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December 5th, 2022 | 11:03 CET

Debacle for e-mobility? BYD, Varta, Almonty Industries, Nordex - Farewell from the Qatar desert!

  • Mining
  • Tungsten
  • RareEarths
  • renewableenergies
  • Electromobility
Photo credits: pixabay.com

The German national soccer team has experienced its next World Cup debacle and attracted even fewer interested people to their TV sets than during the first World Cup elimination 4 years ago. Even during the third-round preliminary match, TV figures remained comparatively low. The DFB women thus retain the viewer record in 2023, which is nice. E-mobility could also suffer a significant setback in 2023 because if electricity prices continue to rise and availability falls, charging stations could have to be taken off the grid. According to the ADAC, Switzerland is planning a speed limit of 100 and driving bans on non-essential private trips with e-mobiles to prevent the risk of blackouts. The decision will be made in the National Council on December 12. But the stock market is still betting on Tesla & Co - who are the profiteers?

time to read: 5 minutes | Author: André Will-Laudien
ISIN: BYD CO. LTD H YC 1 | CNE100000296 , VARTA AG O.N. | DE000A0TGJ55 , ALMONTY INDUSTRIES INC. | CA0203981034 , NORDEX SE O.N. | DE000A0D6554

Table of contents:


    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] 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

    Full interview

     

    BYD - After bottoming out, will the turnaround now follow?

    Despite a mega deal with Sixt and the entry into the European automotive markets, the BYD share in the fall of 2022 is experiencing the most significant correction. The Build Your Dreams company first came into investor focus in 2008, when Berkshire Hathaway, the investment company of stock market guru Warren Buffett, invested in the Chinese manufacturer of electric vehicles and batteries. But with tensions rising between Washington and Beijing, many analysts recently advised caution. Berkshire owned almost 25% of BYD at its peak, but strong sales have recently brought the stake down to less than 16%. As a result, the investment holding company generated more than USD 1 billion in profits.

    Not helping the mood is the current corporate press, as Vice President of the technology group, Lian Yubo admitted at the China Auto Forum that the New Energy Vehicles (NEV) sector is currently struggling with several difficulties. In addition to growing competition, these include shortages of lithium. Nevertheless, the Company is optimistic because BYD has enough innovative technologies in its quiver to be able to launch new products on the market. Does this already indicate a move away from lithium?

    Things are still looking good: Sales of NEV and hybrid vehicles rose by 87% YOY in October to 680,000 units. BYD remains the market leader; its closest competitor Tesla had recently cut prices in the Chinese market to further boost sales in the face of supply pressure and a weakening economy. After hitting a low of EUR 20.80, BYD shares have turned for now and are again setting their sights on the EUR 25 mark. Keep an eye on the stock as a long-term investment.

    Almonty Industries - An important all-round project

    GreenTech producers are heavily dependent on the availability of critical metals. For example, hardening steel requires tungsten, one of the most heat-resistant metals on the planet. The world has problems with China, the leading supplier, because, after all the politically threatening gestures towards the West, the Middle Kingdom could also think of rationing its exports. Since Russia's invasion of Ukraine began, the world has known that peace is not a top priority for every leader.

    Canadian explorer and producer Almonty Industries (AII) has already fully focused on this tight tungsten market with its three sites in Spain, Portugal and South Korea. Few know that in e-mobility, about 1.4 kilograms of tungsten is installed in each vehicle today, in addition to lithium, graphite and copper. That number could even expand to around 2.5 kilograms with the introduction of tungsten-based cathode coatings in LI-ion batteries.

    With the ongoing development of the Company's Sangdong mine in South Korea, world supply could shift by about 5% to a friendlier jurisdiction. Because of its strategic importance to the West, Germany's KfW is also involved in financing the project. In mid-November, an additional USD 9.82 million was drawn from the USD 75.1 million credit facility. In addition to reactivating the mine, the Company plans to build a vertically integrated nano-tungsten oxide processing plant. Tungsten is expected to be mined as early as the second half of 2023, with the offtake partner being Austria's Plansee GTP at a minimum price guarantee of USD 235 per metric ton (MTU). CEO Lewis Black is convinced that the price has much more potential in the long term, and Almonty will provide the South Korean industry in the battery market with the rare metal in the best possible way. Currently, the price is already around USD 350 per MTU, with an upward trend.

    The current price of Almonty shares in Canada is a low CAD 0.70 but could recover significantly from the lows around CAD 0.57. In a recent study, First Berlin voted with "Buy" and a price target of CAD 1.70 over 12 to 24 months. They also put Almonty on the return of mining stocks in 2023 because 2022 was marked by price corrections despite scarcity.

    CEO Lewis Black will take questions from interested investors on December 7, 2022, at 16:00 CET at the 5th IIF - International Investment Forum. Participation in the virtual event is free of charge. Click here to register.

    Varta and Nordex - GreenTech needs critical metals

    In order not to be left behind by China, great efforts are needed in Europe, both from the public and private sides, to quickly develop the topic of GreenTech. Resource security appears to be important, which should be established through contractual relationships with strategic partners. Both the battery and alternative power generation markets depend significantly on important metals and rare earths.

    Varta has been investing heavily in research for years and has intensified its efforts in V4Drive in recent months. However, due to raw material shortages and high procurement prices, the economic conditions have recently negatively impacted the Ellwangen-based company's figures. Although series production of the V4Drive battery is to start soon and supply Porsche as the first major customer, the Group will only make further investments once demand in the sector is spread across several customers.

    At Nordex, the situation on the earnings side is similarly bad as at the battery manufacturer, as the delayed handover of the new wind turbines is squeezing margins, as is the strong inflation in input costs from materials to labor costs. Currently, it has full order books and could deliver three times as much if access to resources were consistent. At the end of November, Nordex received a further 85 MW of orders from Belgium and Poland. The share price quickly overcame the EUR 7.30 level from the October correction and is now trading above EUR 12 again. That is how quickly a 67% plus comes on the yield clock! Better to wait for the next correction here. Nordex and Varta are also presenting at the upcoming virtual 5th International Investment Forum on Dec 7.


    In addition to e-mobility, the energy transition is the key driver for innovations in the GreenTech sector. BYD is a Chinese standard stock with high growth dynamics. Varta and Nordex are struggling with the greatest difficulties to achieve a positive margin. Almonty Industries will likely show off in 2023, so one should be invested by then.


    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.

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    Der Autor

    André Will-Laudien

    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.

    About the author



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