April 19th, 2023 | 08:10 CEST
Plug Power crashes, SMA Solar share plus 60%, and when will Almonty Industries start?
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"[...] While tungsten has always played an important role in the chip industry, it is now being added to batteries for e-cars. [...]" Lewis Black, CEO, Almonty Industries
Almonty Industries facing revaluation: Tungsten mine to go into production in 2023
When it comes to critical raw materials for electromobility, tungsten is usually overshadowed by lithium. Wrongly so. In the list of the most important metals for the EU, tungsten receives 7 out of 8 possible points. That makes it more important than cobalt, copper and titanium. The reason: tungsten is urgently needed for the batteries of the next generation. It replaces the controversial cobalt and is supposed to improve charging performance, endurance and safety through a higher energy density. In addition, tungsten is essential as a hardening metal in alloys for the defence and high-tech industries. The problem is that the mining areas for this critical metal are primarily located in China and Russia. Almonty Industries wants to change this.
Today, Almonty already produces about 78,000 metric tonnes of tungsten trioxide from the Panasqueira mine in Portugal. That provides the Canadian-based company with gross revenues of CAD 24.8 million in 2022. The operating result (EBITDA) of the mine was positive. There was still a loss at the group level in 2022, as Almonty is investing heavily in mine development in Spain and South Korea. Both projects in Spain are in further permitting processes. A milestone will be the start of the tungsten mine in South Korea, which is to take place before the end of the current year. Almonty should thus become the leading tungsten producer outside China. For further details on Almonty's figures and prospects, please see the latest update from researchanalyst.com (link https://researchanalyst.com/de/updates/aktien-news-almonty-industries-strategische-metalle-fuer-die-energiewende).
The analysts at German Sphene Capital expect production to start in South Korea before the end of 2023. That would lead to a massive jump in sales and earnings already in the current year. Sphene forecasts that Almonty will increase sales to CAD 60.9 million and net profit to CAD 5.8 million in 2023. In the coming year, the revenue mark of EUR 100 million should be cracked, the net profit multiplied to over EUR 25 million, and the share finally revaluated. Anyone now curious should mark May 10, 2023, in their calendar. That is when Almonty CEO, Lewis Black, will present the Company at the 7th IIF virtual investor conference (link to registration https://ii-forum.com). The update on South Korea should be exciting and could boost the share.
Plug Power: Share falls like a stone
There is no sign of a boost in the Plug Power share at the moment. This also applies to the other hydrogen high-flyers, such as Nel and ITM Power. In euro terms, British ITM Power has even become a penny stock. Plug Power has yet to reach that point, but at the moment, the share is not finding a foothold. In USD, it is trading below 10 and in EUR below 9. Since February alone - when the price was just below USD 18 - the stock has almost halved. Investors seem to doubt the sustainability of the business models of the entire peer group. Losses are often higher than revenues, and it is uncertain whether this will change. The Americans had reported revenues of USD 701 million and a net income of USD -724 million for 2022. The loss was equivalent to USD 1.25 per share. The forecasts for the coming years do not look bad: in 2023, USD 1.4 billion in revenue and a gross margin of 10%; in 2024, USD 2.2 billion in revenue and a gross margin of 25%; and in 2025, USD 3.3 billion in revenue and 30% gross margin. But with the stock currently dropping like a stone, investors need more confidence in management. After all, Plug Power is valued at over USD 5 billion even now.
SMA Solar: After 60% in 2023, the air is getting thinner
For many years, SMA Solar had to deal not only with lost investor confidence but also with weak business performance. The Company has overcome both. The share is currently trading at a level it has not seen in over 10 years. Yesterday it reached a new all-time high of over EUR 104. That means the share has gained over 60% in the current year alone.
The reason for the price fireworks of the past weeks was the raising of the annual forecast. Demand is high, and supply chain problems are dissolving more and more. The specialist for inverters for photovoltaic systems aims to generate sales of between EUR 1.45 and 1.6 billion in 2023. EBITDA is expected to climb to between EUR 135 and 175 million. Analysts had previously expected sales of only EUR 120 million on average. At the same time, SMA is diversifying its product portfolio outside of classic inverters. Among other things, the technology company is working on an energy management platform, including a battery for the smart home market and for industrial customers. The Company also wants to be involved in the hydrogen sector in the future: SMA wants to score with a turnkey container solution for producing green hydrogen.
However, the air could become thin for the share for the time being. A consolidation phase should certainly do the chart some good. After all, SMA Solar is now valued at EUR 3.6 billion. Analysts have not yet raised their price targets either. Jefferies recommends buying the share, but the price target is EUR 85. Numerous research updates are likely in the coming weeks. Either price targets will be raised, or downgrades are imminent.
Buying the Plug Power share would be like trying to catch a falling knife. A countermovement is possible at any time after the crash, but its sustainability may be doubted until the Company shows progress in margins. SMA Solar is currently running like clockwork, and "the trend is your friend". However, consolidation should not come as a surprise. Almonty will be exciting in the current year. If everything goes well at the start of production in South Korea, the share of the tungsten producer should be on the verge of a revaluation.
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