Mutares, Almonty Industries, JinkoSolar – CAUTION: Something is happening here!

Mutares - Gotham City Research attacks companies

Mutares SE is a private equity firm specializing in the acquisition and restructuring of companies in difficult situations. Mutares acquires low-yield companies or peripheral activities of large corporations, often on favorable terms. After the acquisition, the companies undergo four restructuring phases: strategic realignment, continuous optimization, growth through targeted acquisitions, and profitable divestment. Mutares generates income from consulting fees, profit distributions, and sales proceeds. The aim is to increase capital significantly within three to five years. Mutares is also expanding internationally, including in China and India.

Mutares' shares were recently the focus of a short-selling attack by Gotham City Research, which triggered a drop of up to 27% in the share price. The SDax-listed financial investor strongly defended itself against the accusations. Mutares accuses Gotham of misleadingly presenting known facts in order to maximize its own profits through falling prices – an accusation that is not uncommon for such attacks. Mutares further stated that the strategic use of debt requires a deep understanding of its sophisticated investments and is by no means unusual for its business model. On October 1, the Company followed up by promising a dynamic continuation of its growth strategy in the fourth quarter.

The Company's guidance suggests significant progress will be made in the engineering & technology, and retail segments. Up to five acquisitions are planned by the end of the year, and they are expected to generate a substantial revenue value of over EUR 600 million. By contrast, a partial exit at Steyr Motors could be on the cards. The Company is also considering an IPO for Steyr, which could represent a further milestone in its growth strategy. The planned sale of MobiLitas shows a strategic reorientation that continues to focus on strengthening the core business areas. A price-to-sales ratio of 0.1 indicates a favorable valuation. The share price recovered to EUR 24.45 following the Gotham report.

Almonty Industries - Takes important step in South Korea

Almonty Industries' Sangdong mine has recently made significant progress: the completion of a final technical review paves the way for the installation of the processing plant. This measure results from numerous tests and adjustments to the flotation technology, specifically tailored to the properties of the tungsten ore mined in South Korea. Two pilot plants were operated during the testing, demonstrating the stability of the developed processes in Portugal and on-site in Sangdong. In Portugal, over 60% tungsten concentrate (WO3) was recovered, corresponding to a yield of approximately 82% of the tungsten contained in the ore, thus confirming expectations for future production.

The pilot plants played a significant role in Almonty's strategy of identifying challenges and gaining operational knowledge before the opening of the main plant. The success achieved ensures that the main plant, the construction of which is now progressing in a targeted manner, will achieve a high level of operational stability. With the optimization of the flotation technology and adapted reagents, an impressive 86.3% of the tungsten ores were recovered in Sangdong. The WO3 content in the concentrate production will thus be stable between 60 and 65%. This test and verification phase enabled Almonty to gain confidence in its own technology and prepare for a stable production year in 2025.

In addition to the Sangdong mine, the Panasqueira mine in Portugal also offers great potential. This mine supplies high-purity tungsten concentrate and benefits from an excellent permitting status and ongoing expansion projects. As a critical raw material, tungsten is gaining increased importance worldwide, particularly due to its applications in future-oriented industries such as e-mobility and semiconductors. The strategic location of the mines outside of China gives Almonty Industries a valuable advantage in a market characterized by supply chain uncertainties. The stock has already risen in anticipation of production starting in 2025 and marked a new annual high of CAD 0.88 last Friday. Currently, a share costs CAD 0.87.

JinkoSolar – Challenges and prospects

In September, the Chinese central bank announced a series of significant economic measures to stimulate economic activity. These include a reduction of 50 basis points in the minimum reserves for banks, a cut in interest rates on existing mortgages, and a reduction in the deposit requirement for second homes from 25% to 15%. In total, about 1 trillion yuan (around EUR 125.5 billion) of liquidity will be injected into the market. Almost simultaneously, the US Department of Commerce has set preliminary tariffs on solar modules from some Southeast Asian countries, with rates varying from 0.14% to over 3,293% depending on the Company, which could lead to international tensions.

JinkoSolar has recently experienced difficulties in profitability and on the stock market. The Company is heavily dependent on government subsidies and political conditions. Unique risks arise from the upcoming 2024 US elections, as the new administration's energy program could be crucial. Despite revenue growth in Q2, declining solar module prices and rising operating costs are weighing on profitability. However, the strategic expansion, including investments in innovative technologies such as N-type TOPCon cells and capacity expansions in Saudi Arabia, shows its commitment to improvement.

Thanks to China's extensive stimulus measures, Chinese equities have gained momentum. JinkoSolar benefited from this after the stock had fallen from over EUR 75 in mid-2022 to around EUR 15 in September. The new Chinese economic measures bring a positive outlook in the short term, but it is unclear how long the trend will last. The analysts, therefore, recommend the shares as a "Hold" and have issued an average price target of USD 29.26. If the dividend remains stable, the share is worth a look for dividend hunters. Currently, the share price is at USD 29.94 and thus already more than 75% higher than at the beginning of September.

Mutares, Almonty Industries and JinkoSolar are on the verge of decisive developments that could strongly impact their market positions. Mutares is recovering from a shortselling attack by Gotham City Research and planning ambitious acquisitions to continue its growth strategy. Almonty Industries has made significant progress at its Sangdong mine in South Korea, raising hopes for stable production in 2025. JinkoSolar is benefiting from Chinese stimulus measures, but is struggling with profitability challenges from volatile module prices and high operating costs. The first two companies, in particular, show promising prospects for investors, while JinkoSolar's stock seems to have already run too far.