February 15th, 2023 | 11:40 CET
Is Tesla hunter BYD almost 100% in? Has the Nel share run hot? When will Manuka Resources jump on?
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"[...] Our SMSZ project is the largest contiguous land package of any exploration company in the region at 400km2 and overlays a 38km portion of the prolific Senegal Mali Shear Zone. [...]" Jared Scharf, CEO, Desert Gold Ventures Inc.
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
Manuka Resources: Is the share making a jump?
As with so many commodity companies, the share of Manuka Resources is struggling despite high gold prices. But operationally, the Australians are stepping on the gas. In the past fiscal year (ending June 30), the Company generated revenues of AUD 53.5 million and a positive operating cash flow of AUD 8.9 million. In order to expand, a capital increase was completed at the end of 2022. How the new funds will be used has been explained in the past few days. The new drilling program is focused on the Cobar properties to increase the inventory of indicated mineral resources significantly. As a result, more than 24,000 drill holes are expected to be completed over the next two years. Exploration near the existing mine is a priority because of the opportunity to delineate indicated mineral resource targets. Manuka CEO Dennis Karp said, "The results of the strategic exploration review indicate significant resource potential on our Cobar properties, particularly with respect to silver and gold near the mine, but also high-grade copper deposits as well as zinc and lead. Since our production infrastructure at Wonawinta, with a capacity of over 1 million tonnes per year, can produce both gold and silver, the deposits discovered nearby are logically priority targets. Cobar is a high-yielding region, particularly for polymetallic deposits. The planned drilling will provide a wealth of data to enhance our understanding of the structural conditions critical to delineating additional precious metal and polymetallic deposits on our property."
Manuka's projects in detail: The Mt. Bobby gold project was acquired in 2020. It is one of the historically most prosperous gold mines in Australia. At the time, 500,000 ounces of gold were mined at an average grade of half an ounce per ton of ore. Manuka originally planned to produce 24,000 ounces of gold. But the resource could be much more productive than thought. At the Wonawinta silver project, the resource estimate is already available. It comprises 51 million ounces, and with the start of production, Manuka would become one of Australia's largest silver producers. A processing plant is already in operation and will initially be fed with historic tailings with a volume of 515,000 tons.
In addition, Manuka's third project, South Taranaki Bight (STB), could even lead to a complete revaluation of the Company. The project off the coast of New Zealand was only taken over towards the end of 2022. It contains iron sands with vanadium titanium, and magnetite. Vanadium is a critical mineral and helps improve energy storage and battery durability. The potential is great: with a JORC resource of 3.8 billion tons and a vanadium content of 0.5%/t, Manuka could become the world's third-largest vanadium producer with a 15% market share. Revenue estimates are around £55 million per annum. Manuka Resources' market capitalization is under AUD 45 million.
Nel: Share running hot?
After an impressive 70% rally, Nel now weighs in at an impressive NOK 27 billion. The share price of the Norwegian hydrogen specialist has corrected by around 10% in recent days. The recovery went nevertheless too fast for Goldman Sachs. The analysts have reduced their recommendation from "Outperform" to "Neutral". The price target was also cut from NOK 25 to NOK 20. The share is currently trading at NOK 17.67, compared with just over NOK 10 in October 2022. While the analysts stressed that the Company's long-term prospects are still right, the stock has run too hot for them. And looking at the history, skepticism is definitely warranted. Like industry peers such as Plug Power and ITM Power, Nel's fiscal 2022 was marked by supply chain issues, slower growth and higher losses. While orders like those from HyCC have been reported again this year, order intake is not the industry's problem; efficient execution is. To HyCC, Nel subsidiary Nel Hydrogen Electrolyser AS will supply electrolyzer equipment of HyCC with a volume of 40 MW and a value of about EUR 12 million. HyCC is planning a production plant for sustainable aviation fuel (SAF) in the Netherlands. It will be produced from industrial by-products and residual streams, such as used cooking oil. The energy needed to run the plant is to come from green hydrogen. Interested parties should mark February 28 in their calendars. Nel will report on its fourth quarter and full-year 2022 results on this day. In the past, this often resulted in stronger share price movements.
BYD: On the verge of doubling?
From the perspective of HSBC, the BYD share is anything but hot. The analysts have raised their price target to HKD 452. Currently, the shares of the Chinese Tesla chaser are trading at HKD 238. HSBC thus trusts the BYD share to almost double. Looking ahead, HSBC remains optimistic for BYD regarding revenue and earnings growth. It says this is based on the group's competitive product portfolio in electric and hybrid vehicles. Through increasing economies of scale, they expect margins to expand steadily.
For these economies of scale in the future, BYD is investing massively in the present. Most recently, the planned construction of another battery factory was made public. The new plant in Zhengzhou, China, is to have a capacity of 40 GW. The blade batteries are to be manufactured by BYD, and the investment volume is to be around EUR 1.1 billion. This is already the third gigafactory that BYD has announced in just a few months. Production of 15 GW is planned in Xuzhou, and 20 GW in Wenzhou. At the same time, BYD is pushing the sale of its e-cars abroad. In addition to India, the focus is on Europe. It will be exciting to see how the vehicles will be received in this country.
The Nel share has run hot after the strong price increase. In addition, there is still no confirmation that operations are running smoothly again. Therefore, February 28 will be important. At Manuka, investors can look forward to a regular news flow in the current year. If this is positive, it should only be a matter of time before the share starts to rise. Not only are BYD's rising sales and profits impressive, but so is its investment pace. However, the tensions between the US and China should not be underestimated as a risk for the stock.
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