December 5th, 2022 | 10:14 CET
Investment stories that inspire: Freyr Battery, Manuka Resources, BASF
Table of contents:
"[...] 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
Freyr Battery: Attention, capital increase!
At first glance, the Freyr Battery share has everything it takes for success on the market. The Company manufactures batteries for e-cars, continues to expand and has already forged promising partnerships with the major players in the industry - one example being Volkswagen. However, after Freyr Battery's quarterly figures were encouraging a few weeks ago, the stock went into reverse gear at the end of last week. The announcement of a capital increase put the value under pressure. Around 20 million new shares are to be issued at an offer price of USD 11.50. The sell-off began as the share price was well above this level when the measure was announced.
With some luck, Frey Battery will still be able to hold its ground at the price of the new shares. This is supported by the fact that the new funds are intended to support expansion. Starting in 2025, Freyr Battery wants to score with large unit volumes. Another source of fantasy around the Company is that Freyr has a technology that is supposed to favor the recycling of old batteries. An intact and efficient circular economy could be a good argument for further partnerships with industry. The stock offers a medium-term perspective, but the air is out in the short term.
Manuka Resources: Where cash flows and growth come together
In contrast, the Australian company Manuka Resources offers incomparably more potential. The Company offers a good project mix and scores with growth and substance in equal measure. While a gold and a silver mine in Australia are currently ready for production and have so far alternately fed a processing plant that also belongs to Manuka, the Company was able to secure a gigantic vanadium project in New Zealand. The South Taranaki Bight project (STB project) offers a preliminary feasibility study and has been well advanced over the past several years. Among other things, the owners put about USD 50 million into the project. Initial estimates suggest that the project could be responsible for up to 55 million pounds of vanadium annually - which would make the project alone the third largest vanadium producer in the world after Russia and China.
Vanadium is considered a critical metal for energy storage. Growing geopolitical tensions necessitate the establishment of redundant supply chains for critical raw materials. With its Anglo-Saxon legal system and current environmental regulations, New Zealand has everything it takes for a successful raw material project. Since operator Manuka Resources also has projects around gold and silver that generate cash flows, while at the same time, the resource is steadily increasing in the course of ongoing exploration, the Company looks interesting. Anyone wanting to take a closer look at the investment story will have the opportunity to ask the Company representatives from Manuka Resources questions live and online, free of charge, on December 7 at the 5th IIF - International Investment Forum.
BASF: All China or what?
There are hardly any unanswered questions about BASF at the moment - after all, Martin Brudermüller, CEO of BASF, has hardly missed an opportunity for an interview in the press in recent weeks and months. In particular, Brudermüller has taken a stand on China and made it clear that the Middle Kingdom will continue to be BASF's most important growth market. The statements did not exactly boost the share price. Now that the stock has recovered from its summer lows, BASF seems to have run out of steam. The Company remains sensitive to the economy. Now that the already priced-in recession is starting to make itself felt, the stock is far from a top pick.
While investors currently see few arguments for buying BASF, Freyr Battery at least operates in a promising sector and has already convinced the industry with VW. However, due to the announced capital increase, the share price has run out of steam for the time being. In contrast, the Manuka Resources share has just taken a deep breath. Given the smart combination of cash flows and growth opportunities around vanadium from secure sources, the stock currently represents a promising mix. If the story catches on with more and more investors, the share could head north. Momentum could come from the International Investment Forum on December 7, where Manuka Resources will present.
Conflict of interest
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