July 5th, 2021 | 13:26 CEST
JinkoSolar, NewPeak Metals, TUI - Between uncertainty and opportunity
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"[...] 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 - Over 60% share price increase in three days
In my May 17 commentary on JinkoSolar, I had pointed out the opportunity to be in on the trend reversal. The breakout took place on May 20 and even ran slightly higher than the targeted USD 40. But what then happened with the announcement of the quarterly figures on June 25 can be described as surprising. The figures were better than forecast. 33.7% more solar products were sold, and sales would also have increased without the sale of the plant in Mexico, but profits fell year-on-year to around 221 million Chinese yuan (CNY).
The share price increase was caused by the news of the IPO of the subsidiary Jiangxi Jinko on the Shanghai Stock Exchange. However, investors should note that this announcement was also made last year and the resulting price gains were all completely given back. It will be interesting to see whether the IPO will be carried out this time. The application is said to have been filed at least. The management has set a sales target of 25-30 gigawatts for this year. That can be seen as restrained. On the other hand, the Company is threatened by US sanctions, which could lead to a loss of sales.
If the silicon price stabilizes, as assumed by the management, and does not climb further, this would undoubtedly help JinkoSolar. The share price decline was closely related to rising raw material prices. Currently, there will be a consolidation, which should lead at least to the breakout edge at USD 47.10. Due to the uncertainties of possible US sanctions, we would advise against currently investing and see how far the consolidation goes.
NewPeak Metals - New reports are coming in continuously
NewPeak Metals is constantly receiving new news, which is not surprising given the diversified projects. On June 3, there was an update on the Las Opeñas gold project in Argentina. In the Belleza target area, a geophysical survey showed mineralization over two anomalies 100-150m wide and 600-800m long. The data collected will be used to plan for the upcoming drill program this year.
Results from the Otago Gold Project in New Zealand were announced on June 11. Up to 1.99 grams of gold per tonne was found at the Cap Burn target. Results for the eastern portion of the drill program are pending. Also announced was drilling at the Finnish gold project to provide a resource estimate. There was also an announcement on the Swedish tungsten project on June 15. Data analysis on 480 exploration and 280 drill holes has been completed. Exploration targets were derived based on historical drill results of up to 1.2% tungsten and 0.82% copper per ton.
In New Zealand, the drill permit for the Carrick Gold area was issued on June 18. So work is being done simultaneously on all projects. Without further ado, there is good news about the 29% stake in Lakes Blue Energy. The Australian state of Victoria's moratorium on gas exploration expired on July 1. It is a decisive step towards the resumption of trading on the stock exchange. The value of the investment alone is then expected to be higher than the total enterprise value. Thus, this share is well suited for value investors. The share could awaken from its slumber once a joint venture partner for one of the gold projects has been found.
TUI - New capital injection necessary
The summer vacations mark the start of the season for travel providers such as TUI. In the wake of vaccinations and falling numbers, they were convinced of good summer business. But then the German government put Portugal on the list of virus-variant areas. A stay there entails a two-week quarantine. But also on Mallorca, the incidence values are rising rapidly and are already approaching the 100 mark again. This uncertainty has also affected the TUI share.
However, the Company is relaxed and can hardly see any cancellations at the moment. Customers are more likely to book at very short notice. Nevertheless, the situation remains tense due to the Delta variant. Another reason for the weakening of the share is the increase of the bond from April by a convertible bond for a total of EUR 190 million. The convertible bond can later be repaid in shares. The fact that money is needed again after just two months does not please the shareholders at all.
Looking at the share, it is positive that the support line at EUR 4.08 has held for the time being. Last Friday, quite a few insider purchases were reported, which can be seen as a sign of confidence on the part of the boards. Should the EUR 4.08 mark not hold, a test of the EUR 3.71 must be assumed. Since it is difficult to predict how the Delta variant will develop, one should be cautious when investing and watch the news closely.
Uncertainties are present in all three stocks; currently, NewPeak Metals seems the most promising due to its undervaluation. TUI may bounce back quickly if Delta does not spread as feared and summer is used for travel. At JinkoSolar, the share has currently run too far for us to recommend an investment.
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