Close menu




March 11th, 2022 | 12:23 CET

K+S, Edison Lithium, BASF - Explosives for the stock markets

  • Lithium
Photo credits: pixabay.com

Inflation is rising sharply, and there is uncertainty due to the increasing geopolitical tensions with sanctions, which are supposed to hit Russia in particular but are having a one-to-one impact on our wallets. For example, energy prices are rising enormously, with gasoline increasing by more than 50 cents at the pump within a few days. The switch from fossil fuels to renewable energy sources will take time, but it will almost certainly not be cheaper. The price of lithium alone, an elementary metal for electric mobility, has quadrupled since the summer of last year. The primary beneficiaries of the runaway inflation are undoubtedly the producers of the in-demand raw materials.

time to read: 3 minutes | Author: Stefan Feulner
ISIN: K+S AG NA O.N. | DE000KSAG888 , Edison Lithium Corp | CA28103Q1090 , BASF SE NA O.N. | DE000BASF111

Table of contents:


    Edison Lithium - Following the trend

    The changeover from the combustion engine to the battery-powered electric car is still at the beginning of the cycle. However, it is already apparent that lithium deposits will be far from sufficient to cope with demand. Already, analysts are warning that rising commodity prices could slow the energy transition by slowing the rate of decline in battery costs. "Companies across the lithium-ion supply chain are in the best position," Pedro Palandrani of Global X Lithium & Battery Technology ETF told Reuters' English-language service.

    In addition to the largest lithium producers such as Albemarle and Standard Lithium, exploration companies that will only start production in the next few years but are already securing promising deposits with expected high lithium content to counteract the impending supply shortage will also benefit from the supercycle in the long term. In total, more than three-quarters of global lithium production is mined in Chile, Argentina and Australia. For years, Argentina has been particularly prominent in this field, with the aim of overthrowing Chile as the top dog by the end of the decade.

    Edison Lithium, known as Battery Metals until the end of 2021, focuses on exploring and developing cobalt, lithium, and other energy metal deposits. In 2021, Edison acquired Argentina-based Resource Ventures SA for USD 1.85 million. This enabled the Canadians to secure prospective lithium brine claims in Catamarca Province, Argentina. The area covers 148,000 hectares and is primarily located in the two geological basins Antofalla Salar and Pipanaco Salar in the so-called "Lithium Triangle".

    In addition, the Company, which is also traded in Frankfurt with a market capitalization of only EUR 11.64 million, owns a prospective cobalt project near Ontario in Canada. The historic deposit includes the Thomas Edison, Shakt-Davis and Cobalt-Kittson mines and several unexplored pits. Previous resource estimates at Shakt-Davis indicated grades of 1.5% cobalt over 1.37m and selected grab samples of up to 4% cobalt and 93.3 g/t gold. In addition, occurrences of nickel and copper were awarded. Edison Lithium is in the early stages of exploration, with deposits mainly in South America promising greater potential.

    K+S - Profiteer of scarcity

    Commodity companies, especially those from Germany, were considered somewhat dull and sluggish investments in the recent past. However, this has changed since the outbreak of the Corona pandemic, but at the latest since the invasion of Russia, the scarcity of certain raw materials such as fertilizers and salts has become a hot investment topic. K+S has been able to profit since the low in March 2020, and the share price has risen by 360% since then.

    Last year's financial figures have now been presented, which exploded from EUR 220 million to EUR 969 million due to the increased fertilizer price. Despite the current Ukraine crisis and uncertainty for global agricultural markets, the Company is also sticking to its annual targets for 2022. The Company expects operating profit EBITDA to rise to between EUR 1.6 billion and EUR 1.9 billion. "With the range mentioned, we would generate the best result in our company's history to date," said CEO Burkhard Lohr. On the other hand, US bank JPMorgan sees the development in the share as too advanced and reiterated its "underweight" rating with a price target of EUR 12.50 after the figures. That represents a discount of around 50% to the current level.

    BASF - Under pressure

    The BASF share has been severely under pressure in recent weeks. After several attempts to break out above the EUR 68.50 range, the share fell to below EUR 48 due to the weak overall market. A small countermovement followed, but an easing of the negative chart picture at a price of EUR 53.05 is not yet given.

    The analysts were not very optimistic about the chemical group from Ludwigshafen. Deutsche Bank's analysts see a lack of momentum and a catalyst for the share price in the coming months. The buy rating with a price target of EUR 90.00 has now been lowered to a "hold" with a price target of only EUR 64. In contrast, analyst firm Jefferies reiterated its buy recommendation with a price target of EUR 80.


    Due to the escalating situation in Ukraine, the risk of rising inflation figures is high. Concerning the energy transition, the important metal lithium is in a further rising trend, which could benefit exploration companies such as Edison Lithium. K+S is benefiting from rising fertilizer prices. According to analysts, BASF is lacking impetus at the moment.


    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 hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



    Related comments:

    Commented by Stefan Feulner on September 21st, 2022 | 13:41 CEST

    Rock Tech Lithium, Edison Lithium, Albemarle, Allkem - Defying the recession

    • Mining
    • Lithium
    • Commodities
    • Electromobility

    Fears of a global recession continue to grow, with prices for commodities such as copper, lumber, cotton and even grains correcting sharply. In contrast, the lithium price continues to hold at a high level after the explosive rise at the beginning of the year. The reason for this is the continued strong demand from the electric car industry. In China alone, sales of electric cars amounted to 3.2 million units last year, and 5 million vehicles are expected to be delivered this year. In contrast, the existing supply of lithium resources is scarce. In addition to existing producers, the primary beneficiaries of this shortage are the exploration companies, which have already been able to secure attractive properties.

    Read

    Commented by Stefan Feulner on September 14th, 2022 | 15:17 CEST

    BYD, Altech Advanced Materials, Varta - Breakthrough in the battery market

    • Battery
    • Lithium

    Electromobility is considered a key technology in the transformation of the transport sector. In 2021 alone, the number of new registrations and the market share of battery-powered vehicles more than doubled. In addition to the charging infrastructure, efficiency plays a decisive role in the expansion of e-cars. Another obstacle to rapid growth is likely to be the shortage of lithium, an essential raw material for the production of lithium-ion batteries, due to the high demand. A German company is about to start a revolution with new innovative technology. The main component of the new battery is regular table salt, which is available in extremely large quantities and is produced in highly diversified regions.

    Read

    Commented by Carsten Mainitz on September 14th, 2022 | 13:24 CEST

    Aspermont, Allkem, K+S - Shares for the fast lane

    • Digitization
    • Fintech
    • Lithium

    We are living in turbulent times on the stock markets. War, energy crisis and inflation are shaping the moods of market participants. Anticipatory action and understanding the "big picture" and the long-term correlations between supply and demand are part of a stock market trader's toolkit. Exaggerations and understatements are part of the package. There is no getting around shares as a long-term form of investment. Because as stock market veteran André Kostolany said, "If you want to eat well, buy stocks; if you want to sleep well, buy bonds."

    Read