September 22nd, 2022 | 13:28 CEST
Here are the rising prices: Nordex, Defense Metals, JinkoSolar
Table of contents:
Wind power paradox: Why Nordex is in the doldrums
Anyone producing electricity today is perfectly positioned. While the business models were already profitable before the Russian war, the returns are going through the roof today, given rising prices. As a shovel manufacturer in a gold rush, Nordex should be benefiting. However, the thin margins hurt the value despite its full order books. In the meantime, despite its origins, Nordex was considered a company that no longer had much to do with Germany at all. The reasons: The rotor production in Rostock was wound up, and orders from Germany also virtually stopped coming in. Instead, things went better in South America. However, a small order from a regular customer for 31.5 MW now gives hope. On top of this, Nordex is also to provide service for at least 15 years.
The order gives hope that the expansion of wind power will also pick up again in Germany. However, for Nordex to benefit, the Company must get a grip on its margins. Nordex will only be able to put its horsepower on the road, and the share price will only benefit if something of the many orders comes to fruition. Since the stock is in a downtrend, investors need not rush into anything. However, bargain hunters can already keep an eye on past lows.
Defense Metals: Critical metals for the day after tomorrow
One aspect of the weak margin at Nordex is increased costs for basic and raw materials and logistics in the construction of wind turbines. In the area of raw materials, critical metals, which are increasingly coming from China today, are becoming more and more important. Although the Middle Kingdom is currently showing itself to be cooperative and is walking a tightrope between Western partners and Russia, this concession could also be due to the still strong international integration of the respective economic areas. In the long term, self-sufficiency and short supply chains are gaining in importance - whether for reasons of security of supply or cost and environmental protection. The Canadian company Defense Metals is advancing one of the most promising properties, the Wicheeda rare earths project. Rare earths are needed around modern electronics, but also in the renewable energy sector.
In August, the Company completed exploration drilling at Wicheeda and is awaiting laboratory results. Further work is currently underway to provide information on the economic prospects. A preliminary economic feasibility analysis has already been completed on Wicheeda, including a property valuation of CAD 517 million. With new results, this value could even increase in the future. The property covers a total of 4,244 hectares, is developed by roads and is located close to electricity, highways and railroad lines. The Defense Metals share price has already risen recently. Critical commodities from safe economies and with an ESG profile will likely be in demand over the long term.
Defense Metals, by the way, was invited to the International Investment Forum (IIF) at the end of September.
JinkoSolar: Watch out for this China firecracker
Photovoltaic systems are also in demand in the long term. Anyone ordering such a system today must hope it will be installed before the end of next year. Profiteers are companies like JinkoSolar. The Company scores in terms of quality and price. But an investment is not a foregone conclusion. Here, too, basic and raw materials play an important role. Since PV manufacturers compete with each other, rising prices can quickly erode margins and cause the stock market to plummet because of ambitious valuations. In addition, in the case of JinkoSolar, there are geopolitical tensions and efforts by Western countries to diversify and establish their industries in critical areas. The JinkoSolar share is currently at an exciting mark: If the value remains above the EUR 55 area, a recovery movement could begin. Below that, however, there is a threat of losses from a chart perspective.
Times are challenging. Even companies that manufacture urgently needed products are currently on shaky ground. The reason is the uncertain situation around the world economy and how it will be organized in the future. Companies like Defense Metals, which are not yet producing but have metals in demand in the ground, do not yet have to deal with short-term problems in the market. In the long term, however, they could play a major role. Those betting on a market comeback today should not forget such profiteers of the day the day after tomorrow.
Conflict of interest
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