: DE000BAY0017 , CA68828L1004 , KYG9830T1067
Attractive mining stocks
Due to the strong gold price in the past year, gold producers such as Barrick Gold and Newmont achieved record results and are now sitting on a mountain of cash, which should flow into promising mining projects in the future. One potential takeover candidate is gold exploration Company Osino Resources, which is focused on developing its main Twin Hills project in central Namibia. Namibia has long been considered the most mining-friendly country on the continent due to its developed infrastructure and its politically and legally stable situation. With a share of almost 12% of the gross domestic product and more than 40% of export earnings, mining is the most important economic sector in the former German colony.
Osino Resources has approximately 7,000 square kilometers in Namibia's prospective Damara sedimentary mineral belt along strike from the producing Navachab and Otjikoto gold mines. The main Twin Hills project is located just 20 kilometers from the largest gold deposit in southern Africa outside the Navachab Wits Basin.
With an expenditure of 69,000 drilling meters, 125 drill holes and a total of less than USD 25 million in exploration costs, initial resource estimates have now been determined there after almost 5 years of work. Already 10 years ago, the team around Osino Resources CEO Heye Daun was able to sell Auryx, which explored the Otjikoto mine, to B2 Gold for CAD 180 million. A similar move is expected this time around at Twin Hills.
Mid-week, an update was provided on drill results from the ongoing infill and extension drilling program, which were better than expected. At Cloud East, drill holes below the first resource pit intersected broad zones of high-grade mineralization that are improving significantly at depth. These indicate the potential for a significant resource upgrade at Clouds for the next estimate. Management plans to expand the current drill program to include additional deep drilling in the Clouds, Bulge and THC areas.
Analysts at Sprott Equity Research issued a buy rating with a price target of CAD 2.55. The currently planned drilling program over 75,000m should bring further high-grade prospects to the surface. Osino Resources is currently trading at CAD 1.50.
Groundbreaking news at Xiaomi
The technology group Xiaomi was able to come up with two trend-setting announcements. First, the Chinese Company was finally removed from a blacklist imposed by the Trump administration earlier this year. Xiaomi and eight other companies were accused of having ties to China's Chinese military, security and intelligence agencies. The classification as a "communist Chinese military company" has finally been withdrawn by a US court. As a result, the restrictions on citizens and companies in the United States buying or holding shares in the Chinese smartphone manufacturer have been lifted with immediate effect.
Profiteer of the sanctions
The sanctions against former top dog Huawei also helped Xiaomi achieve solid growth rates in the smartphone market. According to its figures, Xiaomi shipped 49.4 million smartphones worldwide in the first quarter, giving it a market share of 14.1% and putting it in bronze place in global cell phone sales behind Samsung Electronics and Apple, which still lead by a wide margin. Overall, the Chinese want to reach the threshold of 200 million smartphones shipped this year, despite the continuing shortage of chips.
Overall, group revenue rose 54.7% to USD 74.88 billion. Net profit even grew by 163.8% to USD 950 million. Thus, the first-quarter figures exceeded experts' estimates. Subsequently, JP Morgan raised its price target on Xiaomi from HKD 32 to HKD 35 and reiterated its "overweight" rating. Goldman Sachs also raised the target. The share is now expected to reach HKD 33 - the rating is "buy."
The never-ending story of glyphosate
Monsanto - no end in sight. Following a ruling by the competent district judges in San Francisco, they reject Bayer's proposal for dealing with future lawsuits as "simply unreasonable." The Leverkusen-based Company wanted to use USD 2 billion to resolve future lawsuits against the controversial weedkiller glyphosate. This time it was about Monsanto's Roundup, which can be used against weeds but could also cause possible cancer because of the glyphosate it contains. After losing in court, Bayer plans to opt out of the US settlement for potential future plaintiffs and review Roundup sales to private customers from the United States.
"The decision makes it impossible to move forward with the proposed national resolution mechanism under the supervision of this court, which would have been the fairest and most efficient solution for all parties," Bayer said. Instead, it unveiled a five-point plan to deal with potential future glyphosate lawsuits effectively. The USD 2 billion package is just one part of the overall USD 11.6 billion settlement. The court ruling is not expected to change the provisions of the USD 2 billion. Bayer shares lost 5% to EUR 52.50 at the peak following the news. Strong support at the current level offers a long-term entry opportunity.