February 6th, 2024 | 07:15 CET
BYD, Defense Metals, Rheinmetall - Strategic breakthroughs open up new opportunities
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"[...] 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
BYD - Crash despite positive development
Looking purely at the share chart of the Shenzhen-based company, one might assume that the Chinese market leader in electric vehicles is in serious trouble. BYD shares have lost almost 40% of their value since last year's high and are only just above the double low of USD 21.64 formed in 2023. If the share price falls below this striking mark, it could open up further downside potential to around USD 19.50.
Following the weaker-than-forecast quarterly figures, which were responsible for the further downward trend, the Build Your Dreams company had a good start to the new year. In January alone, 105,304 fully electric vehicles went to new owners, almost 48% more than in January 2023. Production also increased significantly, with 114,365 electric vehicles built last month, an increase of 64% compared to the previous year.
It is also interesting to note that BYD's all-electric vehicles are starting to overtake plug-in hybrids. BYD's PHEV sales rose by 21% to 95,715 last month, while production only increased by 9% to 90,749 units. After selling almost 1.6 million e-vehicles in 2023, BYD continues to drive growth with expansion outside China. In January, the Company, co-financed by Warren Buffett, delivered a record number of 36,174 vehicles overseas.
Defense Metals - Fresh capital and a strong partner
There are few alternatives to Western projects that mine rare earth metals. Apart from a few mines in Australia, the Mountain Pass mine in California, whose operator MP Materials is valued at USD 3.06 billion on the Nasdaq, is the only major producing deposit. A second beacon that could supply the West's supply chains with around 10% of current annual production in the future is located around 80 km northeast of the city of Prince George in British Columbia. Here, Defense Metals operates the 100%-owned Wicheeda project on a total area of 8,301 hectares. The infrastructure is first-class. The deposit, which has the same metallurgy as Mountain Pass, is close to the Canadian National Railway and major highways that provide easy access to the port facilities in Prince Rupert, the closest major North American port to Asia.
Developments in recent months are clearly pointing in the right direction. The mineral resource estimate significantly increased in the third quarter of last year, with the concentration of rare earths in 6.4 million tons of rock now averaging around 2.86%. The completion of the pre-feasibility study is planned for the first half of the year, by which time Defense Metals' shares, which have received little attention on the stock market, should be moving towards their highs of CAD 0.36 from 2023. The share is currently trading at CAD 0.25.
The Canadians recently announced two strategically important partnerships. Firstly, Defense Metals is supplying a concentrate of rare earth carbonates to Ucore Rare Metals, which is to separate these into their respective components using its RapidSX™ technology. In addition, McLeod Lake Indian Band has invested CAD 2.6 million in Defense Metals, representing a significant vote of confidence from the indigenous people living there in the Wicheeda project and the region's development.
Rheinmetall - From high to high
Rheinmetall AG's share price, on the other hand, continues to run like clockwork. This represents a performance of 16% since the beginning of the year. Looking at the DAX member's chart since the start of the war in Ukraine, the share price has risen by 220%. With the increasing armament of various countries and the further escalation of trouble spots in many parts of the world, there seems to be little need to worry about a lack of orders in Düsseldorf.
The signs continue to point to growth for the integrated technology group, both organically and inorganically. With the acquisition of a majority stake of 72.5% in the Romanian vehicle manufacturer Automecanica Mediaș, the Company has taken a significant strategic step. This acquisition expands Rheinmetall's presence in Central Europe and opens up considerable sales growth and new, promising customer countries.
With the new acquisition, Rheinmetall sees an annual sales potential of around EUR 300 million in the medium term and expects incoming orders in the triple-digit million euro range as early as fiscal 2024.
From a strategic perspective, the Company's location in Mediaș, Romania, is favourably situated with regard to the Ukraine conflict. The local presence thus guarantees the armed forces on NATO's eastern flank shorter response times and greater security in the supply chain in maintaining the operational readiness of the Western combat systems deployed in Ukraine and their logistical support.
Despite rising sales figures in January, the shares of the electric vehicle manufacturer BYD are still undergoing a correction. In contrast, Rheinmetall has consistently reached new highs and strengthened its position as a leading weapons supplier through a strategic acquisition. The announced strategic partnership with McLeod Lake Indian Band is expected to advance the Wicheeda project significantly.
Conflict of interest
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