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Royal Helium: Share ripe for a rebound

Helium is often overlooked in the commodities universe - wrongly so. After all, the noble gas is needed in numerous growth sectors - from the defense industry to semiconductors and medical technology. One of the few listed pure plays in the industry is Royal Helium. It is developing helium deposits in Canada and is currently transitioning from explorer to producer. To finance this, the Company has just successfully placed a capital increase at a price of CAD 0.09 and issued a warrant at CAD 0.12. This provides enough capital for the next stage of growth, and investors can currently enter the Company via the stock exchange at CAD 0.075, which is cheaper than at the time of the capital increase.

Following the capital increase, there was also positive operational news. For example, the helium purification plant in Steveville in the Canadian province of Alberta is successfully ramping up capacity. Royal Helium recently reported an increase in the throughput rate and a more consistent operating time. In the meantime, the plant has already reached 50% of its nominal capacity. The helium concentrations have even exceeded the Company's own expectations.

Royal CEO Andrew Davidson: "We are pleased with the progress being made in Steveville by the teams of engineers, electrical and instrumentation technicians, and programmers on site. As the number of adjustments decreases the closer we get to the operating rate, we look forward to achieving the full economic potential of the plant."

With increasing revenues as the year progresses, there is a good chance that the share price will at least return to the level of mid-April. This would correspond to a doubling of the share price to around CAD 0.15.

BYD: Citigroup optimistic

Considering that BYD has just reported strong revenue figures and is well on the way to expanding its leading position in the field of electromobility, one has to rub one's eyes at the share price performance. At around EUR 27, the share is trading at the same level as early 2021. Although it temporarily rose to around EUR 40, the share has not seen that level in the past two years.

The Chinese company is doing well operationally, especially when one considers the problems that manufacturers such as Tesla are having in the currently cooling market environment for electric vehicles. In May 2024, BYD sold around 332,000 vehicles, almost twice as many as in the same month last year. The development is also positive, given the 313,000 vehicles (NEVs) sold in April 2024. From Citigroup's perspective, the Chinese are benefiting from a strong model cycle, which is leading to rising sales. The analysts expect BYD to increase sales by 55% in the second quarter of 2024. Profits should also improve noticeably in conjunction with economies of scale and cost discipline.

BYD is also making progress with autonomous driving. The Chinese Ministry of Industry and Information Technology announced that BYD and eight other manufacturers will be allowed to test automated vehicles on certain Chinese roads.

Varta: New boss, old problems

And what is new at Varta? Due to the cyber attack, it has still not been possible to publish financial statements for 2023. In April, Varta announced that the restructuring program it has been pursuing since July 2023 needs to be adjusted. What exactly this will look like can only be said after the updated IDW S6 report has been completed. This should take place by the middle of the 2024 financial year. In light of the existing restructuring agreement from 2023, the Management Board is in close contact with the financiers and is confident that a solution will be found that will enable the Company to restructure sustainably.

Despite the problems, a new CEO has been found in Michael Ostermann, who has many years of experience in the automotive and battery sectors. Michael Ostermann said: "I am very much looking forward to the tasks at Varta AG. I chose this position because I believe in the Company's opportunities. I see the challenges. But above all, I see the potential. Together with the entire Management Board and the Varta team, we will tackle the challenges and unlock the potential."

Buying Varta shares is probably only for gamblers at the moment. It is entirely uncertain whether the reorganization will succeed and what consequences it will hold for shareholders. In contrast, the Royal Helium share appears to be ripe for a rebound. The capital increase has been completed, and the news flow is positive. The news flow is also positive for BYD. However, the share is suffering from the weak sector sentiment and the China risk.