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July 20th, 2022 | 13:20 CEST

BYD, Globex Mining, Nio - Unbridled growth due to climate change

  • Electromobility
  • Commodities
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Looking through the mainstream media regarding climate change, the German government around Baerbock, Habeck and Co. is calling for an even greater and faster transformation from fossil to renewable energy sources. In this context, the greatest challenges are evident in the transport sector because it is precisely in this area that CO2 emissions have actually risen since 1990, despite the development of more energy-efficient vehicles. According to experts, the all-encompassing solution for radical change is the electrification of the automotive sector. It will require enormous quantities of industrial metals in the coming years. The few producers are likely to profit enormously from the high demand.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: BYD CO. LTD H YC 1 | CNE100000296 , GLOBEX MINING ENTPRS INC. | CA3799005093 , NIO INC.A S.ADR DL-_00025 | US62914V1061

Table of contents:

    BYD - Broad diversification and high value creation

    China is by far the largest market in the electric car sector. Over half of all EV units, around 3.3 million, were sold in the Middle Kingdom. It is almost logical that there is a hard-fought battle for market leadership there. Until now, Elon Musk and his Tesla have been leading the way. However, in the second quarter, the US company was abruptly slowed down by the zero-Covid policy and the lockdowns in the economic metropolis of Shanghai. As explained in a detailed in a report, BYD, the Chinese company funded by Warren Buffett, pulled ahead of the top dog.

    Even after the openings in June, BYD was able to expand its place in the sun significantly. With 134,036 e-cars, BYD was ahead of Tesla with 78,906 and SAIC-GM-Wuling with 49,450. Listed manufacturers Geely (29,671), XPeng Motors (15,295), Li Autos and Nio, each with around 13,000 cars sold, followed well behind.

    Looking to the future, the Shenzhen-based company, founded in 1995, is already taking precautions regarding the scarcity of raw materials and the lack of supply chains. According to Chinese media, major investments are planned to develop its own chip for intelligent driving. The project will be led by a team from the semiconductor subsidiary, BYD Semiconductor. To secure production for the next few years, BYD has also taken a stake in Shenzhen Chengxin Lithium Group with an investment of EUR 425 million and expanded its investment in Shanshan Lithium Battery Material Technology. In addition, BYD acquired six African lithium mines, which, according to insiders, should secure demand for the next 10 years. Overall, the Chinese market leader is well prepared by focusing on the EV market. Only the already high valuation could put a spanner in the works of another stock market boom.

    Globex Mining - Supplied for the future

    The shortage of raw materials, which should now have become apparent to everyone at the latest since the sanctions against Russia, will haunt us more and more in the coming years. Nevertheless, volatility is high for a single commodity, as can currently be seen in copper. From an investor's point of view, a broadly diversified portfolio is more reassuring, in which precious metals such as gold, silver, palladium and platinum as well as base metals such as copper, zinc, lead and nickel, special metals and minerals such as iron, molybdenum, lithium or rare earth metals are added.

    In total, the incubator Globex Mining, which was founded in 1983 and has been able to grow without significant dilutions in the shareholder structure, owns about 210 projects in the US, Canada and Germany. Globex Mining, which has about USD 20 million in cash, generates revenue by optioning land parcels from its holdings for cash and shares. That provides the Company with recurring royalties. In addition, the option partners assume the exploration risk. In addition to acquiring and optioning land, the Company also invests approximately CAD 1.5 million per year in the exploration of its own properties.

    The most recent example of a royalty payment was the receipt of CAD 3 million from Yamana Gold, already the second of 5 receipts the Canadians will be able to generate over a 5-year period from the sale of Francoeur/Arntfield/Lac Fortune Gold Property to Yamana, for the total of CAD 15 million. Smaller royalties of CAD 50,000 from Electro Metals for the Magusi project and CAD 20,000 from Manganese X Energy Corp. as the first prepayment of upcoming royalties also increased the cash balance.

    The stock market valuation of the highly exciting asset manager is currently around EUR 39.50 million. Given further rising commodity prices, Globex Mining is in the right place at the right time.

    Nio - Ambitious plans

    The industry competitor Nio cannot yet keep up with the industry leaders BYD and Tesla, but the delivery figures for June were nevertheless impressive. Nio managed to deliver 12,961 vehicles, which corresponds to an increase of 60.3% compared to the same month last year. Looking at the 2nd quarter, which was shaken by Corona, the e-car start-up even managed to increase by 14.4% compared to the same period last year. That leads to cumulative deliveries of 217,897 units as of June 30, 2022.

    In the future, the start-up does not want to limit itself to the Asian market and is planning to enter Germany before the end of 2022. The European expansion was already kicked off in Norway at the end of last year. "We will launch in Germany in the fourth quarter with the first vehicle, the ET7 sedan," Group Vice President Hui Zhang told Automobilwoche. The Netherlands, Sweden and Denmark are to follow.

    From a chart-technical point of view, a double bottom was formed in the area of USD 16 in recent months. The completion of the correction formation would be reached with a sustainable jump above the mark of USD 24.43.

    Due to the shift to renewable energies and the electrification of transport, an enormous demand for industrial metals and raw materials such as lithium, copper and nickel is coming to the market. In this context, Globex Mining is well prepared for the future due to the broad diversification of its portfolio. BYD is taking precautions with the purchase of lithium mines, while Nio is planning to expand into Germany.

    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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