December 22nd, 2022 | 11:18 CET
Christmas hype alert: BASF, Meta Materials, Varta, Nordex - Strong start to 2023 with GreenTech!
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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.
BASF - The champion in battery materials
The Ludwigshafen-based chemical company BASF is one of the largest suppliers of starting materials for the GreenTech sector. Here, substances are produced and mixed with high-energy input, important chemical precursors for high-tech manufacturers in the alternative energy and e-mobility sectors. Now BASF has added an important customer and will become a strategic supplier of cathode materials for e-car battery cells from Prime Planet Energy & Solutions (PPES), the battery joint venture of Toyota and Panasonic.
The materials are supplied through BASF's majority-owned joint venture BASF TODA Battery Materials (BTBM), a newly developed product from the high-performance cathode materials portfolio. BASF's formulation remains a secret, however, as a race has broken out worldwide to find the most powerful battery for e-mobility in order to persuade larger groups of buyers to purchase an e-vehicle.
It is not yet known in which e-vehicles the new battery will be installed. According to BASF, a tailor-made product has now been developed that meets the battery requirements for higher performance, longer life and improved efficiency. BASF shares have rallied strongly to over EUR 50 in 2022 from the lows of around EUR 38. At currently EUR 46.4, the value is still favourable. Investors are currently paying a P/E ratio of just under 9 at the end of 2023 and will receive a payout of around 7% if the current earnings trend can be maintained.
Meta Materials - Spin-off of Next Bridge Hydrocarbons
When it comes to energy efficiency, anyone who thinks in high-tech terms cannot avoid the driving technology companies that make industrial processes more energy efficient or reduce the overall corporate footprint in carbon dioxide emissions. Innovator Meta Materials (MMAT) is all about high-performance functional materials such as coatings on glass, building structures and other design elements. The Company is developing sensibly integrated antennas and stealth panels for defense equipment.
The first solutions for the booming e-mobility sector have also been available for some time. Together with its partner company Coulometrics, Meta wants to make electric car batteries more durable and powerful. Since the beginning of November, it has also been working with DuPont Teijin Films and Mitsubishi Electric Europe to improve the safety and efficiency of lithium-ion batteries. The PLASMAfusion copper foil represents a groundbreaking development in this regard. Meta Materials regularly attracts attention with its developments. It recently received the CES Innovation Award and was recognized by Deloitte as a Clean Energy expert in the Technology Fast 50 program.
Following FINRA approval, Meta Materials has now distributed its "Next Bridge Hydrocarbons" subsidiary to its investors with a record date of December 12, 2022. MMAT stock doubled in the fall and recently came back a bit. Investors in the stock are used to seeing the value move 50% at times. The turnover in this stock is considerable and allows any investor the best liquidity to position themselves accordingly.
Varta - Where is the bottom?
At the moment, Varta is causing a negative sensation. Many market participants had defined the zone of EUR 27 to EUR 32 after the 75% crash as a catch-up corridor, but in the last few days, the breakthrough to the bottom took place. The new Varta CEO, Markus Hackstein, has brought in restructuring experts from Boston Consulting to bring the battery manufacturer, which has come under pressure, back on track. The reason is the massive increase in the cost of materials to around EUR 400 million per year. With planned sales of less than EUR 900 million in 2023, the Company will remain in the red unless solutions are found to contain costs.
Layoffs are not planned, as there is an acute shortage of skilled workers. Unfortunately, the high costs cannot be passed on to the products, as international competitors do not have to bear Germany's special location problems. Only in this country have energy, material and labor costs soared to unimagined heights since the start of the war in Ukraine. Well-known analyst firms such as DZ Bank and Goldman Sachs have lowered their ratings to Hold and Neutral and adjusted their 12-month price targets to EUR 25 and EUR 30, respectively. Stay on the sidelines for the time being, as Varta's adjustment to the "new world" will still take time and cost a fair amount of money.
Nordex - Good cards for a turnaround
The GreenTech industry is facing a huge challenge, as the coalition government has presented a 500-page package of measures for the rapid expansion of "renewable energies" this year. With the help of this package, the share of alternative power generation is to be increased as quickly as possible from the current level of around 50% to about 80%.
Nordex designs and supplies entire wind farms. The Hamburg-based company has had to raise fresh capital several times due to rising costs in 2022. With three profit warnings in a row, the Company now believes it will only become profitable again in 2024/25. The lynchpin for profitability, as with Varta, remains the high cost of upstream products, lack of staff and constant supply chain disruptions. However, with Q3 sales of EUR 1.7 billion, the group is 50% ahead of last year, but the operating loss will still reach 4% of sales in 2022. However, the lush order situation gives hope for the future. The total order backlog increased to EUR 6.5 billion. The Company is now entering the new year with new major orders from Brazil and Turkey. Goldman Sachs is nevertheless skeptical and rates the stock as Neutral with a target price of EUR 13.10. Jefferies still recommends the share as a Buy with a target price of EUR 14. Great euphoria can probably no longer be felt because the share has gained 75% since the low of just under EUR 7.
The mood on the stock markets at the end of the year is not bad, and most expecting a brighter economic development in 2023. GreenTech shares will remain interesting, because the pressure on the the industry to adapt is high. BASF and Meta Materials offer very good solutions in this environment. Varta and Nordex first have to get back on the road to profit.
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