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February 24th, 2021 | 08:45 CET

K+S, Desert Gold Ventures, Encavis - Buy before others do!

  • Gold
Photo credits: pixabay.com

"The profit is in the purchase." Or so says an old merchant's rule. There are a few more facets to it in stock investments like time horizon and performance. A long-term oriented, perhaps also anti-cyclically thinking investor does not get gray hairs if it takes longer for his investment idea to work out. In contrast, timing plays a vital role for traders or short-term oriented investors. For institutional investors, the question of where their performance lies in comparison to the benchmark is often decisive. We introduce you to three exciting companies that are currently on the move. Where is the greatest potential lurking?

time to read: 3 minutes | Author: Carsten Mainitz
ISIN: DE000KSAG888 , CA25039N4084 , DE0006095003

Table of contents:


    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited

    Full interview

     

    K+S - BaFin is grumbling

    The price of K+S has been moving in the right direction again in recent months, after a prolonged dry spell. Last week, the upward trend came to an abrupt end in the area of EUR 10, when the Company announced that the Federal Financial Supervisory Authority (BaFin) had ordered an audit of the balance sheet by the German Financial Reporting Enforcement Panel (DPR).

    Whether the balance sheet values were overstated and whether the Group should have made higher write-downs in the past is in question. BaFin is taking Company statements in connection with last November's Q3 report as an opportunity to scrutinize the 2020 half-year report and the 2019 annual financial statements. The sticking point: at that time, K+S had lowered its assumptions on the long-term development of potash prices and increased its cost of capital. BaFin suspects that the depreciation taken by the Europe+ operating unit of around EUR 2 billion may have been too low. "BaFin has concrete indications that this impairment requirement may not have been determined correctly and should have been recognized in full or in part at an earlier point in time. Likewise, other asset items may be affected by a need for impairment," the regulator said.

    To put this in perspective, in October 2019, fertilizer and salt producer K+S had announced its intention to sell its salt business in North and South America. The price achieved of USD 3.2 billion positively surprised many market participants. On the one hand, this transaction led to a better balance sheet structure in deleveraging; on the other hand, K+S is now less diversified and more dependent on the fertilizer business and potash price. Although the fertilizer business is more volatile, it also harbors more significant opportunities. It cannot be entirely ruled out that K+S will have to write down a higher amount, especially if calculation and valuation methods have changed. With total assets of EUR 10.6 billion and equity of EUR 4.6 billion, a write-down would be bearable. We will see how the case turns out.

    DESERT GOLD VENTURES INC - G is for Gold

    The gold price is currently consolidating around the USD 1,800 mark. A shift is taking place in the broad stock market - away from hotly traded tech stocks and towards "value stocks." Thus, the stock of Desert Gold is attractive for investors in two respects. Firstly, it offers exposure to the crisis currency, gold. The price of gold is bound to rise over the medium term in light of central bank policy and the global economy. Secondly, the share is very moderately valued. The Company weighs in at just CAD 25 million.

    The gold exploration and development Company is fully committed to the African nation of Mali and is in good company with world-renowned players. Mali is the fourth-largest gold producer on the Dark Continent. The portfolio focuses on two gold exploration permits with large land areas, for the SMSZ Project and Djimbala, in western Mali. The Djimbala Gold Project is 100sqkm in size and is located near producing mines.

    A few weeks ago, Christopher Marsh, appointed as Independent Director, strengthened the already experienced management team. Marsh brings many years of experience in investment banking and corporate development. Positive news from the exploration program or a rising gold price will positively affect the share price.

    ENCAVIS AG - Electricity production at a new record; nevertheless, the share plummets

    Yesterday, Encavis reported on electricity production for the last year. Despite new production records and a positive outlook, the share price fell yesterday by 10% in some cases to around EUR 17. At the beginning of the year, the shares were still trading at EUR 25.

    In 2020, the Hamburg-based Group, which generates electricity exclusively from renewable sources, increased electricity production by 29% from around 2.66 TWh to 3.43 TWh. This growth was primarily based on acquisitions of wind and solar farms.

    Encavis generally invests conservatively. Investments are only made in solar and wind parks that are in the construction phase, turnkey or already in operation. Thus, the share price development in recent months and yesterday can be understood as a "sell on good news". The current price level offers itself for additional purchases.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

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    Der Autor

    Carsten Mainitz

    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.

    About the author



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