November 2nd, 2022 | 10:24 CET
BYD, Infinity Stone Ventures, Rock Tech Lithium - Profiteers of the energy transition
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
BYD - Downward spiral stopped
The successful test of the low for the year at USD 21.42 could herald the turnaround for a countermovement, at least in the short term, for the Chinese market leader BYD. The price of the Shenzhen-based Company could receive a tailwind from the indicators. The relative strength indicator is in the oversold area and is on the verge of a buy signal on a daily basis. However, the chart picture should only brighten up in the long term once the resistance level of USD 27.15 has been broken.
Despite strong figures for the third quarter, the technology group, which has a market share of almost 29% in sales of pure electric and plug-in hybrid vehicles in China, was sold off further. The loss since its all-time high at the end of June amounts to around 46%. BYD's third-quarter net income rose 350% from the year-ago quarter to USD 786 million. Revenue grew 115.6% YOY to USD 16.1 billion, equating to a 39.8% increase over the previous quarter. Operating cash flow increased by approximately 186% in the January-September period. BYD's combined sales of all-electric and plug-in hybrid vehicles rose 250% YOY to 1.2 million units in the first 9 months of this year.
Macquarie analysts reiterated their "outperform" rating and issued a price target of USD 295. In contrast, investment bank Jefferies drastically lowered its price target from HKD 354 to HKD 242. However, the "buy" rating was maintained. Despite the target reduction, there is still an upside potential of over 30% compared to the current price.
Infinity Stone Ventures - The supplier for the green industry
Vancouver-based Infinity Stone Ventures will likely play a central role in the supply chain of the green, western industry in the future. The Canadians are broadly diversified with their seven 100% owned projects. The properties are all located in stable, mining-friendly jurisdictions close to end users in North American production centers in mining-friendly Ontario and Quebec. In doing so, Infinity Stone Ventures solves demand from battery and wind turbine manufacturers and nuclear and hydrogen energy producers with deposits containing the critical commodities of graphite, lithium, copper, manganese nickel and cobalt.
At the Rockstone graphite project in Ontario, the 600m fall drilling program is scheduled to start in early November. The aim is to determine the extent and depth of the graphite mineralization. There are 18 other drill-ready EM targets at Rockstone. All drill targets have the potential to also host VMS-type copper-zinc mineralization.
In addition, a successful exploration update was announced for the Camaro and Hellcat lithium project adjacent to Patriot Battery Metals' Corvette lithium discovery in the James Bay lithium district of Quebec. Eighty-seven samples were collected from 3,850 hectares. One of the highlights was identifying a cluster of prospective pegmatitic veins, and cross-cutting structures near the northern edge of the Hellcat claims that extend northward, leading the Company to expand its claim area. The next step is to conduct a geophysical survey of the project in advance of a planned drilling program to begin in the first quarter of next year.
In order to accomplish the upcoming exploration activities, a non-brokered private placement of 1.13 million units was completed at a price of CAD 0.25 per unit for gross proceeds of CAD 282,500. The market capitalization of the broad-based Company is currently CAD 15.32 million. With respect to the increasing demand for critical commodities for the Western world, Infinity Stone Ventures should benefit significantly in the future.
Rock Tech Lithium - Close to a buy signal
An end to the sell-off could also be in sight for the German-Canadian cleantech company Rock Tech Lithium. After weeks of sell-offs and lows at CAD 2.27, the stock could stabilize and is now at CAD 3.53, just before the downward trend formed since October. A sustained crossing of the CAD 3.70 mark would generate a strong buy signal. The next short-term targets would then be found in the area around CAD 5.00.
A few weeks ago, Rock Tech concluded a binding purchase agreement with Mercedes-Benz AG for the delivery of an average of 10,000t of lithium hydroxide per year. Over the contract period of 5 years and a qualification phase starting beforehand, the contract covers an estimated sales volume of about EUR 1.5 billion. It is expected to utilize about 40% of the converter's capacity planned in Guben, Brandenburg. The annual supply volume of lithium hydroxide is expected to be sufficient to supply around 150,000 Mercedes-Benz electric vehicles with high-performance batteries.
Analysts at Montega AG were also optimistic after the successful announcement. Thus, the experts continue to see the German-Canadian cleantech company as a buy candidate and assign a price target of CAD 10.00, which is around 180% above the current price level.
Electromobility is seen as the key to achieving climate targets. In this context, electric car manufacturers such as BYD are shining with triple-digit growth rates. However, without the essential raw material lithium, the production of batteries is impossible. In addition to Infinity Stone Ventures, Rock Tech Lithium should also benefit from the high demand in the long term.
Conflict of interest
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