December 14th, 2022 | 12:00 CET
Climate protection & energy crisis: BYD, Mercedes, Globex Mining, Volkswagen - Invest in metals!
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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
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.
Mercedes and Volkswagen - German e-mobility takes shape
Germany was certainly not a pioneer of electric locomotion, but the international trend is leading to strong pressure among those responsible. At the Swabian premium manufacturer Mercedes, the wires are running hot, as they are driving a multi-location strategy and also making some deals with promising partners. A total of eight EQ vehicles will then be produced by the end of 2022. Like BMW, Mercedes is focusing on flexibility: Vehicles with conventional drive systems, plug-in hybrids and electric cars can be built in parallel in the plants - depending on demand. The Company is not yet entirely certain that electric mobility will soon take over the reins fully. But the Stuttgart-based manufacturer expects more than half of Mercedes sales to be plug-in hybrids and electric vehicles from 2030. The Company even wanted to tackle the topic of e-vans with the US manufacturer Rivian, but the proclaimed cooperation failed due to the Americans' material and delivery problems. Mercedes cancelled the planned cooperation at the beginning of December.
Volkswagen is currently expanding its electric range drastically. The Company plans to invest EUR 6 billion by 2025 so that it will eventually have a total of 20 electric vehicles on offer. A good handful of pure e-mobiles and some hybrid versions are already on the market. Now VW is investing a further EUR 10 billion near Valencia to build a giant battery factory. More than 3,000 employees are to work there and set up an annual energy storage capacity of 40-gigawatt hours. The Spanish are pleased to have a European neighbour and are subsidizing the new factory with EUR 378 million. The Gigafactory near Valencia will be Volkswagen's second cell factory site after Salzgitter and the first outside Germany. Construction is scheduled to start in early 2023, with a planned start of series production by 2026. Mercedes and Volkswagen are on the verge of catching up with Tesla. Time is pressing, and both shares are currently cheap because, on a 2023 basis, the traditional German companies have a P/E ratio of 4 to 5. In addition, dividend yields of 5-8% are tempting - a small compensation for the inflationary loss of purchasing power.
Globex Mining - Those who bet on the electric revolution need metals
With international action being sought in favour of sustainable climate change, there is a need for abundant raw materials for technological use in GreenTech solutions. CEO Jack Stoch heads the well-diversified Canadian commodity explorer Globex Mining. The Company is considered a potential supplier of valuable metals in the energy renewal process. The current portfolio includes 217 properties, many of which are optioned as exploration properties or deliver permanent royalties after production begins, i.e. payments for outputs of raw materials extracted from the ground.
Two recent deals fit the landscape very well. At the optioned Maple Gold property, drilling has encountered grades of up to 11.3 and 24.4 grams of gold per tonne of rock over 3 and 1 meters, respectively. An electromagnetic and geophysical survey shows several priority anomalies both north and south of the past producing Eagle Mine, suggesting potential for further discoveries. The second Kukamas property consists of two large claim blocks along the highly prospective Yasinski greenstone belt in the La Grande sub-province of the Archean Superior province of Quebec. Another block of 25 claims separates the two claim blocks, 100% owned by Globex, and hosts numerous high-grade gold, copper, silver and iron occurrences. Globex welcomes the ongoing exploration work by partners Azimut and KGHM on its Kukamas project. It will explore there itself next summer or further option the area.
Globex's share price has fallen sharply from just under CAD 1.70 in April. However, the price reductions are more due to ignorance of the situation because the business is running at full speed, and with a valuation of just under CAD 40 million, the cash ratio is still 50% of the capitalization. Jack Stoch has been in the business for a very long time and is using the current market weakness to round out his portfolio, from which he has been able to generate a lot of deals in recent years. After the tax-induced selling wave (the so-called "tax-loss selling" season) in Canada, the GMX share should be returned to its real fundamental value very quickly. The value is suitable for stocking up.
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BYD - Mercilessly outperforms the competition
Those who want to invest in e-mobility will find the Chinese market leader in BYD ("Build Your Dreams"). Recent sales by major investor Berkshire Hathaway (Warren Buffet's holding company) are putting pressure on the share price, with just under 10% of the share capital already placed on the stock market. In October, the BYD share reached prices around EUR 22 and is currently heading back towards EUR 26. US analysts had warned of burgeoning trade disputes between the US and China, especially since e-cars may now only be sold in the US if the battery comes from the country itself. BYD wants to build a battery plant in the US but has yet to decide whether to offer passenger cars on the US market.
In China, BYD has long since left its US competitor Tesla behind. Leading manufacturers there, such as BYD, Tesla and SAIC-GM-Wuling, maintained their high momentum in November, according to the state agency CPCA. BYD posted its third record in a row, selling 229,942 New Energy Vehicles (NEVs), up from 217,618 in October. It is not known how many vehicles were exported, as the brand's European launch is due in the fourth quarter, as is well known. Tesla sold more than 100,000 electric cars produced in China for the first time in November, up 89.7% from the same month last year. Still, Tesla remains clearly behind the Chinese. One should keep the BYD share on the radar in the medium term.
Electromobility is a key driver of high global demand for commodities, especially copper and lithium. The momentum jumps to green, and there they are again, the price increases in the popular trending tech stocks. Auto stocks are at the forefront, and Globex shares have also recently turned around.
Conflict of interest
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