BYD, Kleos Space, Bayer - Great opportunities in laggards

Bayer AG - Chance of a sustainable bottoming out

Shareholders of the pharmaceutical and agricultural giant have had to endure a rollercoaster ride in the current stock market year. The share price of the Leverkusen-based Company rose from EUR 42.50 at the beginning of January to EUR 67.99 in mid-April. Uncertainties surrounding the glyphosate dispute caused the share price to fall back into the EUR 50 range. Nevertheless, the bottom line is a positive performance of over 11%, contrary to the general negative market trend.

With yesterday's news and the subsequent drop of 5%, the critical support zone in the area of EUR 51.85 was again successfully tested, which could indicate a bottoming out. The downward trend formed since June 2022 continues at the current price level. If it is successfully broken, the 200-day line at EUR 56 beckons in the short term.

The somewhat sobering Phase II data of the drug Asundexian against strokes, which were received by the European Society of Cardiologists at a meeting in Barcelona rather cautiously, were responsible for yesterday's sell-off. Nevertheless, the Leverkusen-based Company intends to test Asundexian in pivotal studies on a broad group of patients. However, the exact design of the Phase III trial program, called Oceanic, is still being coordinated with authorities worldwide. According to Bayer, the new Phase III program investigates the efficacy and safety of Asundexian as a stroke prevention agent in patients with atrial fibrillation (a heart rhythm disorder). The first patients are expected to be enrolled in the program before the end of 2022.

The major Swiss bank UBS has a positive outlook and continues to see Bayer shares as a buy with an unchanged price target of EUR 96. Phase II data on the anticoagulant Asundexian presented over the weekend fully supported the group's decision to now initiate a pivotal stroke prevention trial, analyst Michael Leuchten wrote.

Kleos Space - Aiming high

Soon, the share price of the Australian company, headquartered in Luxembourg and with offices in the UK and the US, could be headed back into orbit as the imminent launch of its fourth cluster of satellites is set to provide another significant boost to its data quality. The provider of space-based Data-as-a-Service and Mission-as-a-Service for high-frequency reconnaissance announced that its Observer Mission (KSF3) satellites are scheduled for launch on the Transporter-6 SpaceX Mission NET in October 2022.

Equipped with AIS, VHF and X-band payloads, the cluster of four satellites will expand Kleos' data collection capacity by up to 119 million sq km per day. That will make it possible to increase the average daily overflight rate over the 15-degree latitude area to about five times per day.

The Company plans to deploy a total of 20 clusters in the medium term. In order to finance the growth, a four-year, USD 10 million secured loan has been obtained from PURE Asset Management. The fact that the topic also strikes a chord due to geopolitical uncertainties is demonstrated by the conclusion of a research and development cooperation agreement with the "Naval Surface Warfare Center Division," Crane, for joint data experiments. Under the agreement, Kleos will provide its radio frequency geolocation data in realistic test scenarios to improve maritime domain awareness for real-world challenges. It will include sanctions reporting, transhipment and embargo monitoring, search and rescue, resource management, fisheries control, smuggling, and border control.

In addition, the Australians' order books have been filling up more and more for months. In May and June alone, orders and contracts worth just over EUR 1 million were secured. The stock market value of the highly innovative company is just under EUR 51 million. The share price has fallen by over 60% since the beginning of the year in the wake of the general market correction. The closer the start of the fourth cluster gets, the more interest the share is likely to arouse.

BYD - Strong figures as expected

After the short correction from the annual high at USD 43.61 to currently USD 34.88, a trend reversal to new heights could already have been initiated. Only an open price gap at USD 30.69 could once again lead to an extra round downwards, which would then, however, open up favorable long-term entry opportunities.

As expected by the experts, the Company from Shenzhen delivered excellent half-year figures. Sales increased by almost 66% to 150.61 billion CNY compared to the first half of 2021. Net profit from January to June reached 3.6 billion CNY, up from 1.17 billion CNY a year ago. Earnings per share of 1.24 CNY significantly exceeded the average analyst forecast of 0.42 CNY.

BYD's first-half profit came despite a strained automotive supply chain as citywide lockdowns in Shanghai and Changchun, the two main auto hubs in China, forced thousands of assemblers and component makers to halt production at least partially between March and May. Following the publication of the half-year figures, analysts at major bank Crédit Suisse reiterated an "outperform" rating and raised the price target from HKD 380 to HKD 400.

Due to the ongoing correction in the stock markets, attractive entry opportunities are opening up for some shares. Bayer was able to hold an important support level after yesterday's sell-off. In contrast, BYD came up with solid half-year results and has already turned north again. The start of the fourth cluster in October could soon result in a significant trend reversal for the shares of Kleos Space.