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April 12th, 2022 | 18:37 CEST

Plug Power, Phoenix Copper, JinkoSolar - Shares for freedom

  • Copper
  • renewableenergies
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The conflict between Russia and Ukraine, which has been simmering for weeks, dominates world events. Above all, the implementation of the energy turnaround is at the top of the agenda. Due to the declared sanctions, politics and the economy are facing a stress test on becoming more independent from Russian gas and coal in the future. Longer coal and nuclear lifetimes are on the cards. The traffic light politicians agree that the real path to energy independence is to phase out fossil fuels in the long term. However, scarce raw materials such as copper make this an expensive undertaking.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: PLUG POWER INC. DL-_01 | US72919P2020 , PHOENIX COPPER LTD. | VGG7060R1139 , JINKOSOLAR ADR/4 DL-00002 | US47759T1007

Table of contents:

    The future belongs to "freedom energies"

    According to Robert Habeck, Germany's Minister for the Economic and Climate Protection, the future lies in non-fossil energy sources: "The real path to energy independence is to phase out fossil fuels. The sun and the wind do not belong to anyone." He said this in the ARD program "Report aus Berlin." For Finance Minister Christian Lindner, renewable energies are "freedom energies."

    However, the accelerated expansion of renewable energies will be expensive. Even more so due to the artificial shortage of the required raw materials as a result of the sanctions that have been imposed. Whether lithium, nickel, or cobalt, even before Russia's invasion, there was excess demand. In the case of copper, which is elementary for achieving the climate targets, there is simply not enough supply to meet the demand from the electromobility, wind and solar sectors. Due to the low copper price in the past decade, little investment capital flowed into exploring properties, which are now urgently needed. Promising projects such as Phoenix Copper are few and far between, but they promise disproportionately high potential returns if exploration is successful.

    Analysts see doubling potential

    Analysts at the independent investment firm SISM Investors see a target price of GBP 1.44, or EUR 1.72, for the shares of the copper exploration company Phoenix Copper. The share price currently stands at EUR 0.70, which, according to the experts, represents an opportunity of around 150%. The stock market value of the prospective producer of base and precious metals, whose target to start production is for the first half of 2023, is EUR 83.60 million.

    Phoenix Copper's focus is on the Alder Creek mining district in the state of Idaho, where the Empire open pit copper oxide project is located. In 2013, 80% of the project was acquired, and the original area was significantly expanded in subsequent years through acquisitions to around 32 sq km.

    In addition, the Company, which is listed in Frankfurt, on the AIM in London and on the QTCQX market in the US, 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. The new discovery at Red Star, 330m northwest of the Empire Mine, showed high-grade silver/lead sulfide ore.

    Hidden reserves from strong demand due to the energy transition could also be lifted with 2 cobalt claims. These run along the most prolific trend of cobalt mineralization in the US and are adjacent to Electra Battery Metals' mine, formerly known as First Cobalt. More than 3,000 meters of drilling are planned for the current fiscal year, and with a cash balance of about CAD 15 million, Phoenix Copper is on sound footing. Management's plan to meet production targets by 2023 is to raise debt capital in the bond market. Due to the low supply of suitable copper deposits, Phoenix Copper is extremely attractive for the coming years.

    Green hydrogen as an alternative

    Even before the outbreak of the Ukraine crisis, the German government was focusing on green hydrogen with its national hydrogen strategy. The gas is seen as a missing piece in the energy transition puzzle. However, the production of hydrogen is currently still too expensive to produce sufficient quantities sustainably. As the pioneer of fuel cell technology, the US company Plug Power wants to become one of the world's largest producers of green hydrogen. The goals are ambitious; in 2025, Plug Power's sales are expected to be USD 3 billion with a gross margin of 30% and an operating profit of 17%. The primary revenue is then expected to come from the "Green Hydrogen Market" segment, which is expected to contribute half of the total revenue.

    In order to accelerate expansion into Europe, the European service and logistics center was opened in Duisburg Freeport. By the end of 2025, 500 tons of green hydrogen are to be produced there annually. There is no question that Plug Power is the pioneer and market leader in fuel cell technology. However, the valuation is enormously high with a market capitalization of EUR 13.8 billion. It should also not be forgotten that the Company has never been able to generate profits in its more than 24-year history.

    JinkoSolar with an open price gap

    Shares from the renewable energy sector have been highly volatile in recent weeks. The Chinese module manufacturer JinkoSolar corrected from over USD 66 at the end of last year to USD 35 after the outbreak of the Ukraine war. Defending the USD 40 mark was important here. Thus, the countermovement reached intermediate highs up to USD 57.70, only to turn down again. Currently, the value is quoted at USD 47.85. At around USD 41.38, there is still a price gap to close. Due to the current market correction, the value should only be observed.

    The Ukraine crisis is pushing politicians to switch more quickly to alternative energies. However, these require enormous amounts of copper. Phoenix Copper is expected to become a producer in the first half of 2023 and should benefit from rising demand. Plug Power is ambitiously valued, and the correction is still underway at JinkoSolar.

    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

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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