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July 28th, 2022 | 11:58 CEST

BYD, Almonty Industries, BASF - Positive analyst opinions

  • Electromobility
  • Tungsten
  • chemicals
  • Mining
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The first half of the current stock market year brought heavy losses due to political and economic uncertainties. For the leading American index, the S&P 500, this led to the most significant price correction since the 1970s. In Germany, the DAX 40 lost around 20% of its value. Investors are now eagerly awaiting the second quarter results. In addition to Deutsche Bank, carmaker Mercedes-Benz also posted surprisingly good results. The chemical company BASF is also more confident despite the existing gas crisis.

time to read: 4 minutes | Author: Carsten Mainitz
ISIN: BYD CO. LTD H YC 1 | CNE100000296 , ALMONTY INDUSTRIES INC. | CA0203981034 , BASF SE NA O.N. | DE000BASF111

Table of contents:

    Terry Lynch, CEO, Power Nickel
    "[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel

    Full interview


    BYD - The winner of the first 6 months

    Looking back at the first half of the year, there was one winner in China's electric car sector. BYD, founded in Shenzen in 1995, not only ousted the previous market leader Tesla from first place but also increased its delivery figures by 314.90% compared to the first half of 2021, with 641,350 units. Tesla, on the other hand, suffered from the zero-Covid policy and the accompanying closures of production facilities in the economic metropolis of Shanghai.

    Even after recovering in June through widespread openings, the "Build Your Dream" Company maintained its market position. In the process, sales in China reached a new record level with 571,000 e-cars sold. In the process, BYD further strengthened its top position with 134,036 units, followed by Tesla with 78,906 and SAIC-GM-Wuling with 49,450.

    To further strengthen this position, the Warren Buffett-funded company has been focusing only on the production of pure electric and plug-in hybrid vehicles since March of this year, while production of internal combustion vehicles has been discontinued. In addition, BYD is working to secure its value chain to prevent potential delays. Thus, one focus is on the development of blade battery technology. The battery business, with which company founder Chuan-Fu Wang began almost 30 years ago, is to be further expanded. The blade technology is also to be made accessible to other competitors such as Tesla.

    For this reason, production capacities are to be significantly expanded in order to be able to meet the increasing demand. An agreement was therefore recently signed through a subsidiary with China's Jinan High-Tech Industry Development Zone Administration, with the aim of carrying out an investment project worth CNY 10 billion, or the equivalent of USD 1.48 billion, aimed at establishing a total of 16 battery production lines with a total annual capacity of 30 GWh.

    Analysts at Citigroup take an extremely positive view of this. Analyst Jeff Chung gave a target price of HKD 640 or about EUR 80 and sees BYD as a clear buy candidate.

    Almonty Industries - Milestone reached

    The Canadian Company Almonty Industries is moving forward with seven-league boots with the goal of becoming the only transparent, vertical tungsten oxide producer in the West. The Toronto-based Canadian exploration company is focused 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. With the Sangdong project in the Almonty Korea Tungsten deposit, Almonty Industries aims to be responsible for 30% of the world's tungsten supply outside China in the future.

    Through a private placement of USD 3.3 million in May, the last condition precedent for the provision of the KfW financing in the amount of USD 75.1 million was fulfilled, so KfW IPEX-Bank released the first tranche of USD 12.82 million, which represents a milestone for further development.

    On the other hand, the extremely important announcement has not yet attracted much attention on the stock exchange. At CAD 0.86, the price has been running sideways for weeks, and the latest progress is not currently reflected in it. The analyst house of First Berlin referred in its last study to the progress of the Sangdong deposit and increased the price target from CAD 1.55 to CAD 1.70. The investment judgement was confirmed with a "buy" rating. The completion of the financing of the tungsten project would allow Almonty to pursue further opportunities at Sangdong. On July 18, Almonty released an initial JORC-compliant resource estimate for the molybdenum deposit at Sangdong. It shows an inferred 21.48 million tonnes grading 0.26% MoS2 based on a cut-off grade of 0.19%. At a current molybdenum price of over USD 50,000/ton, the in-situ value of the resource is over USD 1.7 billion, according to analyst Simon Scholes.

    BASF - Increase in annual targets

    The share price of the world's largest chemical company BASF has dropped significantly in recent months due to the gas crisis, but the Ludwigshafen-based Company is doing good business. The targets for 2022 of the DAX group have now been raised for the full year. The group expects sales to rise to between EUR 86 billion and EUR 89 billion. Previously, the group had assumed a decline to between EUR 74 billion and EUR 77 billion, down from EUR 78.6 billion last year.

    In terms of operating profit, BASF raised the lower end of its forecast range and now sees at least EUR 6.8 billion for 2022, up from EUR 6.6 billion previously. The Company confirmed the upper end of its profit target at EUR 7.2 billion. In the previous fiscal year, BASF achieved earnings before interest and taxes (EBIT) of EUR 7.8 billion, adjusted for special items. For the second half of the year, the DAX-listed Company sees a gradual cooling of economic development at the global level. However, this will be much more pronounced for Europe, it said.

    In its forecast, the Company assumes that there will be neither severe restrictions due to renewed lockdowns in China nor production shutdowns due to a gas shortage in Europe. Following the publication of the second-quarter figures, analysts at Jefferies were optimistic and reiterated their "buy" rating with a price target of EUR 60.

    The second quarter numbers season is underway, and several companies were able to come up with positive figures. In this context, BASF increased its forecasts for the full year, which analysts acknowledge with a buy rating. Experts are also positive about the electric car manufacturer BYD and Almonty Industries.

    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

    Carsten Mainitz

    The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.

    About the author

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