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July 20th, 2022 | 13:18 CEST

Nel with a liberation blow - When will Varta and Almonty Industries take off?

  • Tungsten
  • Electromobility
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Nel has long been one of the hopefuls in the hydrogen sector. But recently, Plug Power had somewhat outstripped the Norwegians. The reason: a lack of major orders at Nel to justify its billion-euro valuation. The major order has now finally arrived, and the stock is stepping on the gas. Since Monday, it has already gained more than 10%, and analysts see further room for improvement. It should also boost other shares along the renewable energy value chain: For example, battery manufacturer Varta and raw material producer Almonty Industries. Almonty, which is actually on its way to becoming the largest tungsten producer outside China, has published convincing estimates for a molybdenum project. With Varta, on the other hand, caution is the order of the day. The chart is battered and another insider sale adds to the uncertainty.

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: NEL ASA NK-_20 | NO0010081235 , VARTA AG O.N. | DE000A0TGJ55 , ALMONTY INDUSTRIES INC. | CA0203981034

Table of contents:

    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview


    Almonty: Not only tungsten but also molybdenum

    Almonty Industries is known for its tungsten projects. The Canadians operate mines in Spain and Portugal: but the trigger for the share is in South Korea. There, Almonty is currently building the Sangdong tungsten mine. When fully commissioned, the Sangdong mine will be the largest tungsten mine in the world. Almonty would then be responsible for 50% of the world's tungsten production outside China, making it strategically important for the security of supply in Western industrialized countries. Tungsten is indispensable for the modern high-tech industry. In electromobility, tungsten is on its way to overtaking the environmentally harmful cobalt.

    But Almonty also has other exciting projects. For example, a molybdenum deposit is located right next to the Sangdong mine. On Monday, an initial resource estimate of this AKM project was released: 21.48 million tonnes at 0.26% MoS2 with a cutoff grade of 0.19% MoS2. CEO Lewis Black commented, "We are pleased that based on a review of previous exploration work, the MRE shows significant potential. The deposit appears to be open in multiple directions and also has the potential to delineate a high-grade zone within the current ore body. The project can be operated concurrently with our tungsten mine as both can utilize the same existing mining infrastructure, dramatically reducing development costs." Almonty's shares are also traded in Germany and are trading in a narrow range between EUR 0.56 and EUR 0.74 this year (currently EUR 0.63). Given the importance of the Sangdong mine, the market capitalization of around EUR 140 million appears attractive.

    Nel: Liberation strike successful and analysts see more potential

    Investors have been waiting a long time for a major order at Nel. Now the time has finally come, and the share reacted with a jump in price. Nel's subsidiary Nel Hydrogen Electrolyser will supply alkaline electrolyzers with a capacity of 200 MW to the USA. The client was not yet named, but it is said to be an existing customer. The order is worth more than EUR 45 million and delivery is expected to be completed by mid-2024. An order extension is not ruled out, Nel said. Nel CEO Håkon Volldal said, "We are pleased to announce the largest order ever for Nel. This project will demonstrate Nel's delivery and execution capabilities on a large scale and will be a valuable reference for future large orders." Volldal expects a significant, positive impact on practically all levels of the Company: financials, electrolyzer product and production costs, technology development and scale-up plans. Analysts also expressed positive views. Goldman Sachs, Jefferies and RBC recommend Nel shares as a buy, with price targets of the equivalent of EUR 2.05 to EUR 2.24. The stock is currently trading at EUR 1.54.

    Varta: Chart-technically battered and insiders sell

    Shareholders of Varta currently have little reason to rejoice. The share of the battery specialist is quoted just above EUR 70 and is dangerously close to the 52-week low of EUR 68. If the share price slips below this mark, there is the threat of a further sell-off - in the worst case, down to the 3-year low at EUR 50. Investors are waiting in vain for positive company news - such as a cooperation partner in the field of batteries for electric cars. On the contrary: insider Prof. Dr Michael Tojner is selling shares again. The majority shareholder and Supervisory Board member sold 200,000 shares at a price of EUR 78 on July 11. The value of the package was thus over EUR 15 million. This was his second course of action within a few weeks, as he had already sold Varta shares in a volume of EUR 22 million in June. This is anything but confidence-building.

    Nel's burst of freedom shows how quickly a share can go up. Almonty also seems ripe for such a move. At Varta, there is nothing to indicate this.

    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.

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author

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