30. June 2021 | 11:12 CET
JinkoSolar, Kodiak Copper, BASF - Caution: This market will explode!
Due to the energy transition, the raw materials sector is undergoing a historic upheaval. Due to a CO2 reduction in the economy and transport, coal, gas and crude oil will lose importance in the future. The demand for metals such as copper will increase exorbitantly in order to expand the capacities for the generation and storage of renewable energies. Copper is and will remain irreplaceable in the electrification of the global economy due to its chemical properties. In 2020, the supply deficit rose to 560,000 metric tons, the highest in a decade. And transportation electrification is just getting started.
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ISIN: JINKOSOLAR ADR/4 DL-00002 | US47759T1007 , KODIAK COPPER CORP. | CA50012K1066 , BASF SE NA O.N. | DE000BASF111
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Kodiak Copper - Speed increased
In Germany, the share of electric cars was just 1.2% last year. Now automakers, led by Volkswagen, are pushing the transformation from combustion engines to battery-powered vehicles. According to industry circles, at least 25% of electric cars are expected to be on German roads by 2030, equating to 11.55 million units. An electrically powered vehicle requires around 83kg of copper, four times as much as an automobile with an internal combustion engine.
That creates a massive surplus in demand which is then offset by a shortage of supply. Due to the low copper prices in the past decade, several copper mines were shut down and new copper projects were hardly observed. Thus, Goldman Sachs recently opened a study with the headline, "The copper market is unprepared for this critical role!" The few promising mining projects will emerge as winners in the next few years, with disproportionately growing revenues and consequently also rising share prices.
Far advanced is Kodiak Copper of Canada, which is focused on a portfolio of copper porphyry projects in Canada and the US, all of which are wholly owned. The flagship is the MPD copper-gold porphyry project. It is a comprehensive 147km² consolidated land package in the prolific Quesnel Trough in south-central British Columbia, Canada. In 2020, the Company had already discovered high-grade mineralization here within a broad mineralized envelope. Significant copper-gold mineralization has been intersected in the project's Gate Zone over a width of 350m (east-west), a length of over 100m (north-south) and to a depth of 800m, which is open in all directions. Near MPD are the producing mines of Copper Mountain, Highland Valley and New Afton.
In 2021 as a whole, Kodiak Copper plans to cover a total of 30,000m in the target areas. The Company's ample cash cushion of CAD 14 million has already fully funded the program. This year, drilling has focused on the Gate Zone extension, where Kodiak has made a high-grade copper-gold discovery at the northern end of a one-kilometer-long soil anomaly. A second drill rig has now been mobilized to achieve the set targets.
Currently, the copper price, which recently reached a new multi-year high by exceeding USD 10,000 per ton, is consolidating in the range around USD 9,300 per ton. Kodiak Copper's stock reached an annual high of CAD 2.34 in mid-May and fell back to the resistance area at CAD 1.70 due to short-term market weakness. Thus, there is an interesting entry opportunity to participate in the long-term boom of the copper price at the current level.
JinkoSolar - Strong in the market
It has boomed in the chart of the Chinese producer of solar cells, solar modules and mounting systems, JinkoSolar. The share went out of US trading on Monday evening with a plus of almost 23% and at a price of USD 52.85. The reason for the hype was the better-than-expected figures for the first quarter. Solar product shipments rose 33.7% to 5,354 megawatts. Sales fell by 6.4% to CNY 7.94 billion; however, excluding the sale of a plant in Mexico, this would have climbed 9.0%. Net income fell to CNY 221.09 million in the same period last year but remained positive.
Compared to the fourth quarter of 2020, JinkoSolar also increased its gross profit margin from 16.0% to 17.1%. At the end of the last quarter, the Company still had CNY 7.04 billion in cash. In the second quarter, JinkoSolar expects a gross margin of 12% to 15%. Sales of solar wafers, cells and modules are forecast to reach 25 to 30 gigawatts in 2021 as a whole.
In addition to the good-looking numbers, the Chinese Company announced yesterday that it plans to list its 73.28% owned subsidiary Jiangxi Jinko, the Company's solar unit, on China's Shanghai Stock Exchange (SSE) STAR market.
BASF - A friend of the analysts
BASF's strong performance has not gone unnoticed by analysts. The quarterly figures published at the end of next month should hold some positive surprises. Thus, the experts at Deutsche Bank confirm their buy recommendation for the DAX stock and leave the price target at EUR 88.00. Even more impressed by the Ludwigshafener is the US analyst firm Bernstein Research. They raised the price target from EUR 105 to 108. The reason for the positive outlook is the increase in demand for chemical products and the positive trends in selling prices.