August 8th, 2022 | 13:18 CEST
Climate change brings GreenTech stocks into focus: Varta, Nordex, JinkoSolar and Globex Mining
Table of contents:
"[...] 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
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.
Varta - Disappointing figures - what is next?
So, while the so-called BRICS Plus countries, as buyers of Russian raw materials, are confronted with tidy price reductions, in Europe, the political direction is shaped by climate change and the development of its own supply infrastructure. There is speculation about a gas pipeline supplying southern Europe with Syrian fuel, forgetting that the possible route will pass through Turkey. However promising this project may be, its realization will likely be tied to Turkey's accession to the EU.
Ellwangen-based battery manufacturer Varta has already had to withdraw its outlook three times due to the uncertainties in Europe, rising raw material prices and delays in development projects. In the last guidance, the Company had announced sales of EUR 950 to 1,000 million and an operating EBITDA margin of 30% or approximately EUR 260 to 280 million. The half-year figures announced in advance on July 30 are unfortunately significantly below this forecast: total sales of EUR 376.8 million after EUR 397.6 million in the previous year represent a decline of 5.2% and do not sound like growth.
Things do not look any better for the EBITDA on an adjusted basis, with adjusted EBITDA falling to EUR 68.9 million from EUR 112.3 million compared to the first half of 2021 due to cost increases in pre-products, raw materials, energy and transportation, putting the Swabian technology company well below management's expectations and the leading analyst consensus. After an initial sell-off of the share down to EUR 69, the price was able to swing back up to over EUR 80 last week. From a chart perspective, however, the Varta share will only become interesting again from EUR 88. The full report on the half-year will be published on August 11, and uncertainty will likely dominate until then. However, it could well be that the long dry spell ended in July.
Globex Mining - Only a share buyback can help
If you talk to industry veteran Jack Stoch in an environment of correcting commodity prices and outright sell-offs in resource stocks, you will be met with a smile. That is because the CEO of Globex Mining has been in the business forever and has been pursuing a well-diversified investment strategy for years. Global networking, access to deals and the constant will to sail on the pulse of the times make the Canadians very successful, and even difficult times can be survived because of the abundance of interesting projects.
Globex Mining has secured good jurisdictions and benefits from consistent royalty payments over time through many partnerships. Broad diversification can significantly increase investment success, particularly in the exploration sector, as the various commodities are often negatively correlated, keeping overall portfolio volatility low. In addition to its many holdings in gold, silver, copper, platinum and palladium, as well as base and specialty metals, the Company also has a well-stocked treasury to enable it to make repeated additions or new acquisitions as needed. The opportunities in the bombed-out resources sector are tremendous right now if one has some cash.
Since April, the Company has been unable to escape the major commodity correction, with the share price losing as much as 47% from the top at CAD 1.68 to currently CAD 0.90. That means the capitalization has fallen back to around CAD 50 million. As it did last year, the Company is responding to this undervaluation with a further share buyback of up to 1.8% of the outstanding capital. Globex intends to make all purchases on an opportunistic basis, taking into account share price and other tactical considerations. The treasury is still filled with just under CAD 20 million for this purpose, which is still 40% of the current market value. Collect!
Nordex and JinkoSolar- Climate change with different successes
The fact that China and Europe represent two completely different jurisdictions can be seen in the GreenTech companies Nordex and JinkoSolar. In their strategic orientation, both benefit from the global climate protection movement, but their success so far has been very different.
Renewable energies are one of the most important factors when it comes to green living. Nordex SE, based in Hamburg-Langenhorn, is actively implementing one of the possible technologies, as it takes care of the planning, production, installation and maintenance of wind turbines and wind farms. Demand in Europe is huge, yet the Company is struggling to break even. In the last 5 years, the stock has risen from EUR 5 to over EUR 24, but there were price increases in manufacturing due to pronounced shortages of raw materials. The Company had to correct the target figures several times and, in addition, permanently asked the shareholders to pay. In July, there was another sell-off to EUR 7.09, but then the share price turned around with a plus of 50% to EUR 10.46. On August 11, the Hamburg-based company will present its half-year results. It will be interesting to see what effect the new outlook has on investors. Depending on the impact, buy only on rising momentum.
The Chinese solar module company JinkoSolar is also completely geared towards GreenTech. Nowadays, solar systems are more sought after than ever, given rapidly rising electricity prices, but the waiting time is sometimes several months due to material shortages. There is no prospect of relief at present because the demand for self-sufficient energy supply is rising and rising and is already ten times as high as in the pre-Corona year 2019. The decisive factor could be the recently announced expansion of renewable energies in the EU. That is because the next political step was taken with the revision of the Renewable Energies Act (EEG 2023). It came into force on July 30, 2022, and includes a planned quadrupling of photovoltaic plants in Germany. JinkoSolar is one of the major solar module suppliers to Europe. So the sails continue to be strong in the wind here. In July, the share price corrected by about 20%, which makes the entry somewhat more favorable. The share has already gained over 260% in 36 months.
The stock market consists of various cycles and trend themes. The last few years have been dominated by mobile technology and digitalization. Now it seems that climate change is slowly gaining traction, and GreenTech stocks, in particular, are coming into focus. A balanced and risk-conscious mix of the companies mentioned above will reduce the risk and increase the return prospects in your portfolio.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.