26. August 2021 | 11:08 CET
Lang & Schwarz, NEL, GSP Resource - Short-term or long-term rebound?
No annual general meeting, no dividend, in-house tax discovery and loss of confidence - the news from Lang & Schwarz on Tuesday could hardly have been more severe. Accordingly, the share price fell by more than 35% in after-hours trading. On Wednesday, the share price rebounded with a double-digit gain. But the possible involvement of the stockbroker in the Cum-Ex deal will certainly keep investors busy for longer. The NEL share also made significant gains on Wednesday. It benefited from an order and the generally friendly mood in the hydrogen sector. Copper specialist GSP Resource has been on the rise again for some time because the raw material could soon become scarce. When asking how sustainable the rebound is in each case, one should look at the details.
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ISIN: LANG+SCHWARZ AG NA | DE0006459324 , NEL ASA NK-_20 | NO0010081235 , GSP RESOURCE CORP. | CA36249G1090
"[...] We have a clear strategy for neutralizing sovereign risk in Papua New Guinea. [...]" Matthew Salthouse, CEO, Kainantu Resources
Lang & Schwarz's confidence gambled away with Cum-Ex?
On Tuesday evening, the Board of Lang & Schwarz announced that it would cancel the Annual General Meeting scheduled for August 26, 2021. The dividend and the stock split are also off the table for the time being because on August 23 (evening), the interim report of a tax audit was received. The transactions of the years 2007 to 2011 are being examined concerning the capital gains tax credit. Thus, the Company seems to slide into the Cum-Ex scandal. Lang & Schwarz rules out the possibility of multiple capital gains, tax refunds or anything similar. Nevertheless, it is possible that those responsible could subsequently be assessed differently for tax purposes. In this case, up to EUR 61 million would probably be due. Therefore, the Executive Board decided to set aside a provision of EUR 45 million from the profits of the first half of the year. Although the amount is still manageable, confidence has been lost for the time being. Only a few days earlier, the Company had celebrated "the best half-year in its history". Even if the interim report of the tax investigation was not yet available, the question may at least be asked whether Lang & Schwarz should not have reported on the investigations earlier. Customer confidence could also suffer as a result of the investigations. Therefore, it is likely that the rebound was relatively short-term and that the share will be volatile for the time being.
GSP benefits from scarce copper
The GSP Resource share has made a more solid rebound in recent weeks. It went up by a good 25% in about 4 weeks to CAD 0.28 for the shares of the copper specialist. The reason is sustainable: Copper is scarce and prices are rising. Thus, the head of the Munich-based economic research institute Ifo, Clemens Fuest, already warned the Handelsblatt: "If commodity prices continue to rise significantly across the board in the coming years, this could become a problem." For US investment bank Goldman Sachs, copper is the favorite in the commodities sector, after gold. For them, copper is the crucial metal for the transformation to a greener economy; moreover, especially in China, there are problems in production and thus a shortage of supply.
GSP Resource (GSP) is benefiting from this. The Canadians own two projects in British Columbia. Copper has already been mined in both areas in the past. At that time, however, they were mined with picks and lorries. So the chances are good that modern production methods will be used to extract attractive quantities from the ground. A small capital increase has just been successfully placed to finance exploration. The drilling program for the flagship project, the Alwin Mine, is currently underway. The results should be available by the end of August. Interestingly, Teck Resources' Highland Valley Copper Mine is located in the immediate vicinity. If the drilling results are positive, the probability that the large competitor will make a takeover bid increases. In addition, the Olivine Mountain project was purchased in May. Two discoveries have been reported so far, the Asp deposit with 3.51% copper and some silver over 3.4m and the Hop deposit with 7.49% copper, 23 g/t gold and 89.5 g/t silver.
GSP shares were already trading at CAD 0.46 in early June. With successful drill results at the larger project, this mark should be reached again. The favorable general conditions for copper should not change in the near future.
Orders from the UK beckon for NEL
The NEL share is also in a rebound. The Company is currently benefiting from the renewed friendly sentiment towards companies in the hydrogen universe. In addition, the framework agreement with the consulting and engineering Company Wood gives rise to hope. The new partner employs around 40,000 people and offers consulting, project and operating solutions in more than 60 countries. Together, they intend to implement hydrogen projects in a wide range of countries. In the meantime, the NEL partner has secured a loan of around EUR 500 million. The loan is to be used to exploit the opportunities presented by the energy transition and to develop hydrogen projects, among other things. As a cooperation partner, NEL should be able to benefit from this. New orders are also needed, as the last quarterly figures had disappointed.
All three shares are in rebound mode. Due to the ongoing investigations, this is likely to be relatively short-term at Lang & Schwarz, and the share will remain volatile. At NEL, hope continues to rule, as the operating figures are likely to remain weak. GSP is benefiting from the copper shortage, and the excitement for the drill results is rising.