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August 30th, 2023 | 08:10 CEST

Plug Power, Almonty Industries, JinkoSolar - Will the doubler come after the Crisis?

  • Mining
  • Tungsten
  • RareEarths
  • renewableenergies
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Currently, there are several hotspots of crisis around the world. There is the war between Russia and Ukraine, the efforts of the BRICS countries to free themselves from the supremacy of the US dollar, and the smoldering dispute between the US and China. Relations between the latter have deteriorated in recent years, partly because the US fears growing Chinese influence. However, the BRICS nations are blessed with raw materials that the West desperately needs. The list of critical metals is long. This is also true for Europe, which has had an energy problem above all since the Ukraine conflict. Efforts are being made to solve this. We have picked out one company from each of the various focal points.

time to read: 4 minutes | Author: Armin Schulz
ISIN: JINKOSOLAR ADR/4 DL-00002 | US47759T1007 , ALMONTY INDUSTRIES INC. | CA0203981034 , PLUG POWER INC. DL-_01 | US72919P2020

Table of contents:

    Plug Power - Looking for money

    The energy crisis has brought the hydrogen issue back into focus. Renewable energy is being expanded, and surplus energy could be converted into green hydrogen. This could then be used on demand. It is ideal conditions for plug power. But the Company has repeatedly failed to meet its intended targets for some time now. Most recently, the figures for the 2nd quarter were the reason for the share's downward slide. While sales increased and even exceeded analysts' expectations, the losses per share were higher than feared. While equipment sales are still making money, services, power purchase agreements, and fuel deliveries are loss-making.

    In order to boost investor confidence, CEO Andy Marsch gave analysts a tour of a hydrogen plant in Georgia. Once the plant is fully operational, losses are expected to narrow. **Currently, Plug Power is still purchasing hydrogen. These costs are then to be divided into thirds. A total of 9 production facilities are planned, but even here, there are always postponements. The CEO assured that the Company would receive funds from the large US climate package, and subsidies could also beckon internationally.

    The group urgently needs money because, in the 1st half of the year alone, it consumed around USD 625 million in cash. There is a risk that the Company will run out of money before the turnaround is achieved. Behind the scenes, every option is being examined, such as the loan program of the Ministry of Energy. They are said to have inquired there about USD 1 billion. The analyst day has prompted Morningstar to upgrade its rating to Buy with a price target of USD 11.50. The stock is currently trading at USD 8.33. If new liquidity becomes available, the share is expected to gain value rapidly.

    Almonty Industries - Mine in Spain goes into production

    Tungsten has been on the critical metals list for some time, and for good reason. About 90% of the world's tungsten production comes from China and Russia. If the West is cut off from these exports, it will hit various sectors such as defence, medical, aerospace and automotive. In electric vehicles, tungsten is used in wiring harnesses, semiconductors and battery components. Here, the demand for corresponding raw materials is growing rapidly. To free oneself from this dependence, one needs alternatives. One of these is Almonty Industries, which has the largest mine outside China, with its Sangdong Mine in South Korea.

    On July 31, the Company gave an update on the Sangdong project. Protective screens and recovery feeders arrived at the port in late June. Additional parts from Turkey, Brazil and France are expected soon. Detailed design plans for the crushing and stockpiling areas have been completed, and finalization of drawings for the grinding and classification area is underway. Scalping work at the processing plant site has been completed and is in the verification phase. The Company has received the next USD 9.8 million from KfW IPEX Bank, bringing the total drawn amount to USD 40.2 million out of the provided USD 75.1 million.

    The H1 annual report shows that the Portuguese Panasqueira mine generated EUR 12.6 million in revenue. The bottom line was an expected pre-tax loss of EUR 3.9 million. In addition to the Portuguese mine, the Spanish Los Santos mine is also expected to come back on stream in the 3rd quarter. This will require an investment of about EUR 1 million and would increase recovery rates to approximately match Panasqueira's revenues. Insights gained from the Sangdong Mine are proving beneficial in this context. The stock has fallen from CAD 0.88 to CAD 0.49 since mid-January. With positive news, it should quickly go up again. Currently, the share is quoted at CAD 0.50.

    JinkoSolar - Downward trend despite performance

    The Chinese solar module manufacturer JinkoSolar is considered a leader in the industry, yet the share price has fallen by over 50% since mid-January. There are two reasons for this. On the one hand, there is the trade dispute between the US and China, which has ensured that Chinese shares are at a decent discount, as a withdrawal from the New York Stock Exchange always seems possible. On the other hand, the Chinese real estate crisis plays a significant role. After Evergrande, Country Garden was most recently in trouble. The question is how significant the impact on JinkoSolar will be.

    There are rumors of overproduction in the Chinese market, and JinkoSolar is expanding its capacity. However, the company is also looking positively towards the quarters leading up to year-end. The figures for the 2nd quarter also give no reason for concern. Sales climbed to CNY 30.69 billion, up 62.9%. Gross profit increased 72.5% to CNY 4.78 billion. A total of around 18.6 megawatts of capacity was shipped. The high investment cost of CNY 15 billion is mainly used for the large plant in Shanxi.

    In September, the US factory will be able to produce up to 1 gigawatt, which should help US business. Operationally, everything is going well, but shareholders are currently avoiding the stock. If the problems in China are resolved and the next quarterly results remain good, fears should dissipate, and the stock should bounce. Currently, the share is trading at USD 30.76. In the last 90 days, 8 analysts have covered the stock, and there have been 1 sell, 1 hold and 6 buy recommendations. On average, the price target is USD 56.61.

    All three presented companies have the potential to make a quick and significant turnaround. Whether it is enough for a doubler, one must wait and see. In the case of Plug Power, a lot depends on whether management succeeds in raising fresh money and whether the plant in Georgia performs as promised. At Almonty Industries, construction of the largest tungsten mine outside China is in full swing. The stock will have to be revalued at the latest when production starts. JinkoSolar is doing everything right operationally and is presenting very good figures. However, the share is currently being avoided.

    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

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author

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