September 2nd, 2021 | 13:22 CEST
BYD, Kainantu Resources, DWS - Investing against the tide
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"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
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.
BYD CO LTD - In expansion mode
The BYD share has been one of the top performers in recent months. Currently, the shares of the Chinese electric car manufacturer are scratching at a new all-time high. The latest reports make us sit up and take notice; the group is continuing its dynamic expansion mode. BYD recently announced its intention to enter the Indian market soon with an exclusive B2B vehicle.
BYD has already been present in Indian cities with electric buses for eight years. Now a new chapter is to be opened. Its strategy in relation to the world's fifth-largest automotive market is to launch a multi-purpose electric vehicle from the fourth quarter of 2021. The group thus plans to "participate in every Indian consumer's journey to electric vehicles."
But it's making headway elsewhere, too. Recently, BYD unveiled two new battery-electric heavy-duty trucks at the ACT Expo in Long Beach, California. These models represent the next generation of heavy-duty electric trucks with improved aerodynamics, energy efficiency and advanced driver assistance systems as standard equipment.
KAINANTU RESOURCES LTD - Undiscovered Value
In the long run, the precious metal gold is a good inflation hedge. Investor legends like Jim Rogers are fans of gold and silver. If we look at the last 10 years, the current gold quotation is more at the upper end of the trading range, with a price of over USD 1,800. That allows mining companies to lock in high profits. But investors should also not lose sight of companies that are not yet producing. Exploration and development companies offer attractive value enhancement leverage, even if this has to be bought with a higher risk.
One such Company is Kainantu Resources. The Canadian-listed gold explorer has its geographic focus on the Asia-Pacific region. Kainantu Resources owns several prospective projects in Papua New Guinea. KRL South and KRL North are located in the well-known mining region, the high-grade Kainantu gold district. They have the potential to host high-grade epithermal and porphyry mineralization. In the immediate vicinity is K92 Mining's high-grade producing gold mine. In addition, the Kainantu Resources properties and the K92 project share the same geology. That is an important indication of the project's upside.
To capitalize on the potential in the country, the Company recently acquired the May River Project, which comprises three properties totaling 1,697 sq km. Previous drilling returned gold grades of 54m at 1.83 g/t, 109m at 1.53 g/t, and 96m at 0.89 g/t. In addition, several copper anomalies were encountered. Currently, the Company has a market value of just under CAD 10 million. With project progress and a rising gold price, higher valuations are inevitable.
DWS GROUP GMBH & CO KGAA - Price slide and now?
Only a few weeks ago, the world was in order. The fund company presented strong half-year figures in the wake of the global stock market boom and was thinking aloud about raising its medium-term targets. Net profit increased by 40% to EUR 340 million in the first six months of the current fiscal year, exceeding analysts' estimates. Due to price gains and fund flows (especially ETFs), client assets under management grew to a record volume of EUR 859 billion. In several respects, the investment in the fund house Harvest in China had a positive impact.
But then the massive accusations of a former employee sent the stock on a downward spiral. The insider accused the Company of massive misrepresentations regarding its ESG investments. In the meantime, even the US Securities and Exchange Commission (SEC) is investigating based on the ex-managers statements. If the allegations are confirmed, this will very likely damage the Company's image and outflows of funds. However, most analysts have not changed investment ratings or price targets after the "scandal". The share price has fallen by more than 15%, which means that the Company currently has a market capitalization of around EUR 7 billion. If the current analysts' estimates for this year and next year are halfway accurate, the stock is favorably valued. The P/E ratio for 2021 and 2022 is 10, and the experts are forecasting a dividend yield of a good 6% for both years.
Inflation and low interest rates are the precursors to a sustained stock market boom. Different strategies are available for this. If you are betting on electromobility and Asia, BYD is the right choice. The DWS share is currently a little uncertain. The fund company is favorably valued and benefits from the stock market boom, even if there is currently a threat of damage to its image. If you want to combine the facets of shares and precious metals and also take advantage of the opportunities of a still-young company, you should take a close look at the shares of Kainantu Resources.
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