December 23rd, 2020 | 09:01 CET
Linde, Royal Helium, BASF - Explosive news this year?
A wide range of applications is leading to increased demand for various gases and chemical compounds. Hydrogen is a prominent example, and the shares of companies in this sector are booming. Investors should also take a look at industrial gases and helium. Helium is used in medical technology and in the production of high-tech products. We present three promising companies.
time to read: 2 minutes
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Author:
Carsten Mainitz
ISIN:
CA78029U2056 , DE000BASF111 , IE00BZ12WP82
Table of contents:
"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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LINDE PLC - UBS sees further upside potential of 20%.
Linde's core business is gases and process plants that extract or produce gases. Linde is the world market leader in industrial gases, ahead of its French competitor Air Liquide. Applications for its industrial gases include medicine (e.g. endoscopy and respiration), the food industry (cooling and freezing) and the chemical industry.
In mid-December, Linde and Saudi International Petrochemical Company announced a partnership to build a network for industrial gas projects in Saudi Arabia. The 50/50 joint venture will continue to operate existing hydrogen and synthesis gas plants. The aim is to develop new production facilities and efficient solutions for decarbonizing downstream production in industrial clusters in the Kingdom.
The top dog in the industry is valued at around EUR 110 billion at a share price of EUR 208. Even though there have been negative analyst comments recently, some experts see upside potential. UBS, for example, formulated a price target of EUR 250 and JP Morgan of USD 288. The share is a base investment in the sector.
ROYAL HELIUM LTD - the countdown is running
Royal Helium is focused on exploring and developing a 400,000-hectare helium project in southern Saskatchewan, Canada. The Company is one of Canada's largest helium leaseholders. With further project progress and rising helium prices, this offers excellent leverage for share price increases. The Company is currently moderately valued at CAD 16 million (price: CAD 0.28).
Yesterday, the Company completed a significantly oversubscribed capital increase in the volume of CAD 6.15 million at a price of CAD 0.22 per share. Following extensive exploration work, the cash inflow will now be used to drill the first series of exploration wells in a known past and current helium-producing formation.
In mid-November, Royal Helium launched a so-called scoping study. This study is the first step to determine the economic potential of the project. It will also examine whether gas streams generated by the helium production wells can be additionally monetized. The Company promised to release the results before the end of December, making this an exciting corporate phase.
BASF SE - IPO of the subsidiary in 2021
Last year, the Dax Company headquartered in Ludwigshafen, Rhineland-Palatinate, reorganized and refocused its divisions. The total of twelve business sectors were combined into six segments. The portfolio ranges from Chemicals & Materials to Industrial Solutions, Surface Technologies, Nutrition & Care and Agricultural Solutions. Oil & Gas and Technical Services are no longer part of the core business.
The Group consistently sought and found a solution for the Oil & Gas sector by merging its subsidiary Wintershall, with its Hamburg-based competitor, Dea. BASF is the largest shareholder in the new Company, with a stake of around 2/3. The IPO of NewCo was initially planned for the second half of 2020, but could not be achieved.
The core business of the Ludwigshafen-based Company is chemicals. However, spin-offs also often stimulate the share prices of the parent Company and offer trading opportunities.
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