March 9th, 2022 | 12:56 CET
Panic oil price USD 130: Volkswagen, Porsche, Nevada Copper, Mercedes - Next push for e-mobility!
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"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
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.
Volkswagen and Porsche - Spin-off in stormy times
Shortly before the Russian invasion of Ukraine, Volkswagen and Porsche Automobil Holding SE made a groundbreaking announcement. It concerns Porsche AG, which comprises the operating business of the sports and off-road vehicle manufacturer. Both companies have cross-shareholdings and own shares in Stuttgart's engineering pearl. The Company is a key earnings generator for the entire Volkswagen Group.
The targeted IPO of Porsche could be in place by the end of this year, according to the roadmap of the parent company Volkswagen. According to the current status, Porsche's share capital is to be split in half into ordinary and preferred shares. The listing of part of the preferred shares in the profitable brand could take place in the fourth quarter of 2022, as the extensive preparations by the auditors and lawyers are already in full swing.
According to the new distribution of ownership, around 12.5% of the German sports car icon would then be on the stock exchange. The holding company Porsche Automobil Holding SE (PSE), in turn, would receive 25% plus one share of the voting common stock. The family holding company is the center of power in the Wolfsburg-Stuttgart network. After the Wiedeking era, it now holds a good 53% of the voting rights in the Volkswagen Group and is controlled by the owner families Porsche and Piëch. However, VW itself is to remain Porsche's main shareholder in the construction under discussion.
The awakening of independence and entrepreneurial freedom could open new perspectives for the sports car manufacturer because investors value the Zuffenhausen sports car manufacturer. Of course, of key interest to VW is the financing of further investments, especially in electromobility, software, and networking technologies. The brand value of the new share is currently very highly valued and can finally come to life. VW is also thinking out loud about making its e-battery activities independent. For VW and Porsche shares, which have been badly beaten due to the crisis, these corporate simplifications would be a strong buying argument at the current level.
Nevada Copper - Getting down to business
Investors are hearing a little less about Nevada Copper at the moment. The Canadian mining company is a copper producer with a promising property called Pumpkin Hollow in Nevada. Pumpkin Hollow has considerable reserves and resources, especially in the coveted copper, gold and silver. It had taken the Company a long time to raise the necessary funds for the large-scale project, but the urgent need in the processing industry does not allow any further delays. Since new CEO Randy Buffington took the helm in the fall of 2021, things have been visibly progressing.
The two fully-permitted projects include a high-grade underground mine and associated processing plant, which are now in production. Furthermore, management is working on implementing a mega open pit project that is moving towards a feasibility study with new drilling in 2022. The pace of development will continue to accelerate this year, with a significant increase in copper output expected in 2023.
New investors Solway and Mercuria have recently sent a strong signal that things are now moving forward on the financing side. With a contribution of CAD 30 million each, both sent a signal and at the same time secured a good stake in the future project. Despite the uncertainty, the Nevada Copper share has shown good stability in recent weeks and is currently trading at CAD 0.67. The market capitalization is thus again above CAD 300 million. When production starts, a revaluation of the assets is likely.
Mercedes Benz - Good prospects, but minus 30% in just two weeks
Many market participants would probably not have expected this. When the Daimler Truck division made its stock market debut a good 6 weeks ago, the then Daimler AG had been renamed Mercedes Benz AG. Today, after the transaction, Mercedes Benz AG, as the remaining DAX stock, has lost a whole EUR 22 billion in market value. That corresponds almost exactly to the stock market value of the spun-off subsidiary. So if a shareholder did not react at the time, i.e. sold, his share portfolio today has the same value as before the spin-off. Of course, no one could have known that there would be such a major correction that these gains would all be wiped out.
Nevertheless, the split does have one advantage. Both companies can now go their own ways, and Mercedes is doing very well. The figures for the past year were first-class, and the outlook was also positive. On top of that, shareholders received a crisp dividend increase, which will rise from EUR 1.35 to a whopping EUR 5.00. The previous year, which was burdened by corona lockdowns, has thus been wiped away. The Group is looking to the future in a new position.
Only the current crisis could negatively impact sales plans for the current year; it is not yet possible to predict whether the supply chains will panic again. If consumers also opt for the e-model from Mercedes, this would also be very welcome. Because, with the revamped model range, CEO Ola Källenius can easily take on challengers like Tesla, Rivian and Lucid. Analysts have recently given the Company a lot of applause and corresponding buy recommendations with an average price target of EUR 96. Unfortunately, however, the share price fell by a full 30% to EUR 57 due to the crisis. Here it is necessary to collect courageously!
The automotive industry is facing considerable challenges. The price of raw materials has risen dramatically recently, and gas station prices are exploding. That provides further arguments for e-mobility, although of course electricity from the socket also has its price. Nevada Copper can benefit from all this in the medium term because the high-tech industry is waiting for the red metal.
Conflict of interest
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