October 23rd, 2023 | 07:15 CEST
Deutsche Bank, Blackrock Silver, SMA Solar - Which share offers the most potential for the portfolio?
Table of contents:
"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
Deutsche Bank - Resolving IT Issues
Whether Deutsche Bank has sold significantly more precious metals through its HomeCash service since the FED speech is not known. But it is a fact that the figures for the third quarter are to be presented on October 25. Experts expect a decline in net income. However, there could be a positive surprise due to bond and currency trading, as American banks have excelled in this area. After the share buyback program failed to boost the share price, the Q3 results may provide new information on how the stock is intended to gain momentum.
On October 20, the Group announced that the IT problems at Postbank and DSL Bank were largely under control. This is good news, as a special BAFIN officer was recently appointed to resolve the problems. A total of 22 service processes out of several hundred were affected by the problems. Ten have been resolved, and six more are expected to go into regular operation at the end of October. The problems should be off the table by the end of the year. The bank has also made additional staff available to clear the backlog.
Deutsche Bank shares have fallen below the 50-day moving average in the wake of the problems around Israel and have broken the upward trend line. The uncertain environment is causing oil prices to rise, which could, in turn, reignite inflation. This could have a negative impact on the credit business. Currently, the share is trading at EUR 9.528 and has thus reached the support level from early September. In October, there were 4 buy recommendations with price targets between EUR 14.00 and EUR 18.90. Only Barclays recommends "Hold" with a price target of EUR 12.00.
Blackrock Silver - Resource estimate more than doubled
The increased silver prices since the beginning of October are good for Blackrock Silver. The Company operates in one of North America's largest historic silver districts. At Tonopah, silver and gold were produced by hand until 1930. The mineral resource estimate has been 42.65 million ounces of silver equivalent. The Company's October 10 announcement pulverized that figure. The new estimate shows a remarkable 135% increase to 100.4 million ounces of silver equivalent. 6,119,000 tons of material are waiting to be mined. This assumes a silver grade of 242.6 g/t and a gold grade of 2.9 g/t. This results in a silver equivalent value of 508.5 g/t.
The over 100 million ounces of silver equivalent consists of 0.57 million ounces of gold and 47.74 million ounces of silver. Thus, the discovery cost is USD 0.29 per ounce of silver equivalent. By reinterpreting the geological models of the Victor and DPB zones, the new step-out drilling in the Northwest zone has extended the resource corridor to over 3 km. The estimate was based on a silver price of USD 22 and a gold price of USD 1,850. Currently, both prices are significantly higher. The project offers further upside potential as the mineralization is open to the south, northwest and at depth. With additional infill drilling, there is the possibility of turning three deposits into one.
Promising lithium values of up to 1,660 ppm have been found on the Tonopah North Zone property, spread over an area of 7.2 sq km. Tearlach Resources has secured the option for a 70/30 joint venture partnership. The first step is to expand the resources. In addition to the flagship project, a bonanza gold discovery was made at the Silver Cloud project. Drilling returned values of up to 70 g/t gold and 600 g/t silver over 1.5 meters in the Northwest Canyon region. Management holds a 4% stake in the Company, and there are interesting names on the institutional side as well, led by Eric Sprott, and First Majestic Silver also has a stake. After the new resource announcement, the stock climbed from CAD 0.285 to CAD 0.38. Most recently, the stock consolidated back down to CAD 0.30.
SMA Solar - Renewed forecast increase
Silver is also needed in the solar industry to produce solar cells. It is used as a conductive material in the electrical contacts and connections, as it has good resistance to corrosion. However, the precious metal does not have as strong an impact on the Company's success as polysilicon. As the price of this raw material has dropped significantly, margins have increased. The industry took a big hit last week when SolarEdge, one of the leading inverter suppliers, revised its third-quarter revenue forecast by almost 20%. Instead of USD 900 million, it is expected to bring in only USD 725 million.
The reason could be high interest rates, which make investments less profitable. So far, SMA Solar has not experienced any reluctance to purchase. In the first half of the year, sales increased by 65% year-on-year to EUR 778.9 million, and EBITDA was EUR 125.3 million, significantly higher than the previous year's figure of EUR 15.9 million. All segments were EBIT positive, indicating strong business development in all areas. The order backlog was around EUR 2.5 billion, an increase of almost 100% year-on-year. Net liquidity increased to EUR 304.6 million and secured a new EUR 380 million revolving credit facility.
At the beginning of October, after the third quarter, the Company again raised its forecasts. Sales are expected to be between EUR 1.8 and 1.9 billion. Originally, EUR 1.7 to 1.85 billion was planned. EBITDA is looking even better. While the last forecast was between EUR 230 and 270 million, management now expects EUR 285 to 325 million. Operationally, things are going well, but the share was taken into custody by the SolarEdge profit warning and sold off to EUR 53.35, which means a peak minus of a good 18.5% compared to the previous day. At the end of Xetra trading, the share price was down 8.9%, closing at EUR 59.75.
All three candidates have upside potential. Each investor must make their own decision. Deutsche Bank has the lowest price target of EUR 12. Even with stable interest rates, the bank should not be adversely affected. Blackrock Silver has increased its mineral resource by 135%. This was only briefly rewarded by the share price with a 33% gain. First Majestic Silver has a shareholder on board who is always in pursuit of worthwhile silver projects and most recently burned his fingers with the purchase of a gold mine. The share of SMA Solar has lost over 50% in value at its peak since the beginning of July, despite business running brilliantly. A countermovement could be imminent here.
Conflict of interest
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