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November 9th, 2022 | 12:14 CET

BYD, Almonty Industries, Ballard Power - Attractive future prospects

  • Mining
  • Tungsten
  • Electromobility
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In order to achieve long-term climate targets, there is no alternative but to switch from fossil fuels to renewable energies. With subsidy programs worldwide, politicians are promoting the expansion of wind, hydro and solar energy. Despite excellent future prospects, the shares of the relevant companies have been undergoing a sharp correction for months. Similarly, raw materials such as copper, nickel and tungsten, which are vital for the energy transition, have also corrected. Demand already exceeds existing supply - an opportunity for the future.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: BYD CO. LTD H YC 1 | CNE100000296 , ALMONTY INDUSTRIES INC. | CA0203981034 , BALLARD PWR SYS | CA0585861085

Table of contents:

    BYD - Positive trend

    In the operating business, the trend at the Chinese market leader for electric cars, BYD, continues to point upwards. As already reported in, BYD was also able to make significant gains in the third quarter. Accordingly, net profit increased by 350% to USD 786 million. Compared to the same period last year, sales grew by 115.6% to USD 16.1 billion. That equates to a 39.8% increase from the previous quarter. BYD's combined sales of pure electric and plug-in hybrid vehicles increased 250% YOY to 1.2 million units in the first nine months of this year. For the full year, the bar remains at 1.5 million units sold.

    The Shenzhen-based company also reported a ninth sales record in October, with 217,816 NEV vehicles sold. Compared to October 2021, when only 81,040 NEV vehicles were sold, this represents an increase of around 170%.

    In the first quarter of 2023, the Chinese auto giant plans to expand its product lineup by launching a new premium brand. According to the local newspaper Cailian, under a new label, the first product series will be a hardcore crossover model costing at least EUR 138,000.

    In contrast to the operating business, in addition to the sell-off in Chinese shares, the rumors that Warren Buffett would sell further company shares were the main brake in recent weeks. The annual low of March at USD 21.42 was successfully tested once again. Since then, the price has started a countermovement. With the overcoming of the downward trend formed since June, the way to the resistance area at USD 31.58 should be clear in the short term. A further sell-off threatens, however, should the price fall below the described low for the year.

    Almonty Industries - The supplier of the West

    If you look at the world's largest tungsten producers, you might get scared from a geopolitical point of view. In addition to Russia, which has already been hit with sanctions, China is responsible for about 80% of the production of the critical raw material. It is hard to imagine what would happen to the global supply chains and the supply of the Western industrialized nations if the situation in Taiwan were to come to a head. Tungsten is considered an essential metal for the high-tech industry. It is used not only in energy and lighting technology but also in space travel, electromobility, the defense industry, telecommunications, and medical technology.

    In order not to fall into a similar dependency as with Russian crude oil and natural gas, the Western allies are looking for alternatives outside China. At least in tungsten production, a breakthrough seems to have been achieved. The Canadian company Almonty Industries focuses on mining, processing and shipping tungsten concentrate from its Los Santos mine in western Spain and its Panasqueira mine in Portugal, as well as developing its Sangdong tungsten mine in South Korea. The Company is expected to significantly close the supply gap in the future, especially with the Sangdong mine currently under construction. Thus, the target is that its wholly owned subsidiary Almonty Korea Tungsten should be responsible for 50% of the world's tungsten supply outside China in the future.

    Commissioning of the mine is planned for the coming year, and the mine life is estimated at 90 years. In addition, there is already a 15-year offtake agreement with the Austrian Plansee Group, which secures Almonty a cash flow of USD 590 million. Construction is currently on schedule, and according to CEO Lewis Black, the Company is also on budget despite rising raw material and energy costs.

    Due to the general market correction in commodities, the stock lost about 25% and is trading at CAD 0.69. If the positive news continues, the share price should recover from the short-term fluctuations.

    Ballard Power - Stable after the figures

    The reaction to the announcement of the quarterly figures for the third quarter came as no surprise because hardened Ballard shareholders know the pattern from the past well enough. For the fourth time in a row, earnings expectations were missed or hit precisely on target, but there was never a positive surprise from the original founder of fuel cell technology. Thus, despite the disappointment, the Ballard share even opened around 3% higher. However, it lost its gains during trading and is quoted almost unchanged at USD 5.43, just above the year's low at USD 5.13. A slide below the mark will likely trigger further stop orders, and the next target would be USD 4.68.

    Third-quarter revenue of USD 21.3 million was down about 15% from the year-ago period, and the loss per share was USD 0.14 per share, widening from the third-quarter loss. At that time, the loss was only USD 0.10 per share. Ballard received approximately USD 31.8 million in new orders and delivered USD 21.3 million in orders during the third quarter, resulting in a backlog of roughly USD 101.7 million at the end of the third quarter. The growth in backlog was primarily driven by an increase in orders from Europe. This now represents approximately 55% of the total backlog, compared to around 38% at the end of the third quarter of 2021.

    CEO Randy MacEwen also sees little chance of significant improvement in the business in the near term: "As previously communicated, we continue to see a challenging gross margin picture. It is expected to persist through 2023 until our volume increases and our product cost-reduction initiatives are put into production. We ended the quarter with a strong balance sheet to support our growth strategy."

    Despite the positive outlook and massive government incentives, renewable energy companies remain mired in a correction. Ballard Power's sales were below expectations, and the outlook promises little chance of improvement in the near term. In contrast, BYD continues to deliver record monthly sales figures. Due to high demand and limited supply of critical raw materials, Almonty, with the largest tungsten mine outside China, should benefit significantly in the long term.

    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.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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