Despite the super disaster with CrowdStrike, 100% returns are possible with TUI, Lufthansa, Prismo Metals and BayWa!

BayWa - This does not look good

Almost 70% loss in 12 months and then the shock: The heavily indebted SDAX-listed company BayWa has brought in a restructuring expert to examine its strained financial situation. The Munich-based agriculture and energy trader employs around 24,000 people, and CEO Marcus Pöllinger is optimistic that the precarious situation can be resolved in the long term. However, with a debt of over EUR 5 billion, this is no easy task, as the market capitalization has fallen to around EUR 430 million. The recent rise in interest rates has made financing the billions in loans immensely more expensive, with the threat of over-indebtedness looming. The Company did not initially disclose who the expert is and when the first measures will be available.

BayWa AG celebrated its 100th birthday last year and ended the anniversary year with a net loss of EUR 93 million. In the first quarter, BayWa slipped even deeper into the red with a loss of EUR 108 million. At the end of March, the Company had accumulated non-current and current liabilities of almost EUR 5.6 billion. At the Annual General Meeting in June, CEO Pöllinger announced socially responsible job cuts and the sale of non-essential business areas. Most of this debt was built up by Klaus Josef Lutz, who left the Company in 2023 and transformed BayWa into a conglomerate, expanded globally and, above all, built up the renewable energy business as a second pillar of the Company. One sip too many from the bottle. Now, it is time for a brutal reorganization. Let's see how this unfolds. Wait and see!

Prismo Metals - Copper from Arizona is just the beginning

The Canadian exploration company Prismo Metals is heading in the opposite direction. The share price has risen by an astonishing 70% in the last 6 months. The reason is as short as it is obvious. In addition to gold and silver projects in Mexico, the junior also owns a property called "Hot Breccia" in resource-rich Arizona. The property consists of 1,420 hectares with a total of 227 contiguous mining claims located in the world-class copper belt between the well-known Morenci, Pinto Valley, Ray and Resolution copper mines. Hot Breccia shares many similarities with these neighbouring systems, most notably a swarm of porphyry veins and a series of breccia pipes containing numerous fragments of well-copper mineralized rock.

Prismo conducted an airborne electromagnetic (ZTEM) survey last year that identified a very large conductive anomaly. Additional sampling on the project has shown the presence of copper mineralization associated with polymictic breccia that has brought fragments of sedimentary rock and mineralization to surface from a depth of probably 400 to 1,000 metres. Ten days ago, Prismo Metals received approval from the Bureau of Land Management (BLM) for 10 drill pads at Hot Breccia. So we are ready to go!

According to Wood Mackenzie, annual primary copper demand will increase by 30% to around 25 million tons by 2030, and ore is already in short supply. The expansion of renewable energies, artificial intelligence, and e-mobility requires significantly more copper worldwide than previously estimated, and there are currently no significant new mine openings. The construction of a copper mine takes up to 10 years and costs billions. This is why properties such as Prismo Metals are in focus, as the energy supply, processing facilities, and infrastructure are already available for use by neighbouring mines. A major company seeking new mineral deposits for the necessary expansion is currently paying only CAD 11.7 million for the outstanding 53.3 million shares. A drop in the bucket - the next copper rally will likely further boost the Prismo share price.

TUI and Lufthansa - Still struggling

The two tourism giants, TUI and Lufthansa, are still under pressure. While the Hanover-based TUI is issuing a new convertible bond worth EUR 487 million, they are simultaneously buying back EUR 472 million of old shares maturing in 2028. The offer represents the final step in refinancing the credit line received from the state development bank KfW, which is to be reduced from the current EUR 550 million to around EUR 210 million. The remaining amount of the COVID-19 aid is expected to be repaid by the travel company in the first half of the calendar year 2025. With this step, TUI is extending the maturity profile of its debt and significantly reducing its interest costs. The newly issued 1.95% bonds mature in 2031 and can be converted at EUR 9.60. A smart move in the ongoing restructuring, yet the stock market acknowledged the action with a 10% loss in just 48 hours.

Lufthansa is still struggling. The system shutdown led to considerable delays on Friday, but the share price was nevertheless able to bounce back from its Wednesday low of EUR 5.58 to EUR 5.76. The Swiss investment bank UBS confirmed its "Buy" rating with a target price of EUR 12.3. The experts on the Refinitiv Eikon platform are not quite as optimistic. They expect an average 12-month share price of a low EUR 6.80. Both TUI and Lufthansa need a little more air under their wings. Nevertheless, in better times, prices 50% higher could certainly be seen again. Stand ready!

Copper, in particular, has become very important for the energy transition, and Prismo Metals is a supplier in the pipeline. CrowdStrike will have to do a lot of good to iron out last week's mistakes. TUI, Lufthansa, and BayWa need to quickly revamp their business models to be able to take off again.