September 26th, 2022 | 11:36 CEST
Favorable entries at Kion, Defense Metals, Nordex: The GreenTech rally is coming back soon!
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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.
Kion - Slight recovery after severe profit warning
High inflation, increased material costs, energy and wages, and supply bottlenecks are putting the world's largest forklift manufacturer under severe pressure. The Company is the world's second-largest supplier of logistics and warehouse equipment after Toyota Material Handling and the clear market leader in Europe. However, directly passing on the high costs does not currently fit in with the long-term supply agreements with the most important customers.
For years, the Frankfurt-based company, with its industrial solutions, was considered a tech pearl with a global reputation of being "Made in Germany", and even in the pandemic, it was more of a winner in the global digitalization trend. After all, the rapid growth of online trade had many companies pouring copious amounts of money into expanding and automating their warehouses and delivery processes.
However, the current figures speak a different language, with profits collapsing. In the third quarter, adjusted EBIT is expected to be minus EUR 100 to 140 million. A year earlier, the Group had generated just under EUR 229 million, but Kion still sees revenue remaining at the previous year's level of around EUR 2.6 billion. Kion had already withdrawn its originally higher forecast at the beginning of April due to economic uncertainty.
Analysts must now incorporate the new growth parameters. The experts at ODDO BHF Bank expect EBIT to be 60% lower than the current analyst consensus. DZ Bank lowered its price target from EUR 55 to EUR 31. However, it maintains a buy recommendation, as the trend towards warehouse automation still offers long-term growth. We agree: Take advantage of the sell-off around EUR 20 for a medium-term top-up. The Frankfurt-based company will already publish the generated Q3 figures on October 27.
Defense Metals - Seek, and you shall find
The designation "rare earths" for a particular chemical group in the periodic table is examined from different angles in the literature. A distinction is made between light and heavy rare earths. On average, the four light rare earths cerium, lanthanum, neodymium and praseodymium account for more than 95% of the rare earth occurrence. Consequently, the share for the 13 heavy rare earths is 5%. Rare earths never occur alone but always in association with each other. The governments of North America and Europe have classified the essential metals as "strategic" and want to manage new resources carefully beyond China's 80% share. The Canadian state of British Columbia is home to the exploration company Defense Metals, which has been focused for several years on advancing the Wicheeda Rare Earth Project (REE), which covers approximately 4,244 hectares.
The property is an advanced REE project targeting the production of a saleable, high-grade flotation concentrate. The geotechnical field drilling program, which commenced in May, is now 96% complete at 4,800 meters. Existing data on the first 15 holes (18 in total) provide overall REE grades of 1.78% over 192 meters, including 3.13% over 73 meters. These data are now being incorporated into the pre-feasibility study, which is expected to be completed by 2023. Rare earths are important materials for the green energy sector and the global high-tech and defense industries. The relevance in the current environment could not be higher.
Defense Metals (DEFN) shares have recently awakened from slumber and gained up to 50% in September. Admittedly, the fluctuations are still enormous, but the trend is right. With 183.4 million shares, the current market valuation is just under CAD 47 million. Our last entry recommendation worked very well at CAD 0.19, and the sentiment is increasingly improving. For those who want to learn more, watch the live feed at the International Investment Forum (IIF) on Sept. 27.
Nordex and JinkoSolar - High-tech metals urgently needed
Good customers for the REE concentrates are GreenTech companies Nordex and JinkoSolar. They need the additives for special functions in the production of wind and solar energy plants. Due to its different geographic positioning, Jinko is currently better positioned than the Hamburg-based Nordex Group because a storm of shortages is raging through European production halls. In addition to cheap energy, there is simply a lack of skilled personnel that can hardly be found, deliveries are severely delayed, and the calculation at the time of signing the contract is overwhelmed by the high costs. As a result, Nordex does not expect any net profit in the current year; at least the consolidated balance sheet seems to be stabilizing after the third capital increase.
Technically, the Chinese solar expert has now lost 25% from the top, but the stock is still up 47% on a 12-month view. The last quarterly figures were good, but investors still tend to take profits in the weak environment of growth stocks. However, the chart should find stability again in the EUR 45 to 50 zone at the latest. At Nordex, the brief recovery since July came to an abrupt halt again and resulted in a sell-off. The value fell from just under EUR 11 to below EUR 9. Hopefully, the summer low at EUR 7.09 remains far out of sight. The current annual performance of minus 41% is no longer a rarity in the environment of tech stocks. Traders are already looking at the share again, and long-term investors are making a determined effort to buy at a price between EUR 7.50 and 8.20.
For high-tech companies, access to strategic or rare metals is a foundation for their sensitive business. However, with supply chains disrupted, this is not guaranteed, so states should intervene in a regulatory manner. Of the stocks mentioned, Defense Metals has already turned; whether this will work for Kion, Jinko and Nordex soon remains to be seen. Exciting!
Conflict of interest
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