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December 8th, 2022 | 09:22 CET

Gas is becoming scarce and raw materials increasingly expensive: Uniper, BYD, Defense Metals, and Nordex in focus

  • Mining
  • RareEarths
  • Electromobility
  • GreenTech
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Five years ago, Tesla CEO Elon Musk announced the transportation revolution. Last week, it finally happened: Pepsi was the first company to receive the keys to the new Tesla e-truck called the "Tesla Semi." It is said to have a full 500 miles, or 800 km, range and can be charged in less than an hour with the appropriate high-voltage current. Because fossil fuel energy supplies are becoming more and more expensive, electric innovations are now entering all areas of business. But electricity from the socket also needs its sources. For this, in turn, all countries worldwide are making efforts to get GreenTech off the ground, i.e. the climate-neutral generation of electricity. Only then can e-mobility be said to benefit the environment. What is urgently needed for this are inexpensive energy and metal raw materials.

time to read: 5 minutes | Author: André Will-Laudien
ISIN: UNIPER SE NA O.N. | DE000UNSE018 , BYD CO. LTD H YC 1 | CNE100000296 , DEFENSE METALS CORP. | CA2446331035 , NORDEX SE O.N. | DE000A0D6554

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    Terry Lynch, CEO, Power Nickel
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    Uniper - The state bailout will be more expensive than expected

    Another EUR 25 billion will be needed by Uniper to guarantee gas supplies to the municipal utilities. That was the shock news in November, and now the Company has called an extraordinary general meeting for December 19 to get the stabilization package with the German government approved by shareholders. It is safe to assume that the scolded shareholders will wave everything through to ensure the Company's continued existence.

    At its peak, Uniper was making losses of EUR 200 million a day on gas procurement, as group CEO Klaus-Dieter Maubach reported last week. In order to avert insolvency, the group has meanwhile reached an agreement with the German government and its previous majority owner Fortum on a stabilization package that provides for complete nationalization. In addition to a cash capital increase of EUR 8 billion, plans include the acquisition of Uniper shares from the Finnish majority shareholder by the federal government. The Group can raise a further EUR 25 billion through future capital increases. Fortum is currently still the largest shareholder, with just under 78%. Ultimately, the Finns should be pleased to be able to save their head.

    However, the EU Commission has yet to approve the necessary state aid, which is not certain in the current environment because other EU countries are also suffering from the energy crisis and want public help. The employees' side even fears a break-up of the group in the medium term. The Uniper share recently tripled in value and has now lost a quick 50% to EUR 3.50 again. Analysts are holding back because the last fair has certainly not been read in this case. The potential rescue is currently fully priced in; if this does not come, a total loss threatens! Highly speculative bailout bet!

    Defense Metals - A puzzle piece in the supply of rare earths

    Anyone who takes the challenges of climate change seriously needs the technological availability of high-tech metals because, in all GreenTech products, there are industrial metals and a certain amount of rare earths. As the name suggests, these are rare and mainly found in China, where they can also be mined profitably. Around the globe, governments are looking for safe countries of origin. The Russia-Ukraine conflict shows that even good economic ties can quickly turn into a new situation when political changes occur. And we can currently identify geopolitical problem zones en masse; in fact, the question is now increasingly being asked as to which jurisdictions are still reliable and stable at all. From today's perspective, North America is a good location for reliable relations.

    One now well-known rare earth project is the deposit called Wicheeda near Prince George, British Columbia, managed by Defense Metals Corp. The Canadian company's focus here is on materials that typically have applications in the electricity market, the military and national security. However, these rare metals are essential in the production of green energy technologies because they enable high-strength alloys. Examples of applications include magnets for generators, wind turbines and permanent magnet motors for electric vehicles.

    Having completed over 5,500 meters of drilling in 18 holes as part of its resource delineation and geotechnical program, Defense has now released assay results for a total of 2,867 meters in eight holes. CEO Craig Taylor comments, "Infill drilling at the Wicheeda 2022 deposit continues to deliver high-grade rare earth intercepts at surface containing greater than 3% TREO. The drill results are doubly significant in that they represent the deepest testing to date of the Wicheeda deposit, which returned a broad mixed lithological intercept averaging nearly two times the cut-off grade of the Mineral Resource and terminating 50 meters below the current pit shell. We continue to find potentially economic REE grades at these depths, which is extremely encouraging." Defense Metals (DEFN) recently raised CAD 6 million for continued work in 2023. The current market capitalization of around CAD 40 million can dynamize quickly in the current political environment. Therefore, position yourself in the favorable environment of Canadian tax optimization ("Tax Loss-Selling").

    BYD and Nordex - This feels like a turnaround

    Two very interesting technology stocks have completed their technical turnaround in recent weeks, BYD and Nordex.

    BYD, the Chinese technology powerhouse, has been pushed down heavily by selling from Warren Buffett's investment firm Berkshire. Meanwhile, BYD, the vehicle and battery expert, announced rising sales of e-mobiles around the globe. The share price reached levels of EUR 22 as a result of the massive losses; currently, the popular investor stock has been able to climb back up to the EUR 24.50 mark. Of 27 analysts, 24 recommend an entry with an average target price of EUR 38.7. From today's perspective, the investor is acquiring a liquid technology stock with a roughly 70% focus on e-mobility. With growth of just under 25% per year, a 2024 P/E ratio of 17.5 is also not too expensive. The general China risk remains, of course.

    Things are looking better and better for Nordex. Admittedly, the earnings side is still burdened by high input costs, as both metal prices and energy costs impact margins. In addition, the high collective wage agreements of IG Metall are burdening the wage costs at the Hamburg-based company, which, however, continues to rely on Germany as a location. The order books are currently full, and the Company could deliver three times as much if it had access to resources throughout. At the end of November, Nordex received a further 85 MW of orders from Belgium and Poland. The share price quickly overcame the EUR 7.30 level from the October correction and is now trading above EUR 12 again. A remarkable increase of almost 70% in such a short time. For a new entry, a somewhat lower limit is targetable. Remain patient. The uncertainties about the profit trend are still huge.

    The availability of strategic metals could become the linchpin of important products in the future. If GreenTech is to move forward, it will need an abundance of different metals that are not easily found everywhere on the globe. China is leading the charge here, and Western industrial nations are looking for alternatives. BYD and Nordex are interesting producers that could use Defense Metals as a source. So 2023 could be heavily focused on by strategic investors seeking greater liberalization of supply.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    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.

    About the author

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