May 2nd, 2023 | 08:50 CEST
Nuclear off, secure energy now! Altech Advanced Materials, Varta and BYD - Up 700 % and no end in sight?
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"[...] We know exactly what we are doing and are implementing what we consider to be a proven technology in an industrially applicable and scalable way. [...]" Uwe Ahrens, Director, Altech Advanced Materials AG
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
BYD - High profits in the first quarter
The Chinese technology group is making headlines again. The profits in the first quarter increased by 411% compared to the previous year, reaching 4.1 billion Yuan, about EUR 540 million. Turnover grew in parallel by an astonishing 80% to 120.2 billion yuan, another record since the Company was founded. In total, more than 550,000 electric cars were sold, a good 20% more than the Texan competitor Tesla was able to deliver.
Somehow this was already foreseeable because a few days ago, BYD announced that it had overtaken the VW Group, which has so far been able to sell the most vehicles in China. The supremacy of the Wolfsburg-based company, which has existed since 2008, has now been broken for the first time, and other domestic manufacturers, such as NIO, are also taking smaller market shares. Volkswagen sold 427,247 vehicles in the first quarter, and BYD plans to deliver between 3.0 and 3.7 million electric cars this year. This should establish the current and future market leader. One thing should not be forgotten: BYD, alongside China's CATL, also dominates the global energy storage sector, making it a major supplier of Greentech products for climate change. The Company's vertically integrated business model leads to medium-term earnings growth in all divisions.
Analysts have recently raised their BYD ratings again. The experts at Citigroup, for example, believe that BYD's margins, boosted by the Denza and U8 models, will continue to rise this year. Of 31 institutions on the Refinitiv Eikon platform, 27 recommend buying, and the median price target is 352 yuan, which is about 38% above the current price of EUR 27.50. Technically, a move to the resistance level of EUR 30 is possible at any time.
Altech Advanced Materials - One of the front-runners on the German price list
The 6-month chart of Heidelberg-based Altech Advanced Materials AG (AAM) shows a price increase of 693%. Has the Company struck gold? No, Altech is a young player in the market for lithium-ion batteries and an expert in battery materials. The Company's goal is to increase electrical efficiency, for example, in the field of electromobility. They are trying to produce a new high-performance anode material to bring new momentum into the industry through more innovation. Another focus is on solid-state batteries for stationary storage needs.
Together with its Australian parent company Altech Chemicals Ltd, and the Fraunhofer Institute for Ceramic Technologies and Systems (IKTS), they formed a promising joint venture in 2022. The resulting Altech Batteries GmbH aims to set up a production plant for solid-state batteries at the Schwarze Pumpe site in eastern Germany. AAM owns just under 19% of the entire venture, driving the development of the revolutionary CERENERGY® sodium aluminium oxide solid-state battery (SAS).
If the climate turnaround is to work, suitable energy storage systems are needed, especially for the night when the grid is weak, to conserve the regenerative surplus from the daytime production of photovoltaic systems accordingly. According to industry experts, the estimated sales volume for such storage systems will explode globally from about EUR 4 billion last year to almost EUR 20 billion in 2030. There is no need to wait for corresponding legislation from Brussels because the green sails have already been set. For Altech Advanced Materials, the environment could not be better at the moment. Investors followed this idea and were able to cash in on the AAM share. It will be exciting to see what happens in the next 6 months. The rise is reminiscent of the Tesla share in 2020.
Varta - It gets worse
The crisis-stricken battery manufacturer Varta is currently finding it difficult to forecast demand from its customers and is therefore lowering its expectations for the current year. The market development has become so uncertain that a serious outlook is impossible. After a special write-off of EUR 200 million in the lithium-ion button cell sector, it is not entirely clear what will happen next in Ellwangen. A tough restructuring is on the agenda, but fortunately, major shareholder Montana Tech remains on board and is supporting the necessary measures.
And for the first quarter, there is another full-year revenue warning: Instead of EUR 850 to 880 million, management now expects almost unchanged revenue of between EUR 820 and EUR 870 million, after a depressed EUR 807 million in 2022. Adjusted EBITDA is expected to be at least on par with the previous year, but there has already been a 180-degree turnaround in 2022 from a previously EUR 126 million profit before tax to a historic loss of over EUR 200 million.
Varta continues to be burdened by high energy and raw material costs. In addition, the Company has been struggling for some time with weak demand for its lithium-ion button cells, which are currently no longer on consumers' shopping lists due to the weakening global economy. The high development costs in the area of the V4Drive battery cell are cited as another reason for the crash. The previous year's dividend of EUR 2.48 is cancelled, and potential investors are still looking for buying arguments. But despite a 75% drop in the share price, these are still in short supply at EUR 23.20. Wait and see!
The crux of the climate revolution lies in solutions for individual mobility. With electricity prices doubling and oil and gas prices falling, it will be difficult for battery drives to compete economically with combustion engines. Nevertheless, investors need to keep an eye on the industry. BYD continues to do excellent business, Altech Advanced Materials could follow suit, and Varta investors should confidently wait for the upcoming restructuring.
Conflict of interest
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