July 5th, 2022 | 11:25 CEST
Climate shares: BASF, Erin Ventures, Nordex, BYD - The stuff dreams are made of!
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"[...] Boron is one of the most versatile elements in the whole world! Everyone reading this text regularly uses hundreds of products that depend on boron. [...]" Tim Daniels, CEO, Erin Ventures
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.
Erin Ventures - Boron, an important battery element often forgotten
Boron is one of the most versatile elements in the entire world, bearing the atomic number 5 with the abbreviation "B" in the periodic table. Hundreds of products we encounter in daily life all contain boron. Prominent examples are glass, ceramics, house insulation material, fiber optic cables, smartphones, computer screens, and solar panels on the roof.
Other important applications include electromobility and fuel cells, where boron plays just as valuable a role as the generally pursued lithium. In purely quantitative terms, batteries for electric cars contain almost as much boron as lithium. More than six tons of boron are found in large wind turbines, and in the nuclear industry boron is used as radiation protection. The element thus occupies a decisive place in decarbonization.
The raw material is mainly supplied by the two large boron producers, Eti Maden in Turkey and Rio Tinto in California; the remaining suppliers are highly fragmented and relatively small worldwide. These two mining giants have dominated the market for years, but now a new property is opening up in Serbia - the pre-feasibility study (PEA) has just been published. It calculates that demand will soon increase tenfold. For the Canadian explorer Erin Ventures, the cards could not be better because, with an investment of USD 80 million, the net present value for the planned mine is USD 525 million.
There are few peer companies involved in lithium and boron projects. That is why research firm MMG Capital conducted a valuation of Erin Ventures. Including all parameters for a 3-year mine build-up and a partial sale of 50% to joint venture partner Temas, the valuation target is CAD 122.3. The current number of shares at 151.6 million provides a calculated fair value of CAD 0.79 per share. At the current share price of CAD 0.09, a near tenfold according to the latest MMG analysis. Since Europe, in particular, is the world's most committed to climate protection, this boron project could play a vital role for the European industry. Collect a few pieces for the portfolio at the favorable price of CAD 0.09.
Further details on Erin Ventures you can find in our lasted interview with CEO Tim Daniels: Link to Interview
BASF - The chemical giant switches to heat pumps
Ludwigshafen-based chemical giant BASF is one of the largest gas consumers in Germany, and shortages may still lead to operational restrictions if it is not possible to switch in time. However, further thought is now being given to energy generation throughout the BASF Group. Together with MAN, BASF plans to install a huge heat pump at the chemical company's main plant in Ludwigshafen. The plant will generate steam using waste heat from the cooling water system.
With the heat pump, BASF wants to generate up to 150 metric tons of steam per hour for Europe's largest chemical site. The whole thing is still just an idea, and whether the plant can be built in the form envisaged is something that MAN Energy Solutions and BASF intend to clarify in a feasibility study by the end of the year. Steam is essential for chemical industry production; BASF puts Ludwigshafen's demand at 20 million metric tons a year.
Two birds with one stone: BASF still relies on gas to heat the necessary water for about half of its production capacity. The heat pump could now cover part of this great demand, gas consumption would be reduced, and CO2 emissions could be cut by up to 390,000 metric tons per year. BASF shares have been on a downward slide since January 2022. There are probably no good buying arguments at the moment. But the sentiment is already strongly on the negative side. At EUR 41.50, the share is down 39% on a 12-month basis. The P/E ratio is falling to below 7, and the book value of EUR 46 was also recently undercut. Standard stocks are rarely this cheap!
Nordex - Poor figures again for the wind turbine manufacturer
Wind turbine manufacturer Nordex once again started the year with heavy losses, making a loss of EUR 151 million in the first quarter after a loss of EUR 55 million in the previous year. Not good news for the shaken shareholders, who thought their stock was well positioned in the climate debate. According to the Management Board, the high costs for the realignment of rotor blade production, a lower installation output and increased raw material and logistics costs are to blame. Nordex delivered the figures several weeks late due to a hacker attack and has already had to give up its SDAX listing as a result.
The annual forecast, which was lowered at the end of May, remains unchanged, with the operating margin expected to be between minus four and zero percent. In the medium term, the aim is to achieve an 8% margin, but price increases must be implemented urgently to achieve this. The Nordex share price is currently looking for a sustainable bottom. At the beginning of July it went down to EUR 7.93, making a 12-month loss of over 53%. We had permanently advised against a commitment and are waiting for a technical bottom formation in the hope zone of EUR 6 to 8. The risk-conscious investor needs a lot of patience here.
BYD - Operationally outstanding, the chart also shows strength
June figures show that BYD's New Energy Vehicle (NEV) segment, which consists mainly of plug-in hybrid and pure electric vehicles, delivered 134,036 vehicles last month, up from 41,366 units a year earlier. BYD's main competitors, NIO, Li Auto and XPeng, could not keep up and also Tesla's China business can only dream of these numbers. After 641,350 units at the half-year point, BYD is now targeting sales of 1.5 million vehicles in 2022. This is what growth looks like!
BYD is very cleverly positioned. The critical point could be the vertical production structure and the secured access to the important lithium. The share continues to soar and recently reached a new all-time high of EUR 39.90. To secure profits, one should now tighten the safety stop to EUR 37.50. The chart currently shows considerable strength.
The DAX remains under selling pressure, which applies to almost all blue chips in the index. Growth stocks, however, fell worse recently. The Chinese tech giant BYD is holding up bravely, and BASF and Nordex are still under pressure. Since the latest MMG report, Canadian Erin Ventures has made a 30% leap upwards.
Conflict of interest
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