October 15th, 2021 | 12:19 CEST
Bayer, Water Ways Technologies, K+S - Will there be enough food for everyone in the future?
Table of contents:
Bayer - Sale of a division?
Bayer has been well-positioned in the field of agrochemicals since the acquisition of Monsanto. Seeds and weed killers are essential for the future; however, the Group probably did not expect such a wave of lawsuits with the crop protection active ingredient glyphosate. This acquisition is still causing the Group problems today. Investors do not like the uncertainties resulting from the lawsuits. In addition, the purchase price for Monsanto was high, and Bayer even had to take on debt for the acquisition.
Most recently, a glyphosate lawsuit was won, at least a small ray of hope for the beleaguered shareholders. There are increasing rumors that the Company wants to sell the pest control or weed killer division. A final decision has not yet been made. If there is a buyer, the price will ultimately have to be right. The Group intends to use the sales to reduce its debts. However, the Company did not want to comment further on the rumors.
The chart of the share has brightened significantly in recent trading days. The downward trend was broken for the first time, and also a 123 formation was formed. As long as the support at EUR 45.76 is no longer undercut on a closing price basis, the chart picture remains bullish. The analysts at Bernstein are calling for a price target of EUR 76. Bayer's pharmaceuticals division is doing very well, and once the legal disputes at Monsanto have been settled, the stock certainly offers some potential. Until then, investors should be cautious. Pure chart traders could position themselves now.
Water Ways Technologies - Irrigation systems worldwide
Water Ways Technologies is headquartered in Canada but is originally from Israel and provides proprietary irrigation technology to its customers. The Company operates worldwide and has over 400 customers in over 40 countries. Wherever water is scarce or expensive, it pays to use an irrigation system. The plants are optimally supplied without water seeping away. The Company has set itself the goal of becoming the world leader in irrigation projects in the agricultural sector.
The Company reported record figures for the first half of the year. Sales increased to CAD 12.1 million, and EBITDA was CAD 832,000. In mid-September, two new orders worth CAD 1.3 million were won. On September 29, the Company reported no less than three new orders in Mexico, China and Canada, with a total volume of CAD 570,000. According to Allied Market Research, the market for irrigation systems is expected to grow to USD 5.57 billion by 2027. In 2020, the volume was USD 1.44 billion.
Water will gain in importance in the coming years, as on the one hand the earth's population is increasing and on the other hand it is currently getting warmer. The demand for irrigation technologies will therefore also increase. The share is 57% owned by insiders, which is a good sign. The market capitalization is currently CAD 24.1 million, with 2021 being a highly encouraging year for investors so far. At the beginning of the year, the share price was still at CAD 0.06 to rise to CAD 0.295 on August 30. From there, the share has consolidated to CAD 0.22 and is currently trading at CAD 0.24.
K+S - Potash prices ensure turnaround
Potash fertilizer prices have risen significantly recently. Following several natural disasters and periods of drought, demand for fertilizers has picked up. K+S benefits from this and, after a very long dry spell, can attract attention with sustained positive news. The share was also able to make gains in a weak market environment. As long as the price of potash remains at this level, the Company can generate large profits.
Interested investors will find out how well things are currently going operationally on November 11, when the figures for the third quarter are to be presented. Deutsche Bank expects an EBITDA of EUR 121 million, representing year-on-year growth of a whopping 59%. Analysts expect earnings of EUR 2.03 per share. In recent weeks, more and more research houses have raised their expectations.
Deutsche Bank has raised the price target to EUR 15 and left the share on Hold. Likewise, UBS has reacted and issued a target price of EUR 13.95. On October 11, the UBS target of EUR 14.52 was already exceeded. At this point, the share reached a new multi-year high and at the same time generated a new buy signal. If the estimates are achieved, the price-to-earnings ratio is below 7, and the price-to-book ratio is below 1 and can therefore be considered favorable.
The areas around food production are booming. Bayer is still struggling with the Monsanto problem; otherwise, things are going well for the Group. Water Ways Technologies is growing strongly and was able to report record figures. K+S has achieved the turnaround thanks to the high potash price. The Company is now in a much better position than expected at the beginning of the year. As long as the raw material price does not drop significantly, the Company will continue to earn well.
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