17. May 2021 | 08:40 CET
Jinkosolar, Almonty Industries, ThyssenKrupp - Commodity and energy prices still rising
Last week, a 4.2% inflation rate for consumer products was reported in the USA, which caused a correction in the markets. Construction prices rose by up to 70% in some cases. The Federal Statistical Office in Germany currently assumes inflation of 2%. However, there is already a partial shortage of chips for the automotive industry, wood is being imported expensively from Ukraine, and there is also a shortage of supplier parts in other sectors. One should strongly assume that inflation will be higher. Energy prices also rose by a good 27% last year. The long cold winter will cause prices to increase further there as well. To protect against inflation, investors should focus on quality stocks of companies that manufacture products and benefit from such bull markets in the long term. We present three attractive candidates today.
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ISIN: US47759T1007 , CA0203981034 , DE0007500001
"[...] 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 - Support line from 2020 held
The solar sector as a whole posted record sales and earnings again in 2020. Due to the significant corrections in solar sector stocks, valuations appear attractive again. By 2030, the industry expects a tenfold increase in annual additions. Currently, few institutional investors are invested in solar stocks, but just not in the market leaders from China due to the generally troubled political situation.
Globally, the solar sector is forecast to grow significantly again this year, and as one of the market leaders, JinkoSolar will be able to secure a large share of the pie. Should there be a government with Green participation in Germany - anything else would be a surprise - then the transformation of the German energy industry is likely to proceed even faster. In the USA, Joe Biden has already made the first changes - CO2 emissions are to be significantly reduced.
After the announcement of the 2020 annual financial statements on April 29, JinkoSolar went down another notch. The share price marked a new low for the year at USD 28.39 on May 11, testing the breakout level from February 2020. Since then, the share has been running sideways. If the share breaks out to the upside, a pullback to around USD 40 could follow. One should put the stock on the watchlist to be there in case of a trend reversal.
Almonty Industries - On the way to becoming a big player
Almonty Industries specializes in the mining, processing and distribution of tungsten concentrate and operates globally. Despite a difficult 2020 with Corona-related mine closures in Spain and Portugal, it can ultimately be chalked up as a success. Last December, the Company received credit approval to build the world's largest tungsten mine, Sangdong, in South Korea. Parallel work was done on the ASX listing, as that is the largest stock exchange for the Asia-Pacific region.
Another advantage for the Company is the strained relations between China and the United States. Tungsten is considered a strategic metal because of its military applications. Similar to rare earths, China owns a good 80% of the world's resources. Tungsten prices continue to rise. Almonty will benefit enormously from this with the completion of the mine in South Korea. The Sangdong mine alone can supply about 30% of the tungsten not produced in China.
In addition, the tin and tungsten project in Valtreixal in northwestern Spain is gaining momentum. There, the permitting process can be completed after a land-use reclassification occurred. This will significantly increase the value of the project. At Sangdong, a drilling program is planned to further define the molybdenum contained in the mine. If drilling results are successful, this would be another leg up for Almonty.
Those who want to profit from a rising tungsten price can still buy relatively cheaply now from a future big player in the tungsten market. Since the figures for 2020 were only announced on Saturday, one should see if some selling pressure comes up and then take hold. In the long term, the Company is developing into a good investment.
ThyssenKrupp - Reorganization in full swing
ThyssenKrupp is still in the process of restructuring but has positive figures to report. In the second quarter, the Company achieved sales of EUR 2.9 billion in metal trading, more than EUR 2.2 billion in steel and EUR 1.1 billion in auto components, with an operating profit of EUR 220 million. The price of steel plays a decisive role here.
Group CEO Merz is optimistic of achieving double-digit percentage sales growth in the current fiscal year and aims to report an operating profit of EUR 400-500 million. As part of the restructuring, more than the 3000 planned jobs are expected to be cut. A spin-off of Thyssen Stahl AG is on the cards, but probably not until next year.
The news pipeline is full. Negotiations on the sale of various divisions, such as the mining division, are at an advanced stage. Uhde Chlorine Engineers is to be spun off from Chemical Plant Engineering. In the medium term, the production of electrolysis plants for hydrogen production is to be increased fivefold. Hydrogen could provide the Group with further growth in the future.
After the share price rally to EUR 12.03, there was recently a 20% consolidation. If one assumes rising steel prices, one can now build up initial positions. Below EUR 8.80, the picture clouds over again.