November 14th, 2022 | 10:25 CET
Gamechanger stocks - Here, everything is different overnight! Heidelberger Druck, Manuka Resources, BYD
Table of contents:
"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
Heidelberger Druck: Innovation pays off
Interested investors know that the German economy's mood is hardly at boiling point. However, fewer are aware that there are still companies whose business is booming. One of these companies is Heidelberger Druck. The mechanical engineering company from the beautiful town on the Neckar River was still considered a loser years ago. After all, who still prints today, skeptical investors asked. But the resourceful engineers at Heidelberger Druck have launched a new business segment and are building wallboxes, i.e. charging stations for electric cars. It is going so well that the share has become a high flyer. Even in the current crisis, things are going well for the Company.
In the second financial quarter, Heidelberger Druck again increased sales and earnings. Best of all, the Company was even able to raise prices, thus cushioning the impact of rising prices for basic materials. These key data show that the Company scores with high product quality. It is particularly pleasing that the classic printing business is doing well again. In particular, printing presses for packaging materials continue to be in demand. The wallbox business remained somewhat weaker, but this is due to the expiry of government subsidies and the long delivery times for new e-cars. The Heidelberger Druck share lost 35% last year but may have floated free in the wake of the recent rise. If the expected pullback stops at the trend line of the downward trend that has been in place for a year, the value could sustainably move upwards. Another positive factor is that the last quarter of the year is traditionally a high-margin period for Heidelberg.
Manuka Resources: Cash flows from precious metals with upside and...
One company that has undergone a significant transformation similar to Heidelberger Druck is Manuka Resources. Until the summer, Manuka was a commodity producer from Australia with two precious metals projects producing gold and silver on an alternating basis, with a view to progressively developing the projects and exploring them in more detail. Manuka has its own processing plant for this purpose and can envision building another plant to ultimately mine both projects at full load. "We are uniquely positioned to have two great projects in an exceptional mining province, both fully permitted for mining and production. We can mine gold or silver, process both at our plant and generate cash flows," Executive Chairman Dennis Karp commented in an interview in the summer, pointing out that the decision to build another processing facility could be made in the second half of 2023.
...the real gamechanger: Vanadium project could account for 15% of global production
So Manuka Resources is currently generating cash while also holding further exploration potential at two precious metals projects. On the Mt. Boppy gold project, Karp comments, "Internally, we expect the resource to grow significantly the deeper we mine." Since the project was acquired in 2020, the resource has grown despite production. But the real game-changer around Manuka Resources lies in the South Taranaki Bight project (STB project) in New Zealand, which the Company acquired this summer thanks to long-standing business relationships. STB is a VTM (vanadium-titanium-magnetite) iron sands project and has the potential of a 3.8 billion t resource. The previous owners have already invested about USD 50 million in the project, including a preliminary feasibility study. Estimates suggest a potential annual vanadium production of 55 million pounds. That alone could make the STB project the third-largest vanadium producer after China and Russia.
Vanadium is considered an element of the energy transition - the US, EU and Australian governments have already classified it as a critical mineral. "We believe the size of the project, its minimal environmental footprint and impact, and the vanadium it contains make it a truly unique opportunity for the Company with tremendous potential," Karp said.
BYD: The innovation leader with a big problem
One company that could emerge as a buyer on the vanadium market in the long term, and at the same time has already made a name for itself as a game-changer in the past, is BYD. Just over ten years ago, BYD was still considered a manufacturer of batteries and electric scooters. Manufacturers, such as Mercedes-Benz at the time, entered into cooperations, but engineers laughed at the bold Chinese behind closed doors. Today, things look different: BYD produces stylish, high-quality electric cars and is a leader in battery technology. Today, anyone who orders a power storage system to go with their PV system will be quality-conscious enough to choose BYD. It cannot be ruled out that the Company will also intensify its commitment to vanadium redox flow batteries. This technology is considered a promising large-scale storage system for storing renewable energy.
Since BYD is a Chinese company, it has advantages when it comes to sourcing raw materials. For investors, however, the stock is not a safe bet despite the actual good prospects and the technology leadership. The reason: Geopolitical tensions suggest that the economy is taking a step away from globalization and that the world economy is being divided into East and West. What is not a good argument for the BYD share and could also weigh on companies such as Heidelberger Druck in the long term is a blessing for Manuka Resources. Manuka Resources offers potential on 15% of the world's vanadium supply. The profitable precious metal business, including upside, is available for a stock market value of around EUR 30 million.
Conflict of interest
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