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July 14th, 2022 | 12:31 CEST

Kleos Space, BYD and Alibaba: Protection of the states or protection from the state?

  • Space
  • Energy
  • China
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The US dollar and the euro have reached parity. Which industries and countries still offer growth opportunities? A look at the industrial boom country China shows that investments there are still associated with increased risk. Are BYD and Alibaba still worthwhile? A well-known US American has managed to send the value of the electric car company plummeting on the back of a mere rumor. And Elon Musk is not the only one hanging around in space - security is a top priority there, too, as Kleos Space proves. A new CFO is on board.

time to read: 4 minutes | Author: Juliane Zielonka
ISIN: KLEOS SPACE CDI/1/1 | AU0000015588 , BYD CO. LTD H YC 1 | CNE100000296 , ALIBABA GR.HLDG SP.ADR 8 | US01609W1027

Table of contents:

    Dennis Karp, Executive Chairman, Manuka Resources
    "[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources

    Full interview


    Kleos: The EUR 9.9 million cash injection is followed by a top CFO

    Space - endless expanses. Since Tuesday this week, the formation of our galaxy has become a little clearer thanks to the first images from the James Webb telescope. Astronomers worldwide will begin their scientific work using the instruments in space to observe everything from objects within our solar system to the early universe. Both NASA and the Canadian and European Space Agencies are beside themselves with excitement.

    In addition to research, space technology is especially useful for security aspects. For example, US-based Kleos Space provides satellite technology to detect criminal activities such as piracy and drug and human smuggling. The Company's satellite constellations use radio frequency waves to generate data streams for pattern recognition of suspicious activity. Also, with the additional data information from this Company, entire countries can better protect their borders. That is because Kleos' geolocation data complements existing data sets and improves the information, surveillance and intelligence capabilities of governments and businesses.

    In early July, the Company secured an additional EUR 9.9 million to drive its growth. Now, it has appointed a new chief financial officer, Alan Khalili. Khalili is a certified public accountant (CPA) with over twenty years of experience as a CFO, an investment banker at Credit Suisse, and a CPA at Ernst & Young. In addition, the technology entrepreneur has relevant industry experience in Data-as-a-Service (DaaS), aerospace/satellite, business information, and wireless voice and IoT telecommunications. He looks forward to the new role with great pleasure. CEO Andy Bowyer is also pleased to have recruited such an industry veteran as his new CFO. Together with the fresh growth capital, and geopolitical events, Kleos is well positioned for the coming years with its Data-as-a-Service technology.

    Alibaba - Despite share price loss, its cloud drives innovation

    The perpetual motion of the Coronavirus continues to run its circles. China is pursuing a zero-Covid strategy, and as a result, according to Bloomberg, about 30 million Chinese are currently under some form of Covid restriction.

    Fears of further lockdowns and thus supply chain disruptions made themselves felt in the investor market. China's benchmark CSI 300 index fell 1.7% Monday, tracking stocks listed in Shanghai and Shenzhen. The Chinese government also made its presence felt again, with the State Administration for Market Regulation imposing fines on its leading technology companies on the grounds that the companies concerned had violated the country's competition laws. Big player Alibaba (ISIN: US01609W1027), for example, lost almost 9% in value as the agency slapped a fine on the Company for failing to properly report past deals.

    But the tech company's cloud business continues to grow. And lately, it is emission-friendly, too. Its AI product Energy Expert is a sustainability platform that helps Alibaba customers worldwide measure, analyze and manage the carbon emissions of their business activities and products. The Software-as-a-Service offering also provides actionable insights and recommendations on energy conservation to help customers achieve their sustainability goals.

    Likewise, it gives Alibaba a business intelligence heat map of its merchants' CO2 emissions and allows it to use that data to further promote regions or products. Whether merchants with too large a carbon footprint will be denied access to the platform in the future could be a dystopian scenario. On the positive side, developers were able to use smart energy control tips to reduce off-peak power consumption at Cloud Headquarters by 30% and save 17% on air conditioning energy use in the summer. And European companies, in particular, are feeling the effects of how precious electricity and energy currently are. A cloud business is also little affected by Covid measures.

    BYD - Share staggers due to exit rumors by Warren Buffett

    Warren Buffett's latest investment in Oxy, Occidental Petroleum, appears relatively matter-of-fact and well-considered. The Company is one of the largest oil and gas producers in the United States. After first buying Occidental preferred shares worth EUR 9.9 million in 2019, Buffett increased his stake again in 2022. That makes him the Company's largest stockholder, with a 19% stake.

    Looking at the world's energy consumption, one can see the slight shift in global energy supply toward greater use of renewable energy. But so far, the global economy runs on coal, oil and gas.

    If the energy supply from gas were to fail in Germany, the economy there would face collapse. In global trade, the country that can supply itself and its industries with energy is the leader. So it is quite understandable that an American like Buffett is backing companies that make the security of supply possible in the first place.

    The influence of Buffett and his company Berkshire Hathaway is shown by the recent change in the share price of the Chinese electric car company BYD - a BYD stake of 225 million shares was made in the Central Clearing and Settlement System in Hong Kong, matching Berkshire's stake. BYD shares fell 12% on this rumor.

    But looking at Buffett's BYD stake from a value investing perspective, a potential exit for him may fit his investment philosophy: get in when the company is undervalued, and get out when the market has priced in the value. Berkshire said it paid EUR 231.6 million for its BYD shares, which are now valued at about EUR 7.6 billion despite Tuesday's drop in share price. The shares have roughly doubled in value since May 2021. There is a good profit in it.

    Shares from China come with increased risk, which every investor should be aware of. Be it government intervention in the companies themselves or the current zero-Covid policy, which is causing significant difficulties for companies there. A look into space and the US market with Kleos Space could be a good addition to the portfolio, especially since global security risks are increasingly coming into focus and solutions such as satellite technology, including data, offer more security to individual countries and companies. Those who are nevertheless convinced of China as a growth market should focus on industries that are little or not at all affected by possible lockdowns.

    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.

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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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