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February 24th, 2022 | 09:41 CET

BYD, Nio, Nordex, Phoenix Copper: Nothing works without copper!

  • Copper
Photo credits: pixabay.com

Electromobility is becoming increasingly crucial for the energy transition in transportation. And with it, the research and development of drives, batteries and power-saving components. However, in addition to electricity storage, vehicle cabling and the fitting of high-tech components are also coming to the fore. Today, an electric vehicle requires 3 to 4 times as much copper as it did 20 years ago. Still, the earth's deposits are exhaustible, and copper, in particular, is pretty much stretched to the limit. A spot price of just under USD 10,000 per kilo clearly shows how the markets are processing this situation. A current conflict, such as Ukraine, provides additional fuel and further rising prices! Where are the opportunities?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: BYD CO. LTD H YC 1 | CNE100000296 , NIO INC.A S.ADR DL-_00025 | US62914V1061 , NORDEX SE O.N. | DE000A0D6554 , PHOENIX COPPER LTD. | VGG7060R1139

Table of contents:


    Ryan McDermott, CEO, Phoenix Copper
    "[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper

    Full interview

     

    BYD and NIO - In addition to China, now also Australia and Europe

    BYD is a major consumer of copper and one of the world's leading manufacturers of electric drives with proven technology for cars, buses, trucks and rail vehicles. The Chinese technology group is pushing the international expansion of its electric vehicle fleet and is now bringing a low-cost zero-emission SUV to Australia. Called the "Yuan Plus," it has already sold over 20,000 units in China. The low-cost e-SUV will soon also be available in Australia under the market name "Atto 3". It offers a peak range of 480km and cost under USD 35,000. So the newcomer should be off to a very good start.

    NIO's vehicles have rarely been spotted in Europe so far. Now, the e-car maker from China is unveiling the ES7 with a removable battery in April and will launch it later this year. It is the first SUV on the new NT2.0 platform. The manufacturer is positioning the five-seat e-powered SUV between the ES6 and ES8, both of which are still based on the first generation of NIO's NT platform. According to NIO executive Li Bin, e-cars on the NT2.0 platform will offer the most advanced autonomous driving experience. There are no more specific details on the price of the new e-SUVs yet, but they should be very competitive in Europe.

    Both Chinese manufacturers have recently come under intense pressure in terms of price. In the case of BYD, the important chart line at EUR 25 has been held so far. While in the case of NIO, the share price has already fallen by 30% in 2022 alone. With the current crisis scenario, the EUR 20 mark has now also fallen. In the medium term, both e-vehicle manufacturers are well-positioned. Place deep dust-off limits in the market.

    Phoenix Copper - Production is already within reach

    Electric vehicle producers have a huge demand for copper. Manufacturers of energy equipment and high-tech products are scrambling to find favorable long-term contracts for supplies of the red metal. A US property from Idaho will start supplying the market with copper in 2023. The Company in question is Phoenix Copper Ltd. It is listed in London and owns the Alder Creek mining deposit rights. The area, classified as an open pit, now covers an area of over 17 sq km. According to current Milestone plans, production of copper could begin in mid-2023. Exploration work has only been carried out on 1% of the area and already shows considerable potential, making industrial extraction profitable. The feasibility study assumes revenues of approximately USD 784 million over the life of the mine. Just 300 meters away, three surface surveys also discovered high-grade silver-lead sulfide.

    In addition to Empire, Phoenix also owns the historic Horseshoe, White Knob and Blue Bird underground mines, with copper, gold, silver, zinc, lead and tungsten deposits. They will be addressed at a later date. Redcastle and Bighorn are two more interesting cobalt claims in the quiver, formerly known as First Cobalt. Together, all properties form a promising portfolio for Phoenix, especially in supplying climate improvement and alternative energy generation markets.

    As CFO Richard Wilkins explained at the recent International Investment Forum (IIF), the Company is well funded with USD 15 million in cash for all upcoming ventures. The start of operations at Empire is to be done through debt financing, so there will be little dilution in the future. The experts at SISM Investors have made precise calculations in recent research and prioritize Phoenix's ESG strategy.

    The projects show "world-class" potential values, and the already tangible start of production leads to a 12-month price target of GBP 144. The share is currently quoted at GBP 48 or the equivalent of EUR 56. Therefore, the market capitalization of currently GBP 56 million could easily triple.

    Nordex - With the crisis, the share price is already plummeting again

    The Nordex share price is under massive pressure again! The wind turbine manufacturer is also dependent on the availability of various industrial metals and, in particular, on functioning supply chains. In addition, there is also the chip shortage, which significantly delays the production of the control elements of the wind turbines. So the Company has to contend with all kinds of adversity in the pandemic.

    Currently, the wind turbine manufacturer is reviewing the future of its Rostock production sites. The management has informed the works councils that there are considerations about changes. First, the "Ostsee-Zeitung" reported a possible relocation of production capacities from the only German location Rostock to foreign countries. The costs are probably still too high in Germany. However, if the core activities were outsourced, up to 2,000 high-quality industrial jobs would be lost in Mecklenburg-Vorpommern in a climate-friendly industry of the future. State policy should be aimed at preventing this from happening.

    Unfortunately, negative analyst comments are also increasing at present. The experts at Bank of America see a major risk in the supply chains. Nordex often had to contend with delays in completion in 2020/21, which negatively impacted order margins. The short-term development is therefore becoming increasingly unpredictable, say the experts. In addition, there would be rising transport and raw material costs. The US bank, therefore, downgraded Nordex from "buy" to "neutral" and lowered the price target from EUR 22.00 to EUR 14.50. From a chart perspective, holding the EUR 10 to 12 region is very important - it will also go up again quickly if EUR 15.50 can be conquered. Currently, only observe!


    The high-tech manufacturers are currently feeling all the adversities of the pandemic and the Russian crisis. It leads to higher procurement costs and ultimately to rising sales prices. The consumer has to pay these higher costs. BYD, NIO and Nordex have solid order books, but the environment remains highly challenging. Phoenix Copper will benefit immensely from this scarcity situation when mining operations start.


    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    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 also 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

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author



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