September 15th, 2021 | 12:51 CEST
Bayer, Water Ways Technologies, Kali & Salz - Clean water for 7.9 billion!
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Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Bayer - With Monsanto for sustainable world nutrition
Since acquiring US seed giant Monsanto in 2016, Bayer AG has been a major protagonist for agrochemicals. After months of haggling, the US Company accepted the more than USD 60 billion takeover offer from the Leverkusen-based Company. With this takeover, Bayer has managed the largest acquisition of a German company abroad. The resulting Group is one of the world's largest producers of seeds and weed control products and could, with due diligence, ensure sustainable food security.
But unfortunately, the historic deal did not bring much joy to the people of Leverkusen - on the contrary. Even after several rulings and settlements, an end to the glyphosate legal dispute still seems elusive. Bayer CEO Werner Baumann made history at the time, but the balance sheet is sobering five years later. A livid image crisis, record-breaking provisions and additional billion-dollar risks are currently generating little confidence among investors.
The legal trouble that Monsanto was to cause had been underestimated in Leverkusen. At the time, the US company was already facing lawsuits because of the pesticide glyphosate, which some studies consider carcinogenic. Other legacy legal issues also became a problem, such as the herbicide dicamba and the chemical PCB, which US plaintiffs blame for contaminated water and brain damage.
Last year, the balance sheet showed a bitter loss of EUR 10.5 billion - the highest loss in the Company's 155-year history. Bayer shareholders today continue to hope for a favorable judicial decision from the US Supreme Court. In total, Bayer shares have already lost a market capitalization of about EUR 80 billion, which is more than the acquisition of Monsanto had cost. The current market value is EUR 45 billion and is still subject to significant medium-term risks.
Water Ways Technologies - Israeli technology for agriculture
Over two-thirds of the world's water demand is taken up by agriculture. In many countries, water must therefore be heavily rationed and controlled through government allocation mechanisms. Agricultural businesses in Israel have access to innovative technologies for the sensible metering of water in agriculture. Through Water Ways Technologies (WWT) and its subsidiaries, a global agricultural technology provider locally offers viable solutions for smart irrigation.
With its products, the Company is on the cutting edge. The world's population is eager for appropriate technical tools, especially in the problematic land areas plagued by drought and infertility. Specifically, WWT offers systems with a focus on commercial applications in the micro and precision irrigation segments. These are mainly projects for sensible irrigation designs as well as the distribution of components and equipment. This new industrial sector has an important role, especially in times of scarce water and the increasing demand for pollution-free food.
Its offerings are meeting with brisk demand, particularly in China and Canada and in developing countries such as Africa and Latin America. Israel's geological determinants have always made it an innovative country for those who want to grow vegetables and fruits with little fertile soil. WWT takes care of vineyards, cotton fields, apple and orange orchards, blueberries, and medical cannabis in over 15 countries with its innovative equipment. Cold rooms for fresh produce are also part of the range.
Now, WWT has received two significant orders worth USD 1.3 million to supply innovative irrigation components to customers in Ethiopia and Peru. The Company expects to record revenue from the orders in the last quarter of 2021. WWT stock is tradable in Canada and Germany, and recent news has already led to swings to the upside. However, the market capitalization is still manageable at CAD 33 million.
K+S - Kali & Salz has achieved the turnaround
Although Kali & Salz (K+S) is now facing stronger competition in the potash business from the BHP Group, the difficult times should currently be over for the German Group from Kassel. Nowadays, the BHP Group wants to move away from its multi-billion dollar oil and gas business and instead push the fertilizer business. BHP is focusing on projects in Canada, where K+S invested billions a few years ago.
Given the global need for potash fertilizer to increase the volume of agricultural products, the prospects for both companies remain good. In any case, BHP's new production will not come onto the market until 2027. Industry analysts consider a global growth of 2-3% possible over the next 10 years. Demand is enormous, especially in China and Africa. K+S will therefore return to its operating growth path.
Currently, those who invest in K+S will receive an analytically favorably valued share in their portfolio, with a P/E ratio of 8 and a P/B of 0.7. However, from a chart perspective, the K+S share should not fall below the EUR 9.80 line after the breakout.
Agriculture and related technologies for water and cultivation have been a booming sector for several decades. However, it is not easy to find companies that can be invested in; with Bayer and K+S, one could already burn one's fingers. The situation is different with Water Ways Technologies; the share has been in demand since its issue in September 2020 and is rising steadily.
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