February 13th, 2024 | 07:15 CET
Nordex, Kraken Energy, Siemens Energy - Energy shares making a comeback
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"[...] When we acquire something, we want to make sure that the acquisition fits with our strategy and has the potential to be successful for our shareholders. [...]" John Jeffrey, CEO, Saturn Oil & Gas Inc.
Nordex - The picture brightens
The well-received preliminary annual figures, showing an improvement in the margin situation, have significantly brightened the short-term chart pattern for the wind turbine manufacturer. With a gain of over 7% to EUR 10.15, the Nordex share was able to break out of the downward trend that has been established since the end of July 2023. The next target is the 200-day line, which currently stands at EUR 10.81. The rise is also receiving a tailwind from the indicators. Both the trend follower MACD and RSI provided short-term buy signals.
Nordex announced a strong increase in sales but continued to have weak margins, which nevertheless improved compared to the previous year. In comparison, sales rose from EUR 5.7 billion to EUR 6.5 billion. This increase of 14% thus exceeded the Company's forecast, which assumed a figure of EUR 6.1 billion. However, the resulting operating earnings before interest, taxes, depreciation and amortization (EBITDA) only reached EUR 2 million. Compared to the same quarter of the previous year, which recorded a loss of EUR 244 million, this represents the break-even point but resulted in a very low EBITDA margin of 0.0% - nevertheless, the margin improved by 430 basis points.
Nordex plans to publish its full financial results on Thursday, February 29 and will also announce its 2024 guidance on that occasion. José Luis Blanco, CEO of Nordex, commented on the past year: "2023 was a year of transition and a step in the right direction. We have reached break-even in profitability, which is a solid foundation for the future development of our business."
Kraken Energy - Newcomer with big goals
The uranium price has experienced a revival in recent months, breaking through the magical USD 100 mark for the first time since 2007. Since the lows in 2017, the price of the metal has risen by over 460%. Although a correction would be expected after the sharp rise, demand will likely continue to increase significantly in the coming years due to the expansion of nuclear energy to achieve climate targets. Experts predict a tripling of nuclear power by 2050 to provide up to 25% of electricity as part of a clean and reliable low-carbon mix.
Major uranium producers such as Cameco, Fission Uranium and Kazatomprom have already multiplied in this upward cycle. In contrast, the mining company Kraken Energy, valued at CAD 8.97 million, has barely moved but should, according to the plans of the experienced management around CEO Matthew Schwab, benefit significantly from the exploding demand, especially in the US. The Company's current shareholding of 22% shows that the management team is convinced of its vision.
Historically, the US is extremely dependent on international imports. The main suppliers are Kazakhstan (35%) and Russia (14%). In contrast, there has been a steady decline in domestic uranium production over the past decade. Since Russia's invasion of Ukraine, the US government has been trying to turn the tide and is increasingly subsidizing mining in domestic areas. Kraken Energy has set itself the goal of building a uranium base in the US to cover domestic energy requirements.
The Company currently has access to four high-grade uranium deposits, one in Utah and three in Nevada. These properties, including former production facilities dating back to the 1950s, provide access to untapped resources and world-class infrastructure. Particularly noteworthy are the rich uranium deposits, with grades as high as 0.4%, while other projects are producing uranium at grades as low as 0.02%. Surface samples even yielded values of up to 3.19% and 6.0% uranium oxides. In addition, these areas have economic potential due to the presence of other minerals such as gold, silver, copper, nickel, vanadium, diamonds and molybdenum. The Company's key areas, Harts Point in Utah and Apex in Nevada, could become central locations in a hub-and-spoke model designed for the US uranium industry.
A drilling program at Harts Point is planned for the coming weeks. The Apex project has yet to receive a drill permit, which is expected in the 2nd quarter. This will be followed by a NI 43-101 mineral resource estimate, a standard that did not exist at the time of the original exploration. However, historical drill results indicated uranium grades of 0.23% to 1.33%. If these values are approached, the share of Kraken Energy is likely to experience a similar surge as its underlying asset.
Siemens Energy - Analysts euphoric
The share price of Siemens Energy, which plummeted last year, also recorded a further jump. With an increase of 5% to EUR 14.42, the share price is exactly at its 200-day line. Breaking above would open up the potential to close the price gap at EUR 23.41 that was opened in June 2023.
At least several analysts agree that this can be achieved. According to analysts at Bank of America, the energy technology company's wind turbine segment appears to have overcome the most difficult times. They have raised their target for the share from EUR 13 to EUR 20 and thus continue to see considerable growth potential, upgrading their rating for the shares from "Neutral" to "Buy".
Analyst Virginia Sanz De Madrid from the Spanish bank Santander is also more optimistic, with a rating of "Outperform" compared to her previous "Neutral" rating. The target price has been raised from EUR 14 to EUR 19.
Vlad Sergievskii, an analyst at the British Barclays Bank, does not see quite as much scope for share price increases in the medium term but also became more optimistic with an increase in his price target from EUR 15 to EUR 16. He maintains his "Overweight" rating. The business climate in the gas & energy sector remains positive, and there have been no new negative reports regarding the wind energy business, according to the analyst. This sector is even making small progress in the right direction. In addition, the risks on the balance sheet are decreasing.
In total, 21 analysts rate the Company on Refinitiv. The average price target is set at EUR 16.
Nordex was able to surprise with a significant increase in sales and a balanced margin in its preliminary figures. Siemens Energy is becoming a favourite among analysts. Kraken Energy could benefit disproportionately from the further increase in demand for uranium.
Conflict of interest
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