02. May 2021 | 19:04 CET
BYD, NIO, Varta, Kodiak Copper: No e-mobility without copper!
The copper price is just about to climb the USD 10,000 mark. For many market participants, the scenario for the industrial metal is set. Because since the public declaration of the automotive industry to make the e-vehicle the No. 1 means of transportation, the demand for copper and battery metals is shooting through the roof. Mine operators worldwide are alarmed, but how do you increase capacity in the short term when there are too few developed projects? We dive into the market.
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ISIN: CNE100000296 , US62914V1061 , DE000A0TGJ55 , CA50012K1066
"[...] 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 - Passable numbers, but not good enough
In the round of releases, BYD joined Apple and Facebook on stage the day before yesterday. The tech giants benefited from the pandemic and significantly beat estimates, and the shares have performed excellently since then. The Chinese fared differently.
Chinese electromobility and battery specialist BYD Company Ltd. reported strong revenue growth of plus 108% to CNY 41 billion for the first quarter of fiscal 2021. BYD sold a total of 104,145 vehicles between January and March 2021, which is also a 70% year-on-year growth. Net income attributable to BYD shareholders improved 111% percent to CNY 237 million, or about USD 36.6 million.
The market had probably expected more and punished the stock by a full 10% since the beginning of the week, so the stock is back at the consolidation low from mid-March. One can only hope that this is a double low and not the breakthrough to a new downward wave for investors.
NIO - Entry into the Norwegian market
Even though the share price of the Chinese electric vehicle manufacturer NIO came under a lot of pressure yesterday, the news does not read too bad. NIO had already announced its international expansion plans for a long time, and now a significant step has been taken in the direction of overseas, as they are probably preparing to enter the European market. Of course, it is still a question of whether Tesla can be threatened, but it will undoubtedly cost the rival smaller market shares because NIO's product range is 30 to 40% cheaper than the Californian models.
There was already speculation about Norway as the first country of NIO's international expansion, and now the Company's presence there confirms its great interest in European consumers. Norway shines with progressiveness and takes on a pioneering role for many future technologies. For NIO, it is the first foray into a highly competitive market where global players from Germany, France and the US cavort.
It will be interesting to see how this good news will affect the share price in the medium term. Currently, NIO is somewhat under pressure; the all-time high is at EUR 54, about 40% above the current quotation.
Varta - Apple wants to scale back AirPod
Varta already had a chart problem when the price turned back down at EUR 130 last week. We had reported accordingly. Now there are also fundamental reasons why the price may have already seen its high again.
Because as the Japanese newspaper "Nikkei" reports, citing informed circles, Apple wants to cut production for its AirPods by up to 30% this year. The reason given for this is the increasingly fierce competition for music playback applications. Today, any phone with large memory or a corresponding streaming contract can serve just as well as an AirPod, so why carry around an extra device?
Varta, the battery supplier, is under pressure and the share price fell by almost 5%. The battery manufacturer is thus heading back towards its 200-day line. There is now a threat of technical danger because the medium-term 50-day trend line has been violated with yesterday's setback. We, therefore, remain skeptical of Varta.
Kodiak Copper - The next copper mine from Canada
There are no problems at all at copper explorer Kodiak Copper, as the daily price rush of the red metal focuses great attention on second-tier resource stocks. Who could be the quickest to supply the vast undersupply of the market? Electromobility is now taking off with the major manufacturers, and unit volumes will multiply over the next few years. Demand for copper is also growing, with between 50 and 80 kilograms of the metal being used per vehicle.
The property surrounding the MPD project of Canadian explorer Kodiak Copper is located in the gate zone, near well-known mines such as Copper Mountain, Highland Valley and New Afton. Public access has been completed for years, an infrastructure that could not be better. In addition to local amenities, Kodiak also has a strong team of experts around gold explorer Chris Taylor, very well known since his milestone deal with Great Bear Resources. He has joined Kodiak to produce another success story.
As Kodiak recently disclosed, the area of MPD's flagship project has been significantly increased once again with the incorporation of an adjacent property. It concerns the area "Axe" with a size of 4,980 hectares, which could be taken over to 100% by the issue of 950,000 Kodiak shares. It is nice when a company can master acquisitions that are easy on liquidity by issuing shares. It speaks 100% for the attractiveness of Kodiak Copper and its existing projects.
The share itself has been consolidating between CAD 1.60-1.80 for a few weeks, bringing it to a capitalization of about CAD 74 million - a low valuation for a lot of potential and a good positioning in the international copper rush.