12. October 2021 | 10:45 CET
LVMH, Diamcor, Porsche - Demand skyrockets
"I have never hated a man so much that I would have given him back his diamonds," Zsa Zsa Gabor is said to have once remarked. Yet the movie star was married no fewer than eight times. The demand for precious stones is increasing, not only because of more marriages but also because of the fear of inflation and currency devaluation. The diamond industry is experiencing increasing demand, especially from the Arab world, the newly strengthened Chinese middle class and India.
time to read:
ISIN: LVMH EO 0_3 | FR0000121014 , Diamcor Mining Inc. | CA2525312070 , PORSCHE AUTOM.HLDG VZO | DE000PAH0038
Flight into tangible assets
The Corona pandemic and restrictions on shopping and travel also put pressure on the diamond market last year. Prices for rough diamonds fell by more than 10% in the second quarter of last year. However, the easing at the end of the year also led to a massive recovery in diamond prices. The marked increase is not only the rising demand from India, China or the Arab countries but also the flight into tangible assets due to the global sovereign debt crisis. The increased investment demand meets an extremely scarce supply. Raw material deposits are limited, many mines have already been fully exploited, and new mineral resources are no longer being found on the scale required.
Profiting on the stock market
Supply is also tight concerning listed gemstone producers. One of the few listed companies is Diamcor, which focuses on identifying, acquiring and operating diamond projects that can be put into production in the near term and have the potential to generate continuous diamond production and cash flow. With the Krone-Endora project, the Canadians have achieved a real stroke of luck.
The prime project is located next door to the Venetia Mine of De Beers, the world's largest diamond producer and gemstone trader. Currently, only 5% of the 5,900-hectare total area of the project is being worked on, promising potential for the future. Diamcor is strategically well-positioned through an alliance with Tiffany & Co. Canada. The subsidiary of the world-famous Company, where Marylin Monroe once had breakfast, has a right of first refusal on up to 100% of the future production of rough diamonds from the project at current prices.
Diamcor is fully on track, as evidenced by the completion of the Phase 1 upgrade target ahead of schedule, originally expected to be status quo by the end of the current year. The first target was to reduce scrap and increase the previous reprocessing volume by 100%. As a result, the Canadians are getting closer and closer to a breakeven point. Phase 2, which will start soon, includes a further reduction in rejects in order to extract more rough diamonds from the rock and to be able to increase the diamond yield by another 100%. The Company aims to be here six months earlier than expected, towards the end of the first half of 2022.
With a market capitalization of EUR 19.09 million, Diamcor has long-term potential for further increases in value.
Luxury still in demand
Consumer spending is recovering after the devastating Corona year 2020, and demand for luxury goods remains high. The primary beneficiary is industry leader LVMH, which holds rights to more than 75 different brands sold in around 5,000 stores in some 80 countries worldwide. Expensive clothes, jewelry and watches - LVMH offers men and women everything their prestigious hearts desire.
With the acquisition of the cosmetics supplier Officine Universelle Buly 1803, the French Company once again expanded its portfolio. The Buly brand, which was revived in 2014, can now "drive its growth and development under the umbrella of the global leader in the luxury segment," the new owner explained. The group had already been "promoting and supporting" the cosmetics company for almost four years through its investment Company LVMH Luxury Ventures.
Porsche bets on the two-wheeler
So far, Porsche has two e-bike models named "Sport" and "Cross" in its catalog. Due to the boom in electric two-wheelers, the management is considering developing other electric bikes. The long-standing cooperation with the partner Rotwild is to be continued.
From a chart perspective, the share successfully tested the support at EUR 80. Above EUR 85, a buy signal would be generated, which would result in a test of the annual high at EUR 102.00.
The run on tangible assets due to inflation fears continues. Diamonds offer, next to precious metals, the same protection against crises and devaluation of money. Diamcor is one of the few listed diamond producers in this respect and has overachieved its targets. The epitome of luxury goods, LVMH, is promising in the long term. Porsche's technical situation continues to brighten.