March 21st, 2023 | 08:39 CET
Goodbye banks - the Greentech rally is on: Shares of BYD, Canadian North, Mercedes Group and BMW are in focus!
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
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.
BYD - The next flagships roll onto the market
99-year-old US investor and friend of Warren Buffett Charly Munger keeps falling in love with the BYD share: "The Chinese electric carmaker is a remarkable company that is way ahead of US carmaker Tesla, at least in China," he said on the sidelines of an investor conference in early 2023. The original USD 500 million investment by Berkshire Hathaway in 2008 peaked at USD 8 billion, as the value of the BYD share has risen more than 600% in the last decade alone.
Currently, BYD can again come up with new products. At the end of March, they will launch the champion version of the flagship Han and Tang models with retail prices starting at 210,000 yuan or just under USD 30,440. This is a new blow for Tesla Inc., which had to lower prices twice in China to maintain its market share. Nevertheless, BYD no longer has it so easy in China, the competition in its own country is catching up, and VW can also gain new market shares.
For these reasons, investment bank Morgan Stanley recently lowered its price target for BYD shares while raising the ratings of its two counterparts and start-ups, Li Auto and XPeng. The experts cited Tesla's renewed price cuts on the Chinese mainland market as the reason, as vehicle sales are currently faltering while margins are being lowered. This could have a significant negative impact on earnings, analysts said. However, the cross-section at Refinitiv Eikon still sees the 12-month price target at around CNY 362, or the equivalent of EUR 49. Thus, the BYD share still has about 100% potential at the current level.
Canadian North Resources - New discoveries in battery metals
Commodity companies can contribute to environmental and climate protection through environmentally friendly extraction processes. Despite all the public criticism of mining, metals are needed in the Greentech industry to get the energy turnaround up and running. The battery metals copper, lithium and cobalt are important prerequisites for implementing climate targets because they are the main components of current energy storage technologies.
Exploration company Canadian North Resources Inc (CNRI) has identified extensive granitic pegmatites in the 253.8 sq km Ferguson Lake area that may contain lithium-bearing minerals. The potential for lithium minerals has never been explored in this area, but that will change in 2023. "We are exploring the granitic pegmatites in the large Ferguson Lake Project area for their potential to host lithium minerals," recently announced President and CEO Dr Kaihui Yang. The area is located in the southern part of Nunavut within the Northern Canadian Shield, which has world-class potential for critical minerals such as nickel, copper, PGM, diamonds, lithium, uranium and rare earths.
Canadian North Resources Inc. is well positioned to meet the needs of the Greentech industry as it focuses on critical metals for clean energy generation equipment, electric vehicle construction and advanced energy storage. An N43-101 standard resource assessment has already been completed, and the model suggests significant potential for future expansion. CNRI shares have shown strength so far, gaining a good 40% since the beginning of the year. In the current geopolitical environment, the odds favour a further rise.
Mercedes Group and BMW - Another trump card up their sleeves
The ban on internal combustion vehicles in the EU is still on shaky ground. How electric we will drive in the future can hardly be predicted at present. For the German premium manufacturers BMW and Mercedes, however, one thing is already clear: the electric car is not the only right way, as documented by current sustainability analyses. Nevertheless, practically all the major automakers have declared their support for the electric car, albeit with varying degrees of clarity.
BMW and Mercedes are no exception, even if the Bavarians are keeping the biggest back door open and are far from rejecting the internal combustion engine. Business with the new X series has recently been far too successful for that, and the same applies to the Mercedes ML and G models. The popular SUV series is selling around the globe with very good margins. So why go along with the politically driven departure so easily? After all, the 10 to 15-year model cycles will outlive many a political constellation in Berlin.
From 2027, a completely new platform will be available for the models that can accommodate all drive concepts. In the case of BMW, this means gasoline, diesel and battery, and even the fuel cell will play a greater role for the Bavarians in the future. Mercedes has officially renounced the internal combustion engine in response to public pressure and wants to have almost completed the changeover by the end of the 2020s. However, when the electric target was formulated in Stuttgart, the Company took precise precautions: The plan to go exclusively electric applies only where market conditions permit. In plain language, the market will decide in the future, not politics. **In China and the US, currently the most important markets for German automakers, the internal combustion engine does not yet have a dictated expiration date.
The Greentech trend remains strong as many governments worldwide continue to expand their investments in environmentally friendly technologies. This is giving technology leaders a good order book and increasing the need for critical raw materials. Mercedes Group, BMW and BYD are convincing as broad-based automotive stocks, and Canadian North Resources could score as one of the future suppliers in the medium term.
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