November 13th, 2023 | 07:15 CET
Hydrogen failed! Opportunities for JinkoSolar, Saturn Oil + Gas and Nordex
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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
JinkoSolar - Very strong 3rd quarter
The solar industry was doing well until SolarEdge, an inverter specialist, published a profit warning on October 19. When the official figures for the third quarter were published on November 1, it was not only SolarEdge shares that fell but also many other solar stocks that were taken into custody. One exception is JinkoSolar, which presented very good quarterly figures on October 30 and expects to exceed its own forecast for 2023. The reason for this is the price erosion in the supply chain. CEO Xiande Li said: "We believe that as an industry leader, we will become even stronger as competition intensifies."
The balance sheet for the last quarter shows significant growth in key operational and financial indicators. The Company's quarterly shipments reached 22,597 megawatts, up 21.4% from the previous quarter and an impressive 108.2% from a year ago. Total revenues for the quarter amounted to USD 4.36 billion, which is also higher than the previous quarter and the previous year. JinkoSolar's efficiency is reflected in its gross profit, which reached USD 840.6 million. This almost doubled the previous year's result. The gross margin increased to 19.3% and exceeded analyst expectations.
Earnings per American Depositary Share (ADS) amounted to USD 3.52 (basic) and USD 2.53 (diluted). The share of high-quality N-type modules now accounts for around 60% of all module deliveries worldwide. The Company will be able to extend its competitive advantage even further in the future, as it claims to have achieved a technological breakthrough for its solar cell. A new record for maximum solar conversion efficiency of 26.89% has been achieved. The outlook for JinkoSolar remains very good. Since October 30, the share price has peaked at over 44% and is currently trading at USD 36.12.
Saturn Oil & Gas - Another record quarter
Even though the world would like to say goodbye to fossil fuels, the lack of alternatives means this is not happening as quickly as we would like. In addition to fuel and heating oil, several industries depend on this raw material. These include the plastics, pharmaceutical and cosmetics industries. Now that hydrogen has suffered a setback, this is good news for oil producers such as Saturn Oil & Gas. The Company grew significantly again last year with the Ridgeback takeover. In the third quarter, it produced an average of 26,250 barrels of oil equivalent, compared to just 10,965 barrels in the previous year.
In addition to the record average production, a new sales record of CAD 201.1 million was also achieved. EBITDA amounted to CAD 100.3 million and almost doubled compared to the previous year. Adjusted cash flow also set a new record at CAD 76.5 million. Of this, CAD 35.3 million was invested in the development of 18 wells, all of which have a 100% success rate. The acquisition of Ridgeback enabled processing expenses and transportation costs to be reduced. Net debt was also reduced by around CAD 37 million in the last quarter, resulting in a ratio of net debt to annualized quarterly adjusted cash flow of 1.5.
In the current 4th quarter, the Company intends to drive development forward more actively than ever before and is carrying out 3 drilling programs simultaneously. This should enable the target of 27,000 barrels of oil equivalent per day to be achieved in December, especially as the drilling performance so far this year has been between 15% and 52% better than expected. Comparing the Company with its peer group based on enterprise value to debt-adjusted cash flow, the average in Canada is 3.4. Saturn is trading at less than 2. The share, which is currently trading at CAD 2.40, therefore has catch-up potential. Those who want to know more should take a look at the report on researchanalyst.com. On December 5, investors can also get first-hand information at the 9th International Investment Forum.
Nordex - Ahead of the quarterly figures
The conditions for the expansion of wind power are very good. The EU plans to achieve a total capacity of 500 gigawatts by 2030. As this target was in jeopardy, the EU Commission presented the Wind Power Action Plan on October 24. In future, the cheapest bid will no longer automatically be awarded the contract, but factors such as sustainability and cyber security will also play a role. This should play into Nordex's hands. However, the difficulties at Siemens Energy are also causing Nordex to be viewed critically, as rising interest rates and bureaucracy are also affecting Nordex.
The Company plans to present its figures for the third quarter on November 14. It will then become clear whether Nordex is experiencing similar difficulties to Siemens Energy. The Group has published some figures in advance. In the last quarter, the Company received orders for 365 wind turbines with a total rated output of 2.2 gigawatts, compared to just 1.4 gigawatts in the previous year. However, the average sales price fell to EUR 0.79 million/MW. Incoming orders rose 10.6% to 4.9 gigawatts in the first nine months. The average selling price was EUR 0.85 million/MW.
Nordex CEO José Luis Blanco explained that the order momentum has increased noticeably and that the products have proven very competitive in Europe and Latin America. Interested investors should wait for the official quarterly figures before making a decision. In contrast to solar energy, the bureaucratic hurdles for wind power are significantly higher. In October, Goldman Sachs issued a Hold recommendation, while Deutsche Bank and Jeffries rated the share as a Buy with a target price of EUR 17. The current share price is EUR 10.80.
After hydrogen technology suffered a setback, the opportunities for renewable energies and conventional fossil fuels have risen again. The demand for energy is there and wants to be satisfied. JinkoSolar is successfully bucking the downward trend and has presented strong quarterly figures and a positive outlook. Saturn Oil & Gas presented record figures. The high oil price in October should also have a positive impact on the coming quarter. If the large drilling program with 3 drilling rigs bears fruit, production should continue to rise. Nordex is about to report quarterly figures. Politicians have set the course for the expansion of wind power and strengthened European suppliers in the process. Good for Nordex.
Conflict of interest
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