01. October 2021 | 13:19 CET
China Evergrande, Troilus Gold, Daimler, BP - With quality against the crash!
In strongly fluctuating markets, good advice is expensive. China Evergrande has divested itself of a bank stake in order to refinance its obligations. Some will say this is already getting down to the wire. China's real estate markets appear to be in serious trouble. We hear little about the default payments to foreign investors, and domestic investors have probably received their interest late. Everything is in the balance here. Meanwhile, the Bund future falls below the critical 170 mark, which means that the European bond markets also suffer from a slight withdrawal of confidence. We look at some standard stocks with high content.
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ISIN: CHINA EVERGRANDE GROUP | KYG2119W1069 , TROILUS GOLD CORP. NEW | CA8968871068 , DAIMLER AG NA O.N. | DE0007100000
"[...] 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often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production.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.
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.
China Evergrande - Dealing with other people's money
The real estate giant's silence on its international payment obligations fuels suspicions of unequal treatment of domestic and foreign creditors. After all, the intra-Chinese stake sale that was simultaneously engineered is less about propping up Evergrande itself than it is about ensuring that one of the largest domestic lenders, Shengjing Bank, still sees some of its money. The bank is demanding that Evergrande Group use all net proceeds from the sale of its Shengjing shares to settle debts with the bank. Last week, Evergrande had already reached an agreement on a yuan bond shortly before the payment deadline on a dollar bond passed.
The group, once the epitome of China's construction boom, is owed more than USD 300 billion by customers, banks and investors. High hopes have recently risen for government aid among investors, with the Chinese central bank signaling its support for private Evergrande investors. According to observers, the latest deal with the state-owned asset manager signals how Beijing's leaders plan to use their own companies to prevent an uncontrolled collapse of the real estate giant. The China Evergrande share is only for gamblers because there is still the threat of a total loss if things go wrong.
Troilus Gold - With gold against the storm
If you want to hedge against possible distortions from Asia with gold, look to Quebec. We come across an interesting precious metals project there, 100% owned by Canada's Troilus Gold Corp since 2017. The former Troilus mine, located northeast of the Val-d'Or district, produced 2 million ounces of gold and almost 70,000 tons of copper between 1996 and 2010. It is now being brought back into focus.
Recently, the Company announced further results from its ongoing exploration program. Within the J Zone, a parallel zone of mineralization has been confirmed on the west side of the primary ore body by up to 50m along dip. The entire scenario is shown over a strike length of 850m and is predominantly within the Preliminary Economic Assessment pit model. On the J Zone, we expect an updated mineral resource estimate in the foreseeable future. The J Zone exploration target includes the smaller of the two previously mined open pits at Troilus. The results should be a positive surprise.
For those who consider the spot gold price too volatile at the moment, Troilus offers peace of mind in the upcoming drill results. There are currently 196 million shares at a price of CAD 0.74. That is not too high a price for the enormous potential that has already been shown historically. Stock up!
Daimler - Fantasy through spin-off
Daimler-Benz is restructuring its group and spinning off its truck division. Today, the shareholders decide on the spin-off plans; this is a historic step for the traditional manufacturer. Essentially, the plan is to separate the large truck and bus business from the group and float it on the stock market as an independent company. The entire mobility sector is in a state of upheaval, and the challenges for all divisions are enormous.
Billions of euros are currently being invested in the development of new e-cars to achieve the climate targets. Therefore, the Daimler spin-off is about a lot of money: after years of valuation discounts, the aim is to create significant added value for shareholders. The spin-off goes under the project name "Focus" and symbolizes the future independence of the divisions. The Daimler Truck division will thus be released into entrepreneurial autonomy. The more glamorous car business has long overshadowed the truck division - yet the manufacturer, with more than 100,000 employees, sees itself as the world market leader for commercial vehicles. The shares would then be listed on the stock exchange before the year-end - the exact date depends on approval and any objections. In terms of size, Daimler Truck could even be a DAX stock.
The Daimler share is currently one of the strongest stocks in the DAX, having already gained 67% over the year. After the separation, both companies will be able to grow better. Together, they will probably be worth significantly more than the current EUR 82 billion. Go for it!
BP - This looks quite good
Rising oil prices have given British Petroleum shares a nice boost. It was able to show true strength during the troubled days and rose to a 2-year high of EUR 3.97. After horrendous losses due to falling oil prices during the global Corona lockdown in 2020, shareholders of the British energy giant can look forward to lush profits again this year. The British oil company is making an impressive comeback.
Some analysts expect BP's revenue to increase from USD 180 billion to USD 216 billion in 2021. EBITDA is expected to climb from USD 12.0 billion to USD 34.2 billion, and further increases are already anticipated for 2022. BP is thus probably out of the woods and is again striving dynamically upwards. Those who are already invested should set the stop at EUR 3.50. The value can still be bought up to the EUR 4.20 mark because the current price reflects only the book value.
In times of crisis, stock selection is no child's play. Either you keep your fingers entirely out of the market, or you pick up quality stocks at a low level. In the current environment, Daimler, BP and Troilus Gold could well be considered for this.