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November 17th, 2021 | 12:40 CET

Leoni, Sierra Grande Minerals, Varta, Nordex - Critical raw materials, skyrocketing prices!

  • Commodities
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According to the active suggestions of many climate protectionists, we are all best off riding bicycles. Because the climate measures, in particular the CO2 taxes, will soon make movement with fossil fuels impossible. In October, the E10 fuel price reached the EUR 2.00 mark at some filling stations. As a result, 80% of the gasoline price target formulated by the Greens in the 1990s of 5 D-Marks has been achieved. Calculated on the oil price, a liter of refined fuel would only cost about EUR 0.60; the rest is made up of duties and taxes, as is well known. Interestingly, in the Federal Audit Office records, it is precisely the political climate protection protagonists who stand out with an impressive number of car trips and air miles. It seems that only some people are supposed to restrict themselves, while other more privileged groups enjoy a free ride. Is this the future of individual mobility?

time to read: 5 minutes | Author: André Will-Laudien
ISIN: LEONI AG NA O.N. | DE0005408884 , Sierra Grande Minerals | CA82631L1085 , VARTA AG O.N. | DE000A0TGJ55 , NORDEX SE O.N. | DE000A0D6554

Table of contents:

    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview


    Varta - The numbers disappoint again

    If it is up to the political drivers in Germany, e-mobility should be given an elitist look. After all, the advocates of this drive technology show themselves to be highly future-oriented. We do not want to talk about fiscal motives because what is politically demanded usually only works with corresponding incentives because then at least the public listens. In the case of an electric car, the government subsidies add up to almost EUR 10,000 to purchase a new vehicle - equivalent to the price of a 1995 VW Golf.

    Varta could enter the market with an innovation in the next 2 years. After much hope in the market, the Ellwang-based company has unfortunately returned to realism with its Q3 figures. Developing a powerful car battery for e-mobility gobbles up money and takes longer than visionaries want to admit. But an important step has been taken because, according to Varta, the new lithium cells developed in recent years have an approximately 30% improved energy density. This technology will have to be transferred to larger battery formats in the future. Work on this is highly concentrated and costly.

    The share price had been running for months ahead of a possible surprise event, which, however, will only really come to light in the course of 2022 or 2023: The super battery, Made in Germany! Until then, rationality continues to be the order of the day. It does not mean that a trading investment at EUR 111 may not go well for the 4th time! However, if the share closes significantly below EUR 100, it is likely to darken around the price.

    Sierra Grande Minerals - A multi-metal property in Nevada

    The industry is working hard to reduce greenhouse gases. But critical to the success of many technologies remains the availability of copper and other engineering metals. Canadian explorer, Sierra Grande Minerals, focuses primarily on copper at its properties in Peru and Nevada, as well as silver, gold and molybdenum.

    The first results from the announced soil geochemical programs are now available. They relate to the B&C Springs-Mildred properties in west-central Nevada, which image a major prospect in the southern Paradise Range in the Fairplay Mining District. Paradise Peak is an active open pit gold mine. Previous exploration activities at B&C Springs also focused on copper-molybdenum-bearing, non-precious and precious metal-bearing skarn and vein deposits. At Mildred, the focus has tended to be on precious metals. The total of 544 geochemical samples show some anomalies and multi-metal mineralization that indeed suggest industrial recovery. Near the Mildred Mine and towards the southwestern part of the property, where there are numerous historic prospect pits, adits and shallow shafts, soil geochemical analysis for gold and silver confirms the potential of this area for precious metal mineralization.

    The scarcity of strategic metals gives Sierra Grande geologists ample reason to move the fledgling project forward faster. Current supply shortages are forcing existing operations to operate at peak capacity. Sierra Grande Minerals may become a new mining operation in a few years and fill critical supply gaps. Since May, Sierra Grande shares have been listed in Frankfurt, with limited entry available at a valuation of CAD 7 million.

    Leoni - The operational struggle continues

    The recently hard-hit automotive supplier, Leoni, remains operationally profitable but is still battling a mountain of debt. Net non-current liabilities climbed to EUR 1.67 billion at the end of the third quarter, compared with EUR 1.50 billion a year earlier. The equity ratio declined further to 7.2% from 10.2%. In the first nine months, Leoni increased its sales by 33.3% YOY to EUR 3.82 billion, with EBIT up EUR 76 million, compared with a minus of EUR 217 million a year earlier. The net result remained negative at EUR 8 million.

    CEO Aldo Kamper remains optimistic that the turnaround is not far off. Although supply chain problems and the associated temporary loss of demand led to significant issues, especially from the automotive industry, the management remains calm. Cash flow is seen to improve significantly in 2022, as part of the cable division valued at EUR 450 million was sold successfully. The deal is expected to go through in Q1-2022 and will reduce debt noticeably.

    "Overall, Leoni has continued to stabilize under conditions that were considerably cloudy in the third quarter," Kamper said. However, stop-and-go operations at some customers and ongoing disruptions have further made Leoni more flexible and robust. Leoni will save EUR 700 million in annual costs from next year onwards with the cost-cutting program. Leoni shares have lost 33% since August and currently cost EUR 12.10. Based on analysts' estimates, this represents a P/E ratio of 5 in 2023.

    Nordex - Turned around technically, but operating business remains difficult

    Nordex is still struggling with a lot of headwind. The Q3 figures clearly show that the wind turbine manufacturer is still unable to get a grip on the margin problem. The strained supply chains and high raw material prices add salt to the soup. On the other hand, the order books remain well filled, as Nordex recently announced a major order. In Turkey, the power station operator Enerjisa Uretim placed an order for twelve N163 turbines. The total volume of the wind farm ordered is 68.4 megawatts. The order also includes a premium service for maintenance and repair over 20 years. The wind farm is scheduled for construction in summer 2022, with commissioning at the end of next year.

    The turnaround has not yet occurred, but the order situation gives cause for optimism. The current share price shows that the stock market is also prepared to look 12 months ahead. After an October low of EUR 12.73, the share price is now rising above the resistance level of EUR 15. That means that at least trading-oriented investors will return. Collect and set a tight stop at EUR 14.50!

    Climate protection places high demands on commodity producers and technology companies. The big project can only be mastered with united forces. Currently, many components are too expensive or cannot be delivered, which inhibits the further expansion of environmentally friendly plants. Sierra Grande Minerals is a candidate that will only come into play later but is also currently valued extremely low.

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    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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