March 10th, 2021 | 09:05 CET
K+S, Almonty Industries, ThyssenKrupp - revaluation underway, still cheap to get in!
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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
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
K+S - No accounting scandal! Will the EUR 10 mark now fall permanently?
Last month, K+S shareholders had to take a deep breath. The Federal Financial Supervisory Authority (BaFin) had initiated a special audit of the balance sheet by the German Financial Reporting Enforcement Panel. It was alleged that the Group had written-off its fertilizer business too little and too late. As a result, the share price corrected to around EUR 8.
Yesterday afternoon, the all-clear was given: the auditors Deloitte had issued an unqualified opinion on the consolidated financial statements as of December 31, 2020. In addition, the special write-down of EUR 1.86 billion was around EUR 140 million lower than announced. This positive news should now enable the share to make a sustained leap above the EUR 10 mark.
This Thursday, the Group will publish its figures for the past fiscal year. Perhaps investors will then also learn a little more about the current situation of the special audit. As K+S reported, the audit is still ongoing. Soon, however, the issue should be over. Then investors can concentrate on the Group's good medium-term prospects and look forward to further share price increases.
ALMONTY INDUSTRIES INC - absolute and relative strength
Almonty will become one of the world's leading producers of tungsten in the future. If everything goes according to plan, the Canadians will be the largest producer of the strategic metal outside China, with the Sangdong mine in South Korea. Tungsten is the chemical element with the highest melting and boiling points and is used in many important industrial sectors. The increasing demand with a manageable supply, which currently comes mostly from the People's Republic, makes rising prices very likely in the long term.
Last month also saw further positive news on the Company's second project, which is accelerated now that the tungsten project's decisive course has been set. This is the Sangdong molybdenum project. Almonty announced plans to start a major drilling program here in mid-April, lasting about 6 months. That will then enable a robust resource determination to be made per Canadian industry standard NI 43-101, among others, and will allow further conclusions to be drawn about the project's potential and economics. Molybdenum is very heat resistant and is often used for special alloys in stainless steel.
Frankly, we are not surprised that Almonty's shares have rallied in recent months, recently surpassing the CAD 1 mark and significantly outperforming competitors' shares. At a price of around CAD 1.16, the Company is currently valued at CAD 218 million and is by no means too expensive given its huge potential.
THYSSENKRUPP AG - hydrogen is the magic word
In recent years, steel stocks have not been a big winner. But those who bought shares in the Essen-based Group in the fall can look forward to a threefold increase in their investment. The MDAX-listed Company currently has a market capitalization of EUR 7.4 billion.
The Group has been trying to become profitable for some time. The disposal of the elevator business brought only brief relief. In recent months, a solution was sought for the important Steel division. The hope was to sell the loss-making unit to competitor Liberty Steel. However, this failed last month. Now the division is being restructured and will remain in the Group.
But where did the share price fantasy come from in recent months? The answer is hydrogen. This theme is currently being played heavily on the stock market, and investors attribute high valuations to the players. The subsidiary thyssenkrupp Uhde Chlorine sells electrolysers that produce hydrogen. Provided renewable energies are used to generate electricity, "green" hydrogen can be produced, which makes investors' hearts focused on sustainable investments beat faster. The Essen-based Company is also intensively examining partnerships to grow faster in this future market.
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