August 16th, 2023 | 05:35 CEST
BYD, Nel ASA and First Phosphate: These shares promise excitement!
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"[...] We know exactly what we are doing and are implementing what we consider to be a proven technology in an industrially applicable and scalable way. [...]" Uwe Ahrens, Director, Altech Advanced Materials AG
First Phosphate: Economic valuation convincing
In order to become independent of imports, the US government is massively promoting the development of domestic battery production in the coming years. First Phosphate will benefit from this as a supplier of an important raw material. On a total of 1,500 sq km, the Canadians own areas in Quebec with very distinctive phosphate deposits. According to the Company, these are pure magmatic anorthosite phosphate rocks. The recently released Preliminary Economic Assessment ("PEA") for the Lac à l'Orignal concession area confirms management's assertions.
The numbers are impressive: According to the PEA, the mine's resources would be sufficient to allow the production of an average of 425,000 tonnes of processed phosphate concentrate (P2O5 content above 40%), 280,000 tonnes of magnetite and 97,000 tonnes of ilmenite within 14.2 years. That would result in a pre-tax net present value (NPV) of CAD 795 million (internal rate of return of 21.7%) and an after-tax NPV of CAD 511 million (internal rate of return of 17.2%) for the project over its life. In the first 5 years, a cash flow of CAD 567 million after taxes could be generated. This would be enough for the project to amortize within this timeframe.
First Phosphate President Peter Kent: "We are very pleased with the results of this preliminary economic assessment of our Lac à l'Orignal concession area and its timely completion. Our strategy of keeping capital costs low and controlling mine size is well reflected in these PEA results."** This brings First Phosphate an important step closer to its goals. It will work with partners to build vertical integration from mine to value-added production of purified phosphoric acid and active LFP cathode material for the North American LFP battery industry.
BYD: Price war in China and no BYD Robotaxis
BYD is currently fighting on multiple fronts. While the Chinese electric car manufacturer is pushing for global expansion, rival Tesla is driving the price war in its home market. And according to media reports, the Company does not believe in any of the hype topics for the future. Autonomous driving is supposed to revolutionize the market in the coming years. To secure a piece of the pie, car and tech companies are investing billions in the development of autonomous driving vehicles. But BYD seems unconvinced by the prospects. Because as the South China Morning Post reports, the group wants to end its cooperation in this area with the Internet group Baidu. According to the report, BYD does not see any immediate opportunities for self-driving technologies in the mass market. This step would not come as a complete surprise, as a BYD spokesman had already expressed skepticism during the Shanghai Auto Show. Fully autonomous driving is "basically impossible". BYD is thus taking a different path than virtually all other automakers. The US city of San Francisco recently expanded its test of robotaxis. The subsidiaries of Alphabet and General Motors can now offer their driving services around the clock throughout the city. But promptly, there were problems: Numerous vehicles of the GM subsidiary Cruise broke down. A music festival in the city was blamed for this. "During a major festival, we experienced cellular connectivity limitations, which resulted in delayed connectivity to our vehicles. We are actively working on solutions to prevent this from happening again," GM shared.
So while BYD is hitting the brakes on autonomous driving, it continues to go full throttle on expansion. While market entry in the Philippines is underway, the group is launching in China with its Fang Cheng Bao sub-brand. The first vehicle will be the Leopard 5 SUV. The all-electric vehicle is said to have 500 kilowatts of power and 0 to 100 km/h in 4 seconds acceleration. The retail price is expected to start at CNY 400,000. The first vehicles are expected to be delivered before the end of 2023.
The BYD share has been in correction mode since the beginning of August. In recent days, price reductions by Tesla in China have led to further pressure on the BYD share price.
Nel ASA: No price potential?
Shareholders of Nel also have little reason to be happy at the moment. The share of the hydrogen specialist is severely battered on the chart and is trading at EUR 1.04, just above its low for the year. Overall, the share has been running sideways since the beginning of 2022. However, the corridor of EUR 1.80 to EUR 1 is large, and the fluctuations are violent. On the part of the analysts, JPMorgan recently had its say. The analysts do not believe Nel can reach the black in the coming year. Instead, the forecasts for the current and the coming year were reduced. The analysts rated the Nel share as "Neutral" and lowered the price target slightly from NOK 12 to NOK 11.40.
Things are getting exciting for all three shares: Operationally, First Phosphate has been convincing so far, and the recent economic valuation is promising. However, the share price has more than halved this year. This presents a favorable entry opportunity, and if positive newsflow continues, the year's high of CAD 1 should be achievable. In contrast, Nel is struggling with its still high valuation of around EUR 1.8 billion and high losses. In the case of BYD, much depends on whether the international expansion is successful and who emerges as the winner from the price war in China.
Conflict of interest
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