May 4th, 2023 | 07:30 CEST
Clear signals at BYD, Globex Mining and Plug Power
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
BYD - Another exclamation mark
Things continue to go well for the Chinese market leader for electric cars. In the first three months of the 2023 financial year, the Shenzhen-based company increased its profit by around 410% compared to the same period of the previous year. Net profit amounted to EUR 541.00 million, while revenues grew by almost 80% to EUR 15.8 billion.
In total, 552,076 electric vehicles were sold in the first quarter, at 93%, almost twice as many as a year earlier. The gross margin was 17.86%, representing an increase of around 5.50%. The fresh sales figures for the month of April confirmed the positive trend. With 210,300 units sold, BYD was 98.3% above the previous year's level. For the full year to date, sales amounted to 762,400 vehicles at the end of April.
The share price coped well with the news after investor legend Warren Buffett reduced his stake in the technology group. This stopped the share's decline at the vertical support area of USD 27.02 and even broke through the downward trend established since the end of June 2022. The next prominent resistance area is at USD 33.05, the current year's high.
Globex Mining - News all the time
The conditions for a break of the downward trend established since April 2022 at CAD 0.90 are given for many reasons. On the one hand, the precious metal gold is approaching its all-time high. On the other hand, the increasing demand for existential raw materials for climate change should sustainably fuel the prices. Globex Mining is well positioned for the decade of commodities, as industry experts call it, thanks to the broad diversification of its portfolio. A total of 217 holdings are in the portfolio managed by Jack Stoch since the end of the 1980s.
Among them are precious metals such as gold, silver, palladium and platinum, base metals such as copper, zinc, lead and nickel, and special metals and minerals such as iron, molybdenum, lithium or rare earth metals. With 44 projects, Globex Mining participates directly in the energy transition, as critical metals and minerals such as iron, rare earths, uranium, lithium and cobalt are stored here. A total of 55 projects have historical or NI 43-101 compliant resource estimates.
The Company generates a continuous cash flow by optioning land packages from the inventory against cash and shares. As a result, the Company receives recurring royalties and the partner assumes the exploration risk. In addition to acquiring and licensing land, the Company also invests around CAD 1.5 million per year in the exploration of its own properties. The Company's stock market value is currently CAD 45.09 million, but the intrinsic value of all holdings is likely to exceed this figure by far. In addition, the Company has a well-filled treasury, including investments that can be sold in the short term, amounting to CAD 25 million.
Globex Mining's success is reflected in the steady news flow. The licensing company Cartier, for example, published the results of the preliminary economic assessment (PEA) of the Chimo Mine project, whose investment requirements would pay off after 3 years. In this project, Globex would receive 3% of the production as a royalty payment. With an indicated output of 116,900 ounces of gold for 9.7 years, this would mean gold payments of over 34,000 ounces over 10 years. Based on the current gold price of around USD 1,990, the payment alone would amount to USD 67.66 million.
Plug Power - The search for the bottom
The hydrogen specialist is far from breaking the downward trend established since the end of January 2021, with a price of USD 8.83. On a weekly basis, it is trading at USD 13.01. After the horrendous price losses - the share has lost more than half of its value since the annual high on January 30th - it is much more a question of stabilizing the price and possibly forming a bottom. Positive signs for at least a short-term countermovement come from the indicators. The trend-following indicator MACD formed positive divergences and recently generated a buy signal.
Fundamentally, as Plug Power's CEO is used to, the US company continues to plan on a grand scale. For example, SK ES, the subsidiary of the Korean SK Group, which in turn is the largest single shareholder in Plug Power with a 9.26% stake, announced that it would invest 1 trillion Korean won, around USD 747 million, together with the US hydrogen company to build a large production plant for hydrogen-powered devices in Korea. Through the SK Plug Hyverse joint venture, SK ES and Plug Power will invest 510 billion won and 490 billion won, respectively, to build a hydrogen gigafactory and a hydrogen technology research centre, SK ES said.
The Gigafactory will produce hydrogen fuel cells for vehicles and a water electrolysis platform for power generation. Commercial operation is scheduled to start in 2025.
Due to the currently high burn rate and the announced investment, a further capital increase and, thus, dilution of shareholders is likely to be unavoidable.
The positive trend at BYD continues with the sales figures for the month of April. Plug Power may be bottoming out. The intrinsic value of the holdings in Globex Mining should far exceed the stock market value.
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