19. May 2021 | 11:00 CET
BYD, NIO, Nordex, Sierra Growth - Copper soon at USD 20,000?
The meaningfulness of global efforts to curb global warming becomes all the more transparent when one considers the devastating destruction caused by cyclone "Tauktae" in the Indian state of Gujarat. Something has to be done! German industry is attempting decarbonization through various green technologies, aiming to halve greenhouse gas emissions by 2045. Copper is an essential component of electrification; since early 2021, there has been a run on the metal and its suppliers.
time to read: 4 minutes by André Will-Laudien
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
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.
BYD - The strong hand of Warren Buffett
One of the largest copper processors is BYD ("Build Your Dreams"), a battery and vehicle manufacturer based in China. For many years, Warren Buffet has been involved in the Company, and now it has become one of the significant green investments of the fund manager from Omaha.
At the end of 2020, the investment company owned a full 8.25% of BYD. We don't know if that will still be the case after the share price drops in 2021. Confusingly, one also finds information that Buffett holds around 15% of the shares. But this refers exclusively to the H-shares listed in Hong Kong.
Strictly speaking, it was not Warren Buffet but his partner Charlie Munger, responsible for the investment. The Chinese conglomerate BYD tells a remarkable growth story in the 25 years of its existence. Thirteen years ago, Charlie Munger convinced his partner Buffett to invest in the relatively unknown Chinese automotive Company. Munger believed in the Company's management, especially its go-getter Wang Chuan-Fu.
BYD's stock has seen better times, and the price now has to recapture the EUR 20 mark in chart terms before it can move up again. It should also not fall below the stop of EUR 15; otherwise, trouble looms.
NIO - Ahead of Tesla in China for the first time
This news reads well: NIO captured a 23% share of the Chinese all-electric SUV market for the first time in April, ahead of Tesla at 17%. In numbers, NIO recorded a total of 7,404 SUV sales in April - with the ES6 model selling the most at 3,302 vehicles, EC6 sales at 2,484 units and ES8 sales at 1,618 units.
The sales figures are significantly affected by the semiconductor shortage. NIO had already warned at its annual press conference that the shortage could impact sales in the second quarter. NIO has had to suspend production at its Hefei facility for five working days starting March 29. More forced shutdowns could follow.
The share fell below the EUR 30 mark with the figures and is now stuck there. As a consolation, competitor Tesla has lost almost 20% of its share price in May.
Nordex - Red figures again for the first quarter
Another representative of the green revolution is turbine manufacturer Nordex. It slipped even deeper into the red in the first quarter than a year ago. The bottom line was a loss of just under EUR 55 million after minus EUR 38 million. However, Nordex increased sales significantly thanks to good business, and the outlook was therefore also confirmed. Revenues are expected to rise further to EUR 4.7 to 5.2 billion in 2021. The EBITDA margin is forecast at 4.0 to 5.5%, at least double that of the previous year.
CEO José Luis Blanco had already warned at the end of March that he still expected a weak first quarter. The efficiency of Nordex's business processes continues to be impaired because of the pandemic. Then, in the first quarter, it was also burdened to a greater extent with lower-margin legacy projects. The wind power industry has been suffering for some time now from high competition and corresponding price pressure. In Europe, there are now more than ten major suppliers able to implement large-scale wind projects.
The current fear of inflation and interest rates weighs heavily on the minds of investors. Businesses in need of capital, such as wind turbine manufacturers, are particularly sensitive here as the project durations are correspondingly long. Nordex stock has lost 35% since the beginning of April. We do not see this as an entry-level yet, given the less than encouraging figures.
Sierra Growth Corp. - In addition to copper, there is gold and silver
Sierra Growth is a junior exploration company engaged in acquiring, exploring, and developing early-stage mineral projects and currently operating projects in Nevada. The primary sectors the Company is focused on are silver, copper, gold and molybdenum. The areas promise a good prospect for copper, which is so scarce that it could surpass the USD 10,000 mark in May 2021. Now the gold and silver prices follow upwards, so the portfolio of Sierra Growth becomes interesting.
At the moment, the focus is still clearly on the 3 properties in Nevada. All the infrastructure is already historically in place here, and the properties are excellent to manage both legally and geologically. The Company has only raised a small amount of money and would like to use these funds efficiently.
The last prospecting tests in April also produced the first hits. In the mine area of the Mildred concession, 26.6 g/t gold and 78.6 g/t silver were detected, and at another location, 667 g/t silver and 0.41 g/t gold. The nearby Betty East area may provide similarly good values. Over the next few months, these initial discoveries will be validated and converted into a resource estimate. However, this will require some drilling for confirmation.
Sierra Growth shares have been trading around EUR 0.11-0.13 in Frankfurt for a month, and trading volumes are still very low. In return, you get a well-positioned explorer with a capitalization of around CAD 10 million - in the current environment, things can go up very quickly.