December 20th, 2021 | 12:56 CET
Manganese X Energy, Allkem, Nordex - Winners for 2022!
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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.
Manganese X Energy - Disruption in the battery market?
The Canadian explorer Manganese X Energy has ambitious goals. The Company is dedicated to exploring and developing domestic raw material deposits, which are indispensable in the production of rechargeable batteries. The focus is on nickel and cobalt elements, but mainly on the semimetal manganese. The graphite division was spun off a few months ago as Graphano Energy Ltd.
"Manganese is a candidate for a game-changer in lithium-ion batteries. Manganese has elemental properties that have the potential to improve battery density, capacity, rechargeability, safety and longevity. The timing for developing a North American manganese deposit could not be better. Given the global drive for greener technology and reducing carbon footprints, Manganese X is positioned to be a leader in providing a domestic supply of manganese to the rechargeable battery industry. This includes small consumer batteries in electronic devices, smartphones and energy storage to the EV and hybrid electric vehicle industry," Martin Kepman, CEO of Manganese X Energy Corp, said in a recent interview.
The Company operates the Battery Hill project in Woodstock in the province of New Brunswick, among other projects. The 1,228-hectare property consists of 55 claims of manganese-iron deposits and is the only commercially explored manganese deposit in North America. An initial official resource estimate suggests 34.86 million tonnes of proven manganese at a grade of 6.42%, with suspected resources at 25.91 million tonnes at a grade of 6.66%. The Company itself sees the resource potential at many times that amount.
Over 80% of global manganese production comes from South Africa. The Canadians could shift this weight significantly in the medium term and also score points with their geographical proximity to the sales markets of North America. Experts forecast demand growth of 30% p.a. for the semimetal and rising prices in the coming years. With a market capitalization of CAD 37 million, the Company is moderately valued given its potential.
Allkem - New name, new all-time high?
Since the beginning of the month, Orocobre Limited is now called Allkem Limited. It was preceded by the merger with Galaxy Resources to become what is now the fifth-largest lithium producer in the world. Allkem is a global supplier of lithium carbonate and a producer of boron. The Company primarily focuses on the operational lithium business and the development of lithium deposits in Argentina.
Allkem is currently valued at AUD 5.8 billion. The stock is trading about 10% below its all-time high, but rising prices are only a matter of time given the excellent underlying conditions. Lithium will remain one of the most important raw materials for the production of rechargeable batteries for the foreseeable future. Due to rising demand, the price of battery-grade lithium carbonate has already more than quadrupled this year alone. And there is no end in sight. According to estimates by raw materials giant Rio Tinto, only 15% of the supply deficit will be covered by existing projects in the next 10 years. Therefore, it is not surprising that the analyst consensus rates the shares as a "buy". After the excellent share performance in recent months, the upside potential is only around 14%. The stock is accorded relatively high P/E ratios, but these should soon be put into perspective by dynamic growth. The 2022 P/E ratio is 29 and falls to 23 for 2023.
Nordex - Another significant order received
The political framework conditions for green energy production are favorable. As one of the leading integrated, globally positioned manufacturers of innovative onshore wind turbines, Nordex should also benefit from these prospects. However, this has not been reflected in the share price performance in recent months. Even the significant order recently placed by the Norwegian Company Statkraft, Europe's largest producer of renewable energies, for the delivery of 19 N163/5.X turbines for Chile was unable to provide any impetus for higher share prices. Since April, the shares of the North German Company have almost halved in value, with the current stock market value now standing at around EUR 2.3 billion. Most analysts rate the stock as a "buy" and calculate an average upside potential of a good 30%.
Battery metals, in particular, are indispensable for electromobility and difficult to replace by other materials. The high demand for certain raw materials in the face of limited supply should mean higher prices in the medium term. Thus, Allkem should be on the winning side as a producer. The same applies to Manganese X Energy. The Company is more speculative due to its young company phase but has a high potential due to the excellent project quality and the moderate valuation. Nordex should benefit from the general growth of green energy.
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