September 27th, 2021 | 12:20 CEST
Diamcor Mining, TUI, Xiaomi - Consumer stocks are among the winners!
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The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
DIAMCOR MINING INC - Measures implemented for higher profitability
Diamcor Mining is focused on identifying, acquiring and operating diamond projects that are in production in the near term and have the potential to generate continuous diamond production and cash flow. The Company follows a distinctly low-risk strategy by not taking exposure to exploration projects. Diamcor uses advanced technologies to process overburdened reserves and is interested in high-quality alluvial and eluvial projects that allow the recovery of documented diamondiferous gravels using simple, low-cost strip mining techniques. Geographic focus regions include Canada and South Africa.
Of strategic importance is the long-term strategic alliance formed this summer with Tiffany & Co. Canada, a subsidiary of the world-famous New York-based Tiffany & Co. Under the terms of the agreement, Tiffany & Co. Canada has a right of first refusal on up to 100% of the future rough diamond production of the Krone-Endora at Venetia project at current prices. Equally significant, the agreement provides for substantial financing to advance the project as quickly as possible. However, diamonds are not only of interest to the jewelry industry, but because of their unique properties, they are also sought after in laser technology, in the manufacture of semiconductors, and for a variety of electronic components.
The Canadians are currently focused on developing and advancing the Krone-Endora at Venetia project in South Africa. The project covers approximately 5,900 hectares and is adjacent to De Beers' flagship Venetia diamond mine. Diamcor has a long history of operations and production in South Africa and has extensive experience supplying rough diamonds to the world market.
Recently, the Company reported the completed implementation of several measures at the Krone Endora at Venetia project. The goal is to increase the project's processing volume by up to 100%. Specifically, this will be ensured by improving and expanding the diamond concentration system and installing a new electronic X-ray unit for diamond recovery. In addition, cost-cutting measures that reduce water and electricity consumption per ton will be implemented. With the final commissioning, the first results on the effectiveness of the bundle of measures will be available in the coming weeks. Good news will undoubtedly provide positive impetus for the Company's share certificates, currently valued at CAD 24 million.
TUI - Tailwind from relaxation
Germans are traveling significantly more again. This is evident from the recently published data of the airport association ADV. According to the data, the number of passengers using a German airport as their point of departure or destination during the summer vacations doubled year-on-year to 28.6 million. However, this figure is still far from the pre-crisis Corona level. The ongoing dismantling of international entry restrictions, particularly in the USA and the UK, is expected to provide further tailwind for the industry.
It is also urgently necessary, as TUI's 9M figures published in mid-August show. Sales in the first nine months fell by 80%, yet appropriate measures enabled the Group loss to be kept almost at the previous year's level of around 2.4 billion. Due to a higher number of shares in 2021, the loss per share decreased to EUR -2.66 after EUR -3.98. Net debt amounted to EUR 6.34 billion at the reporting date. Looking at the Q3 figures in isolation, significant progress can be seen. Sales multiplied from around EUR 72 million to EUR 650 million due to base factors. The loss per share decreased significantly to EUR -0.85 after EUR -2.51 in the previous year. The Group recently took advantage of the depressed share price level to acquire 317,171 treasury shares for an employee participation program. The volume-weighted average price of all purchases made, excluding incidental acquisition costs, was around EUR 3.85.
XIAOMI CORPORATION - Apple overtaken!
Xiaomi has this summer displaced Apple as the world's second-largest cell phone manufacturer. Samsung remains the undisputed top dog. The Chinese were able to grab a 16.7% market share in Q2 2021 to take second place globally. The Group also grew strongly and much more dynamically than the competition in mainland China. The market share here increased from 10.3% to 16.8% in Q2.
Xiaomi offers smartphones and a wide range of smart devices connected via an AI-IOT platform, which the Company claims is the world's largest. In addition, Xiaomi was included in the BrandZTM Top 100 Most Valuable Global Brands for the third consecutive year in June 2021, with the Company now ranked 70th. The Group is valued at USD 71 billion and has a moderate valuation with a 2022 P/E ratio of 19. Analysts are overwhelmingly convinced of the stock's potential, and on average, formulate an upside potential of just under 50% over the next 12 months.
Private consumption is picking up again significantly, and the trend should continue on a sustained basis. The three featured stocks benefit from rising consumption in the fields of travel (TUI), technology (Xiaomi) and jewelry/diamonds (Diamcor Mining). TUI should be treated with caution due to high debt and red numbers. Xiaomi is interesting for technology-savvy investors. We find Diamcor very exciting with its low-risk strategy and moderate company valuation.
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