March 10th, 2022 | 12:09 CET
Nordex, Phoenix Copper, E.ON - Under power
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"[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper
Nordex - Theoretically a winner
The Americans are suspending Russian gas and oil imports, and Russia is threatening to turn off the gas tap at Nord Stream 1. One industry that should benefit from this is wind energy. This includes the Hamburg-based Nordex Group, one of the top three suppliers of onshore wind turbines. Nevertheless, the share price fell after the publication of the latest quarterly figures, even though the Hanseatic company was able to significantly increase sales and order intake compared to the same period of the previous year and even exceed its forecasts.
The reason for this is that there are problems with profitability. EBITDA has almost halved from EUR 90 million to EUR 50 million. No further details can be elicited from Nordex's preliminary announcement. But that is news in itself. One thing is clear: 2022 will again close with a loss. The Group is therefore working flat out to get costs under control.
It recently announced the upcoming closure of rotor production in Rostock in June 2022 because customer demand has shifted to larger rotor blades that can not be produced at the site in Mecklenburg-Western Pomerania. A social plan is to be drawn up with the works council for the approximately 600 employees.
Phoenix Copper - A budding copper producer
Phoenix Copper is a budding producer of base and precious metals. The Company's primary operations are located in the US state of Idaho in the Alder Creek mining district. The Empire copper-oxide open pit project is the Company's principal asset. In 2013, 80% of the project was acquired, and the original acreage was significantly increased to approximately 32 sq km through acquisitions in subsequent years.
The target is to start production in the first half of 2023. Over a period of 10 years, revenues are expected to reach USD 836 million. The required investment costs of USD 52 million are expected to be recouped within 2 years. As less than 1% of the potential ore system at Empire has been explored to date, there is a good chance of greatly increasing the resource through further exploration work.
In addition, Phoenix Copper owns the historic Horseshoe, White Knob and Blue Bird mines, all of which have historically produced copper, gold, silver, zinc, lead and tungsten from underground mines. At Red Star, 330m northwest of the Empire Mine, the discovery showed high-grade silver/lead sulfide ore.
The Company is planning a 3,000m drill program to further explore this system in the current year. Analysts at SISM Research have high confidence in the stock and formulate a price target almost 3 times the current quote. The stock market value is currently USD 72 million.
E.ON - Nervousness
In order to increase political pressure on Putin, the world has put together a tough sanctions package. It should not be forgotten that Russia is a very important gas supplier. Now that the Nord Stream 2 pipeline project has been stopped, more and more politicians from Europe are also calling for Nord Stream 1, in which E.ON holds a 15% stake, to be cut. Russia is also currently considering cutting off supplies.
The German Association of Energy and Water Industries (BDEW) recently issued an urgent warning against an embargo on Russian energy supplies. The loss of supplies from Russia would have a "massive negative impact on the German economy and also on consumers," said BDEW head Kerstin Andreae. Germany cannot replace its most important trading partner for gas overnight.
The urgently needed diversification will take a long time. The prices that have shot up will soon fuel inflation once again. After a sharp drop in the share price in recent days, the shares have recently recovered somewhat, also in the wake of positive analyst comments.
Due to the war in Ukraine, the issue of supply security is at the top of the agenda. The diversification of energy sources and the expansion of renewable energy sources will be positive for Nordex and E.ON in the long term. With the growth of electromobility, copper producers will benefit massively. Phoenix Copper is a good choice here.
Conflict of interest
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