November 2nd, 2022 | 13:34 CET
GreenTech shares jump! Siemens Energy, Defense Metals, JinkoSolar, and Nordex in focus
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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.
JinkoSolar - The Chinese manufacturer is growing and growing
Solar systems remain the focus of investments in the climate protection sector. Although their manufacture is not exempt from CO2 emissions, they save massive amounts of the greenhouse gas during their 20 to 25-year lifespan. Zones with plenty of hours of sunshine are, therefore, ideally suited for the construction of entire power plants. Spain alone now accounts for 56% of Europe's solar power production, while Germany is in second place with 33%.
Jinko Solar Holdings Co. Ltd. is one of Europe's leading suppliers of panels and wafers. In the third quarter, the Company reported sales of around 10,850 MW of solar modules and cells, a 3% increase on the previous quarter and a whopping 117% YOY. Due to upward price adjustments, sales increased by almost 128% YOY and reached the equivalent of USD 2.74 billion. Adjusted net income was USD 60.1 million, after a loss in the second quarter due to COVID restrictions and power shortages. The continuously rising raw material prices, which cannot be passed on ad hoc to the sales price, are noticeable in the margin.
However, the manufacturer has further optimized its cost structure by expanding its n-type production capacities. At over 26%, they currently deliver the highest efficiency in the solar sector. In the fourth quarter, management expects photovoltaic capacity additions of more than 40 gigawatts in China alone. The Jinko share has consolidated to EUR 42, rising slightly over the past 2 weeks. Analysts put the 2023 P/E ratio at around 8, which means the stock is no longer expensive.
Defense Metals - The path to success is mapped out
All green or high-tech products contain a certain amount of rare earths. As the name suggests, they are rare and mainly found in China, where they can also be mined profitably. However, because of their supply dependence on Beijing, Western industrialized countries are developing strategies for bringing other suppliers to the market. One now well-known project is the rare-earth deposit called Wicheeda near Prince George in 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 in electric vehicles.
The Defense Metals' proprietary Wicheeda property consists of 9 mineral claims covering an area of 4,244 hectares. From the northern region, there are now additional REE assay results from a core hole totaling 383 meters. The infill hole WI22-70 intersected a broad zone of mineralized dolomite carbonatite averaging 2.5% rare earth oxide (TREO) over 113 metres. The Company has now completed resource delineation of the Wicheeda REE deposit and the diamond geotechnical drilling campaign in the pit for the 2022 exploration season. A total of 5,500 meters of diamond drilling was completed in 18 holes this year.
Drilling in 2022 included the completion of 5 geotechnical and hydrogeological holes on the pit slope totaling 1,150 meters, designed in part to support a preliminary feasibility study (PFS) now scheduled to begin in the fourth quarter of 2022. With this progress, Defense Metals (DEFN) shares moved back out of the CAD 0.17 to CAD 0.22 zone, rising to CAD 0.24 at the start of the month. With a positive feasibility study in 2023, the stock should be able to climb back to old highs quickly.
Siemens Energy and Nordex - The problems have not yet been eliminated
The first signs of life are also coming from the badly criticized GreenTech stocks Siemens Energy and Nordex. Both shares suffered losses of 40 - 60% in the last 12 months. However, due to their different focus and location, both have to deal with very different requirements and problems.
After separating from the Russian turbine business, Siemens Energy will have to deal with the complete integration of the Spanish subsidiary Siemens Gamesa. In May, the Company announced its intention to completely take over its wind power subsidiary for around EUR 4 billion and delist it from the stock market. The timetable until the end of the year will be tight, but the costs for the integration should already have been provided for in the expected annual figures on November 16. In recent quarters, Gamesa figures have also hurt earnings at Siemens Energy. With the takeover, the Munich-based company now wants to get the problems under control more quickly. With a loss of more than 50% in 12 months, the stock is still one of the DAX laggards, but it has recently recovered 20% from its low of EUR 10.35.
Nordex had now procured fresh capital from the scolded shareholders several times. With three profit warnings in a row, the Company now believes it will only become profitable again in 2024. The linchpin for the Hamburg-based company's profitability remains the high cost of upstream products, a lack of personnel and constant disruptions in the supply chains. However, these issues will only ease in the long term and are still a heavy burden. The third quarter is now due for reporting on November 15, with experts estimating a loss of EUR 0.60 per share. The lows from 2022 are EUR 6.97 - with current prices above EUR 9, investors are probably more optimistic again because the year 2022 now seems to be ticked off. The order situation is at least better than ever before in the Company's 27-year history.
The availability of strategic metals could become the linchpin of essential products in the future. If you want to drive GreenTech, you need an abundance of different metals that are not so easy to find everywhere on the globe. China is leading the charge here, and Western industrial nations are looking for alternatives. Defense Metals could come under heavy scrutiny in 2023 from strategic investors seeking greater liberalization of supply.
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