BUYING RECOMMENDATION and DISCOUNT BATTLE! Nel ASA, BMW, Volkswagen, ARI Motors

ARI Motors: Analysts see more than 300% upside potential

Analysts at SMC Research recommend buying shares in ARI Motors with a target price of EUR 1.80. The Company, based near Leipzig, is currently particularly successful with its electric pickup, of which it has already sold more than 1,000 units. Analysts expect ARI to generate sales of around EUR 8.4 million in the current year. Next year, it is expected to reach EUR 12.6 million and then EUR 17.7 million in 2026. Net income is expected to climb from EUR 600,000 in the current year to EUR 1.4 million by 2027. Despite these growth prospects, the Company is currently valued at only around EUR 4 million.

Growth for ARI Motors is expected to come not only from their electric pickups - whose customers include small businesses such as tradespeople and large corporations like BASF and Coca-Cola.- but also from small passenger vehicles. The ARI Bruni was recently introduced. The two-door, fully electric vehicle offers space for four people and is designed for urban driving. The compact speedster consumes only 9.9 kWh and has a range of over 200 km. Prices start at EUR 15,990 and can be reduced even further thanks to regional funding programs such as those available in Baden-Württemberg. This vehicle is also available in a "Cargo" version, which is aimed at customers with higher transport needs. Such prices for electric vehicles are precisely what one might hope to see from the likes of Volkswagen and others.

BMW: Discount battle and change in management

BMW is, of course, in a class of its own. However, the Munich-based automaker is struggling to offer e-vehicles with a price-performance ratio that appeals to customers. In order to boost sales and clear the warehouses before year-end, the premium brand will be offering rare discounts in the coming weeks. For example, vehicles with combustion engines will be offered with a price advantage of up to EUR 5,000. The electric SUV BMW iX is even said to be available at a discount of 29%. This move also aligns with BMW's response to stricter CO2 regulations set to take effect at the start of the new year. These measures are unlikely to have a significant immediate impact on the stock. More important for the strategic development is likely to be the replacement of the supervisory board.

As reported by Handelsblatt, long-serving Supervisory Board Chairman Norbert Reithofer is set to be replaced by Nicolas Peter at the upcoming annual general meeting. Major shareholder Quandt and the employee representatives are said to have agreed on this decision. Peter has extensive experience within BMW, previously serving as the Company's Chief Financial Officer. As the new Chairman of the Supervisory Board, Peter will have a number of important tasks to deal with: falling profits, problems in China, and the transition of electromobility. On top of these hurdles, Peter will also need to preserve BMW's independence as a premium manufacturer.

This year, BMW's share lost around 28% of its value on the stock market. That is more than Mercedes and about the same as Volkswagen. According to marketscreener.com, 10 of 22 analysts recommend the BMW share as a "Hold", and 1 recommends it as a "Sell". The remaining 11 recommend it as a "Buy". Most recently, Deutsche Bank, among others, reaffirmed its "Buy" recommendation. Following talks with BMW management, their analysts expect a positive sales trend in the current quarter. Their target price is EUR 95. BMW shares are currently trading at around EUR 73.

Nel: Samsung causes share price to jump

Nel shares have not been recommended as a Buy for quite some time. And the Norwegian hydrogen specialist is not as cheap as ARI Motors, either. Despite a 56% drop in the share price this year, the market capitalization is still NOK 5.2 billion – with slow growth and high losses.

The Nel share did at least show signs of life yesterday. It rose by more than 7% to over NOK 3. However, the downward trend remains intact.

The day before, Nel had reported an order with a volume of EUR 5 million – not enough to be considered a milestone, but still a positive development. The order comes from Samsung C&T Corporation Engineering & Construction Group, an industrial conglomerate. Nel is to build a 10 MW plant for alkaline electrolysers for the production of nuclear (pink) hydrogen for the South Korean company. In the pilot plant, hydrogen will be produced from surplus nuclear power to increase energy efficiency. Earlier in 2024, Nel and Samsung C&T agreed to work together on an off-grid project based on solar energy.

"This is Korea's first nuclear-powered hydrogen production project, and we needed the most reliable electrolysis technology to carry it out. There is no doubt that Nel's technology can meet our expectations. We are pleased to be working with Nel again on the pink hydrogen production project. Samsung C&T hopes to strengthen its partnership with Nel to develop further opportunities in the clean hydrogen business," says Byung Soo Lee, Head of Samsung C&T's Energy Solution Business Unit.

So Nel's plants are still in demand. The question is whether this demand can form the foundation for a profitable business model. ARI Motors aims to break even this year and plans to grow further in the niche of electric mobility in the coming years. It is not only the analysts at SMC who are likely to be interested in ARI's current share price. BMW, like all other German manufacturers, has to manage the balancing act between the shrinking combustion engine business and the transformation to electric mobility. This challenge seems daunting.