October 27th, 2023 | 07:00 CEST
Porsche share, Globex Mining, Bayer AG - Who offers the most profitable return?
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"[...] One focus will be on deposits near the surface. These would be good arguments for a quick production decision using the low-cost heap leaching method. [...]" Brodie Sutherland, CEO, Tocvan Ventures
Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.
Porsche pulls the handbrake on the China market
With increasing economic crises, sales in the luxury goods segment are on the rise. A study by the Bain Consulting Group provides a plausible explanation for this: "The luxury goods sector generally performs better than other retail channels during downturns because it appeals to high-income consumers." Those who have, continue to have, even in times of crisis.
Porsche has confirmed its forecast, reporting an 18.3% operating return on sales. As a result, the operating profit has risen by 9% to EUR 5.5 billion. The luxury car manufacturer had assumed an operating profit margin in the range of 17-19% on sales of EUR 40 to 42 billion.
Despite the ongoing economic instability with one of its key trading partners, China, the Company was able to meet its forecast. The 18% figure corresponds to the ratio of "Group operating profit to Group sales" (Not an IFRS measure).
**With 242,722 cars sold, Porsche AG was able to sell more vehicles than in the same period last year. However, when looking at the engines, it becomes clear that the typical Porsche driver also buys the sound of the combustion engine, which bubbles gleefully from 0 to 100 km/h in 3-5 seconds in the left lane.
The best-selling models are still the "911" with 26.7%, the "Boxster" (17.5%) and the "Macan" (14.7%). The only electric drive model in the Porsche range is the "Taycan" model with 11.2%. Delivery bottlenecks led to longer waiting times for assembly and delivery of the electric Porsche at the beginning of the year. According to insider reports, the Cayenne will also roll off the production line with electric drive for the first time from 2026.
Porsche CFO Lutz Meschke says high interest rates are hurting consumers, according to Bloomberg. China, Porsche's largest market, is also suffering from demand problems due to a weak economic recovery that may continue to lead to moderate sales next year. In China, Porsche buyers are, on average, 10 years younger than in other countries. But consumers in the land of the red dragon are also becoming more cautious.
Globex Mining: 1% Royalty secures stake in a project with annual free cash flow of USD 235 million for 21 years
Where is there a good return on investment now? Globex Mining is an experienced explorer with a unique investment concept for investors. Through its broad portfolio of diverse mineral properties, land and financing, Globex Mining lowers the risk of potential defaults and increases the opportunity for a profitable return. In addition, Globex Mining uses approximately USD 1.08 million (CAD 1.5 million) each year to explore its properties, and option partners participate in this process.
Now Globex Mining has secured a 1% gross metal royalty on all iron production from the Mont Sorcier property. This property, located in Quebec, Canada, consists of 1,919 hectares with 37 claims and extends directly to the northeast end of the Lac Chibougamau mining block.
This royalty secured by Globex Mining provides a 1% interest in a project with an annual free cash flow of USD 235 million over 21 years. Based on indicated resources, the resulting Net Present Value (NPV) is approximately USD 1.6 billion. NPV is a financial tool to determine the current value of future cash flows in the here and now and whether it is financially worthwhile to invest in a project or not. If the NPV is negative, one should refrain. A positive NPV means that future revenues exceed today's costs, and the project will likely be profitable. Investors can decide what Globex Mining's NPV tells them about this project.
Estimates to date are based on 25% of the mineral resources there. Accordingly, the area still offers further potential for its investors. The area is rich in iron, titanium dioxide and vanadium oxide. The steel industry uses these minerals to build aeroplanes and spaceships, and vanadium is a component of nuclear power reactors. Nuclear power is an emission-free energy source in many countries, providing a stable supply of electricity to the local economy. Poland alone will build six new reactors in the coming years.
Furthermore, Globex holds a substantial interest in Electric Royalties, which has a 1% gross metal royalty on all vanadium production recovered from the project. If you are an investor wondering what that could mean in terms of ROI if nuclear energy is further developed - you can find more information in the presentation here.
Bayer must pay USD 1.25 million to glyphosate plaintiffs
Bayer AG is required to pay USD 1.25 million to a man in the US state of Missouri, who sued the Company, claiming he developed cancer from exposure to the weedkiller "Roundup," according to Reuters. Roundup contains the active ingredient glyphosate.
The plaintiff's attorney says this trial is the first time a jury has heard evidence that other chemicals in Roundup, besides the main ingredient glyphosate, could cause cancer. Bayer acquired the rights and patents to "Roundup" by acquiring Monsanto, assuming the responsibility for the numerous lawsuits that have been fought in court ever since.
"Roundup"-related lawsuits have plagued Bayer since it acquired the brand as part of its USD 63 billion purchase of manufacturer Monsanto in 2018. The Leverkusen-based company defends its position that decades of studies show "Roundup" and its active ingredient glyphosate are safe for human use.
"The client and the plaintiff's lawyers are extremely pleased and grateful for the verdict after a hard-fought three-week trial," the lawyer said. Bayer plans to appeal. Users of the weedkiller "Roundup", including the active ingredient glyphosate, are said to have developed a form of lymphoma cancer. An analysis of this can be found here.
Bayer settled most of the lawsuits against it in 2020 for up to USD 10.9 billion. However, the Company still faces nearly 40,000 glyphosate-related cases awaiting a verdict or settlement. Bayer has so far unsuccessfully sought to challenge the plaintiffs' standing under state law before the US Supreme Court.
Porsche AG continues to achieve impressive margins despite uncertainties in its largest market, China, showcasing the strength of the luxury goods sector. However, gaps in supply chains for the electric model are causing sales to falter. Globex Mining relies on diversification and a unique investment approach to provide its investors with a secure and profitable return. Securing a 1% gross metal royalty on the Mont Sorcier mineral property in Canada appears to include long-term financial success. Calculations promise a positive net present value of USD 1.6 billion. Bayer is again facing glyphosate-related challenges, with a USD 1.25 million payout and ongoing battles against proven cancer-related allegations in pending cases despite previous settlements. The current evidence makes the case significant for potential future lawsuits.
Conflict of interest
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