August 30th, 2021 | 11:33 CEST
Central African Gold, Nordex, Varta - Performers for the second half of the year!
Climate and energy transition are more than just buzzwords. They affect us all to an ever increasing extent. The production of green energy and the currently also politically favored spread of electric mobility place considerable demands on the availability of raw materials, the sufficient production of green energy and the existence of an area-wide infrastructure. As steering mechanisms, states offer extensive support measures. A market for emission certificates creates incentives as well. It is also important to keep an eye on the development of increasingly stringent ESG standards in the investment sector. Companies that do not do their homework will sooner or later lose out. These three companies have the potential to profit from the energy transition. Who will win the race?
time to read: 3 minutes
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Author:
Carsten Mainitz
ISIN:
CENTRAL AFRICAN GOLD INC. | CA1523761098 , NORDEX SE O.N. | DE000A0D6554 , VARTA AG O.N. | DE000A0TGJ55
Table of contents:
"[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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CENTRAL AFRICAN GOLD INC - Under the radar of investors
In the course of electromobility, raw materials such as copper, zinc, nickel, cobalt and lithium are gaining enormous importance. China is the undisputed producer worldwide. The Democratic Republic of Congo also has rich deposits of these critical raw materials. In the past, the African country was often criticized - corruption, child labor, and high environmental pollution in the mining of raw materials were the focus here. Now the situation has improved considerably politically, but also in terms of environmental and working conditions. Thus, the country and companies operating here should increasingly come back on the radar of investors.
One exciting Company is Central African Gold. The commodity company focuses on promising copper, cobalt and nickel projects and intends to develop and operate such projects. Indispensable for success is an experienced, local management team. Without a doubt, this is available with the Group around CEO Yves Kabongo. The Company owns six mineral concessions with a total area of 176 sq km, which includes both forests and farmland. Consideration of ESG aspects in all projects has high priority. In addition to the King Luba properties, the concessions are 100% owned by the Company. There is also an option to participate in the state-controlled Musefu Gold Project. This project has historical grades of 2.5m at 28.4 g/t gold and 11m at 8.1 g/t gold, among others.
Recently, the Company announced new plans that could result in significant shareholder value. The Company is currently evaluating the possibility of generating cash flow from carbon credits on its extensive land package, including 160 sq km of acreage. The Company is working closely with two internationally recognized leaders in carbon credit accreditation and project development to structure the CAGR Carbon Plan. Central African Gold is currently valued at just under CAD 6 million.
NORDEX SE - Better than the competitors
Logistical problems and high raw material prices burdened the wind industry in the past quarters. Corona-related disruptions, the temporarily blocked Suez Canal, and the sharp rise in prices for steel, copper and carbon fibers had a negative impact. Siemens Gamesa presented moderate figures, and Vestas even had to revise its annual forecast. Nordex shows the best progress among the trio, as evidenced by the Group's latest half-year figures.
In the second quarter, in particular, business picked up again significantly. Sales increased by around one-third to EUR 1.45 billion in Q2. It was driven by project business, which grew by more than a third to EUR 1.3 billion. In the first half, sales climbed 32% to EUR 2.7 billion. At operating level, earnings turned positive, but a loss was still reported after taxes. However, things are moving in the right direction. Full order books and record installations of 3.0 gigawatts, an increase of 44%, in the first six months underpin this. The Hamburg-based Company also confirmed its forecast for the full year. Sales are expected to grow to between EUR 4.7 billion and EUR 5.2 billion, with an operating margin (EBITDA) of 4.0% - 5.5%.
In July, Nordex had secured new funds for expansion via a capital increase of EUR 586.15 million. At around EUR 16, the Group is currently valued at EUR 2.6 billion. The analysts at Jefferies confirmed their buy recommendation for the shares with a target price of EUR 25. That is an upside potential of a good 50%.
VARTA AG - The second half of the year is what counts
Varta's half-year figures disappointed many market participants. The Group was only able to report an increase in sales of just under 2% to EUR 397.6 million. The adjusted operating result (EBITDA) increased disproportionately by 10% to EUR 112.3 million. That was also associated with a margin expansion of 2.1 percentage points to 28.2%. Now all eyes are on the seasonally stronger second half of the year.
Varta confirmed its forecast for the full year. Sales and operating profit are expected to increase, and the adjusted EBITDA margin is expected to rise to around 30%. Based on average analyst estimates, the stock has a sporty 2021 P/E of 39 and a 2022 P/E of 29.
To justify this valuation, the Group's plans must work out. These include continued growth in the flagship discipline of lithium-ion batteries, such as those used in wireless headphones, despite stronger competition from Asia. In addition, entry into the market for high-performance batteries must succeed. The recently concluded cooperation between Continental and Varta to develop especially powerful batteries for electric two-wheelers should also generate business.
With all the shares described, investors can bet on the triumphant advance of renewable energies and electromobility. Nordex and Varta are established players worth billions. Those looking for an undiscovered, early-stage, high-opportunity stock with a low enterprise value should take a closer look at Central African Gold.
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