June 1st, 2021 | 08:30 CEST
HeidelbergCement, Silkroad Nickel, BYD: Shares with an explosive mix
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"[...] The collaboration with CVMR offers two primary advantages for Power Nickel: We can cover a larger portion of the value chain in the future, and despite the extensive cooperation with all its positive outcomes, we have remained significantly independent. [...]" Terry Lynch, CEO, Power Nickel
HeidelbergCement: Boredom on the decline
The HeidelbergCement share was boring for a long time. Then came the pandemic and the stock was considered unsafe. But the reality soon looked different. The crisis dampener on the real estate market only made itself known for a few months, then normality quickly returned. And normality in recent years means rising prices. HeidelbergCement is the world's third-largest building materials manufacturer and has set ambitious goals: It wants to achieve an EBITDA margin of 22% by 2025. To achieve this, the Company is investing in digitization, among other things, and is making cuts in regions that are not profitable.
This kind of drastic change is traditionally well received on the stock market. However, companies usually take such steps out of necessity. HeidelbergCement is by no means in need. Thanks to infrastructure programs in the USA and other regions such as India and Australia, the Company has a positive outlook for the future. The share price has risen by almost 63% over the past year, and in recent months it climbed by around 15%. For a manufacturer of building materials, this is a very dynamic development. The Company is healthy and has a future, but the potential of the share seems limited.
Silkroad Nickel: Sounds like a good deal
Indonesian nickel producer Silkroad Nickel should have more potential. Indonesia is considered an important producer of industrial metals and has also invested heavily in the processing of raw materials in recent years. Silkroad Nickel has long-term supply agreements with Chinese companies and supplies them with products for stainless steel, among other things. Electric mobility is also a driver for Silkroad. The Company wants to expand even more into downstream industries of raw material production and refine its products further. In this way, Silkroad Nickel intends to open up new business areas.
The Company already has good contacts with major Chinese companies. The world's largest stainless steel producer, Tsingshan, is one of Silkroad's customers. From 2022, Silkroad Nickel plans to put a new rotary kiln into production to produce 350,000t of ferronickel per year. Such a plant is considered very profitable in Indonesia, where mining costs for nickel ore are particularly favorable. Despite investments of around USD 400 million, the rotary kiln is expected to generate USD 672 million in revenue in its first year, which could mean a bottom-line net profit of around USD 200 million. Silkroad's market capitalization is currently only around EUR 66 million. The stock has attracted little attention so far. However, it should benefit from the strengthening global economy and infrastructure investments in the short term and demand around electric mobility in the medium term. Read about the Company's plans in an interview with Jerre Foo, corporate development executive at Silkroad Nickel, here.
BYD: Where do we go from here?
Demand for metals such as nickel and co. that are used in batteries for electric cars, among other things, is also driving companies such as BYD. Shares from this sector have recently fallen out of focus a little. The reason for this is that they have already performed very well and the market has given them advance praise. Since established carmakers are now also focusing strongly on electromobility, the electric pioneers are losing a bit of their unique selling proposition. In addition, brands such as Volkswagen have a better reputation even in China than many local carmakers. However, BYD's stock, in particular, has recovered recently: the value rose by around 7% in just five trading days. Where do things go from here?
There is still a lot of room to reach the record prices at EUR 28. First, the share has to break through the EUR 20 mark in German trading. All it needs is a favorable market environment. BYD is very well positioned with its battery production and the semiconductor division and should also play a significant role in the automotive industry in the long term - whether as a manufacturer or supplier. However, the stock is no longer an insider tip.
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