Close menu




May 27th, 2022 | 10:30 CEST

Nel ASA, Erin Ventures, NIO - Using setbacks as long-term opportunities

  • boron
  • commodities
  • Electromobility
Photo credits: pixabay.com

Since Russia invaded Ukraine, stock markets have corrected sharply, and volatilities have increased significantly. The S&P 500 Volatility Index VIX, for example, rose from under 20 to a high of over 35 points. Individual stocks are also still subject to high fluctuations, with market leaders in promising future-oriented sectors such as hydrogen fuel cell technology, photovoltaics and wind energy losing more than 50%. In such market phases, an anticyclical entry can represent a particularly worthwhile investment. A historic opportunity could also present itself in a critical commodity.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: NEL ASA NK-_20 | NO0010081235 , ERIN VENTURES INC | CA29570H2000 , NIO INC.A S.ADR DL-_00025 | US62914V1061

Table of contents:


    The next player in the raw materials hype

    Scarce raw materials have so far dominated the current decade. The energy transition has fueled the demand for lithium, copper, and cobalt. After the invasion of Ukraine and the subsequent subsidies against Russia, the need for Western deposits is once again more significant than ever to minimize dependencies.

    The Canadian company Erin Ventures, traded on the TSX and in Germany with a market capitalization of only EUR 6.89 million at a share price of EUR 0.04, has a treasure in its portfolio that could significantly increase its value in the near future. In this regard, Erin Ventures is betting on boron. The European Commission declared boron a critical commodity in 2018. Although it is hardly mentioned compared to other raw materials, boron is only surpassed by diamonds in hardness due to the highest tensile strength of all known elements. Modern life can hardly be managed without boron. Thus, the trivalent semimetal is used in more than 500 products that shape everyday life. Applications include the production of fibreglass insulation, textile fibreglass and borosilicate glass for LCD screens, solar panels and smartphones. Boron is also contained in cleaning agents, fertilizers and wood preservatives.

    The boron market currently has a volume of USD 4 billion per year. However, it is dominated by just 2 major players, Rio Tinto's US Borax in California and Eti Mine in Turkey, with an oligopoly of more than 70%. Currently, growth exceeds demand. Rio Tinto estimates that the boron industry will need the production of nearly two boron mines the size of its California operation over the next decade to keep up with demand. With the 100% owned Piskanja project in Serbia, Erin Ventures thus becomes a serious player to fill this gap. The deposit has an indicated resource of 7.8Mt (31% boron trioxide B2O3) and an inferred resource of 3.4Mt at 28.6% B2O3. In the course of the new project feasibility study, the Company intends to update the resource estimate and incorporate new findings. A result is expected as early as in the next few weeks.

    Erin Ventures plans an annual production of 200,000t with its strategic partner Temas Resources, which is to receive 50% through a EUR 10.5 million contribution. Erin's competitive advantages include the high-grade deposit with an area of 3 sq km and a long life of over 20 years and the first-class infrastructure with unlimited expansion in 2 directions. In the process, gross project revenues are expected to be CAD 2.04 billion with a net operating margin of close to 70%, according to the 2014 PEA. An investment in Erin Ventures can be crowned with disproportionate success due to the potential. However, due to the exploration stage, higher risk should also be taken into account.

    On a knife's edge

    The short countermovement, which led the share of the Norwegian hydrogen specialist since marking a new intermediate low at EUR 1.10 to EUR 1.39, is already about to be completed again. It is likely to come to an abrupt end and accelerate the downward movement at the latest once the critical support at EUR 1.28 is undershot. Supporting this, both the trend-following indicator MACD and the relative strength indicator point to Sell. Thus, a retest of the annual low at EUR 1.05 could be the likely scenario.

    Various analyst houses also have different opinions concerning the Nel ASA share. The US bank JPMorgan lowered the price target for the Norwegians from NOK 11.40 to NOK 11.10, equivalent to EUR 1.08. The verdict was repeated after the weak quarterly figures with "underweight". In contrast, US analyst firm Bernstein Research sees Nel as an outperformer and assigns a price target of EUR 1.65. In a study, analyst Deepa Venkateswaran elaborated on the advantages of green hydrogen and sees it as a good time to enter shares such as Nel ASA and ITM Power. "The industry is benefiting from growing zero-emission ambitions and increasing advantages over gas-based electrolysis, and the cost of green hydrogen is currently falling fast," she said.

    New low for the year in sight

    The technical picture for Chinese electric carmaker NIO is also negative. After annual lows of USD 11.67, the share price had risen by almost 30% to USD 16.44 by mid-May. However, NIO lost strength in the downward trend that formed since December, resulting in strong sell-offs. Currently, NIO is trading at USD 14.40; at USD 13.82, another sell signal would be triggered. Since the indicators diverge negatively, similar to Nel ASA, a further slide towards the low for the year cannot be ruled out. Thus, the share is, at best, an observation position.

    In order to improve battery technology, NIO plans to set up lithium-ion battery labs and a pilot battery production line in Shanghai. Thus, according to CneVPost, about USD 32.75 will be invested in the facility. The new plant would be located in the city of Anting in Shanghai's Jiading District and would include 31 laboratories for lithium-ion cell and battery research. It would also have a pilot line for lithium-ion cells and a production line for battery packs. The pilot line and battery pack production line would be used for trial production of lithium-ion cells and battery packs to test large-scale production in the future.


    The stock market continues to show signs of weakness, and fluctuations remain high. In addition to Nel ASA, NIO was also unable to extend the countermovement in the overarching downward movement, and a further slide could be the result. After a correction of around 75%, the Erin Ventures share is certainly worth a closer look.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



    Related comments:

    Commented by Armin Schulz on May 15th, 2024 | 06:45 CEST

    Volkswagen, Desert Gold, RWE - There is significant upside potential here

    • Mining
    • Gold
    • Electromobility
    • Energy

    The search for stocks with upside potential is like a treasure hunt in the depths of the financial markets. It combines analysis and intuition to find companies with solid fundamentals, innovation, and a good market environment for growth. Investors must show foresight and recognize many factors that make a share special. We have selected three candidates who have not stood out in recent months but still have significant catch-up potential.

    Read

    Commented by André Will-Laudien on May 6th, 2024 | 07:30 CEST

    Attention e-mobility 2.0, now China is in demand! BYD, Almonty Industries, VW, and Mercedes in focus

    • Mining
    • Tungsten
    • Electromobility

    Even though e-mobility has stuttered in Germany since the scrapping of the environmental bonus, the production of new vehicles "Made in China" is running at full speed. Manufacturers are still trying to pack more range, durability and stability into the units. Conceptually, electric vehicles only make sense if inexpensive electricity can be used for charging. Fast charging stations on the highway cost between 55 and 95 cents per kilowatt hour; Tesla charges an average of 43 cents but asks external customers to pay up to 64 cents. Without the tax disadvantage, optimized diesel vehicles have the same operating costs as electric vehicles. Where the combustion engine clearly scores points, however, is in winter operation, independence, and range. What is more, the battery in an electric vehicle needs to be replaced after 10 years, while the diesel engine has only just warmed up with 150,000 km of performance. Where are the opportunities for shareholders?

    Read

    Commented by André Will-Laudien on April 23rd, 2024 | 07:45 CEST

    Attention: DAX dividends! Car stocks pay out: Mercedes-Benz, MS Industrie, VW and BMW

    • Technology
    • hightech
    • Automotive
    • Electromobility

    The DAX 40 index has gone into reverse gear in recent weeks. In addition to the high-tech and artificial intelligence sectors, the multi-month bull market also included defense stocks in the interim phase. There is no real reason to celebrate among automotive stocks, as an expected decline in GDP also means reduced household budgets. This translates to fewer new vehicle sales, with many electric vehicles produced in bulk occupying important showroom space from dealers for months. The pain is increasing, and those looking to sell vehicles find themselves in ruinous discount battles with cheap Chinese imports. However, there appears to be a glimmer of hope on the horizon: interest rate cuts! They are expected in the second half of the year. We analyze the current situation.

    Read