23. September 2021 | 12:51 CET
Kodiak Copper, Nordex, E.ON - It is not too late!
Certain framework conditions must be in place to successfully implement the energy transition and the roll-out of electromobility. First, sufficient electricity must be produced from renewable energies. Secondly, an efficient energy infrastructure must be established and thirdly, large quantities of relevant raw materials such as copper are required. The three companies below cover the central fields and should therefore be among the winners. Who is making the running?
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ISIN: KODIAK COPPER CORP. | CA50012K1066 , NORDEX SE O.N. | DE000A0D6554 , E.ON SE NA O.N. | DE000ENAG999
"[...] We have a clear strategy for neutralizing sovereign risk in Papua New Guinea. [...]" Matthew Salthouse, CEO, Kainantu Resources
Kodiak Copper - Good progress in the drilling program
The industrial metal copper is indisputably an essential raw material for the energy transition. Demand is increasing enormously, and the price of copper has risen significantly in recent quarters. Several experts predict that more copper will be needed in the next 25 years than consumed in the last 500 years. Currently, the automotive industry demands almost 10% of the annual copper production, and hunger continues to grow. The production of a pure e-car consumes around four times as much copper as that of a combustion engine. In addition, the development of new power grids and smart grids for decentralized, sustainable power production will further fuel demand. These are good general conditions for (prospective) copper producers.
One promising Company is Kodiak Copper. The Canadian explorer has two 100% owned, promising copper projects in British Columbia (Canada) and Arizona (USA), for which resource estimates are being targeted. In particular, the Canadian MPD copper-gold project gained much attention last year due to high-grade drill results. The entry of Teck Resources, Canada's largest copper producer, also secured full funding for the current 30,000m drill program at the MPD project. The project is located near the producing Copper Mountain, Highland Valley and New Afton mines.
Recently, the Company reported on ongoing exploration work at the 14,716-hectare MPD copper-gold porphyry project. As of September 1, 25 drill holes totaling 13,600 meters have already been completed, and drill and rock sample evaluations are underway. The results will be published in the coming weeks. Drilling to date has extended the north-south extent of the Gate Zone of prospective sulphide-bearing altered porphyritic host rocks from 125 meters to 950 meters. Significant copper-gold mineralization has been intersected with a thickness of 350 meters (east-west) and to a depth of 800 meters, open in all directions.
Kodiak has an exciting investment story. The stock will benefit from further project progress and a rising copper price. The expected news regarding drill results in the next few weeks could provide significant impetus here. Currently, the Company is valued at CAD 64 million.
NORDEX SE - Is the countermovement coming now?
At the end of 2022, Germany will have phased out nuclear power, and thus more than 10% of the national controllable power supply will be eliminated. According to the German government's plans, 40% to 45% of the electricity consumed in Germany will come from renewable sources by 2025. In 2020, the installed capacity of onshore wind turbines was 54.4 gigawatts and offshore 7.75 gigawatts. Around 103.7 TWh was generated on land and approximately 27.3 TWh at sea. Wind turbines thus play a significant role, accounting for almost 24% of gross electricity consumption in Germany.
The Nordex Group is one of the leading integrated, globally positioned manufacturers of onshore wind turbines and has already installed more than 32 GW of wind power capacity in over 40 markets. In the first half of 2021, the Group reported growth in revenues and earnings and outperformed its competitors. The capital increase carried out in the current year improved the balance sheet picture and serves the further expansion. Since the beginning of the year, the share has corrected by 30%. The stock is moderately valued with a 2022 P/E ratio of 20. Some analysts see an upside potential of more than 50% for the share.
E.ON SE - Société Générale raises price target
The backbone of the energy transition is a powerful and intelligent power infrastructure for the increasingly decentralized energy feed-in. E.ON is making an important contribution to this. Together with VW, the Essen-based Company recently launched a fast-charging station with a storage battery. The fast-charging station, developed and produced by VW, does not require any civil engineering or adaptation of the grid connection and can be installed quickly. That makes it possible to build up a dense public network quickly. The electricity is drawn from an integrated battery storage system instead of from the power grid. The share price has risen by around 20% since the beginning of the year, outperforming the DAX by about 10 percentage points. Most recently, analysts at Société Générale raised the price target for the share to EUR 13.90 - that is an upside potential of a good 25%.
Energy transition and electromobility are megatrends. Investors can cover different areas with the featured stocks: energy (Nordex), power infrastructure (E.ON) and copper (Kodiak Copper). In our opinion, the Canadians have the most exciting investment story, also from a timing perspective.