BYD, Altech Advanced Materials, Volkswagen - Anti-cyclical share price gains

Volkswagen AG - Stable situation

Despite the profit warning for the current financial year, a rebound is in the offing for Volkswagen shares. Looking closely at last week's chart, the stock market adage "buy on bad news" comes to mind. With a weekly gain of over 3%, the preferred shares of the Wolfsburg-based company rose to EUR 108.30, their highest level for four weeks. This development could already be seen during this phase by the rising trend-following indicator MACD and the relative strength index RSI, which failed to confirm the annual lows several times and delivered a buy signal. The next targets are the EMA 50 at EUR 110.72 and the EMA 200 at EUR 115.08. The price gap at EUR 120.86, which was torn open at the end of May, is also likely to represent a further target.

Last week, the Volkswagen Group surprisingly announced that a reduction in the operating profit margin is expected for 2024. Instead of the previously forecast 7.0 to 7.5% of sales, the Company now expects 6.5 to 7.0%. The Group is facing financial burdens totaling EUR 2.6 billion. These are made up of already planned provisions for staff reductions at the core VW brand, which amount to EUR 0.9 billion, as well as further costs of EUR 1.7 billion, which were previously unknown. According to a trader, these costs correspond to about half a percentage point of the EBIT margin and reflect the current adjustment of the margin target by VW for this year.

Altech Advanced Materials - Forecast confirmed

The innovator in solid-state batteries for stationary battery applications presented preliminary figures for the first half of 2024. In the first 6 months, the Frankfurt-based company recorded an expected net loss for the year of minus EUR 818,000. The preliminary half-year results include sales revenues of around EUR 54,000, other operating income of around EUR 191,000 and other operating expenses of approximately EUR 649,000. In the forecast report of the last annual financial statements for the full year 2024, the Executive Board assumed a loss of around EUR 1.6 million to EUR 2.1 million and continues to confirm the estimates.

The ambitious plans of the team led by CEO Uwe Ahrens show that these figures are of little significance for the future with regard to the two technologies that Altech Advanced Materials holds in its portfolio. The Company aims to become the global market leader in the production of solid-state batteries for stationary energy storage, which is fundamental to the energy transition. In cooperation with the Fraunhofer Institute, Altech is developing a battery that has enormous advantages compared to conventional products.

CERENERGY® batteries are fire and explosion-proof, have a service life of more than 15 years and function in extreme climatic zones. The battery technology uses common salt and small amounts of nickel. In contrast, neither lithium, cobalt, graphite, nor copper are used. According to Fraunhofer, the manufacturing costs of CERENERGY® batteries should also be around 40% lower than those of comparable lithium-ion batteries.

In addition to CERENERGY®, Altech Advanced Materials is focusing on Silumina Anodes™, a new type of coating method that increases battery performance and promises at least 30% higher energy density. It also offers a longer service life and greater safety.

The Altech share made a strong comeback due to a successfully executed corporate action. Due to the outstanding prospects, this is a play on a multiplier. However, realizing this potential requires further financing, exposing the stock to increased risk.

BYD - Unstoppable

The Chinese market leader BYD is defying the negative political news and is continuing the upward trend it started in February. Since the year's lows, the shares of the "Build Your Dream" company have gained a whopping 45% and are edging ever closer to the striking horizontal resistance at USD 32.80, which represents a further buy signal towards the high from 2023 at USD 36.27.

The relative strength is impressive, especially after the European Union decided to impose additional punitive tariffs on Chinese electric vehicles, increasing tariff rates by 17.4% to 37.6% above the usual 10%, depending on the manufacturer.

Analysts at the US investment bank JP Morgan Chase were extremely optimistic about BYD. They expect the Shenzhen-based company to deliver around 6 million units over the next two years. Around 1.5 million vehicles are to be delivered abroad, while 4.5 million vehicles are to be sold on the domestic market. The financial experts raised the price target to HKD 440, converted to EUR 51.60; the investment rating is "Overweight".

The imposition of punitive tariffs and a profit warning from Volkswagen could not halt the upward trend. Both BYD and Volkswagen are on the verge of further technical buy signals. Altech Advanced Materials presented preliminary results and confirmed its annual forecasts.