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October 30th, 2023 | 07:40 CET

Positive signals at Siemens Energy, Manuka Resources and Covestro

  • Mining
  • Gold
  • Vanadium
  • renewableenergies
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Forecast adjustments and state aid were the buzzwords on the German stock market last week. In addition to the car manufacturers Mercedes Benz and Volkswagen, the electro and energy technology manufacturer Siemens Energy surprised with talks about state guarantees. The wind energy sector, which is considered essential for climate change, is weakening. In general, renewable energy companies are miles behind a possible consolidation. Not yet factored in is the problem of procuring critical raw materials for building the new technologies.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: SIEMENS ENERGY AG NA O.N. | DE000ENER6Y0 , Manuka Resources Limited | AU0000090292 , COVESTRO AG O.N. | DE0006062144

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    Nick Luksha, President, Prospect Ridge Resources
    "[...] As we look at four or more zones in more detail from the beginning, investors can expect a continuous news flow that will underscore our vision of the Holy Grail project as a giant opportunity. [...]" Nick Luksha, President, Prospect Ridge Resources

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    Siemens Energy - Opaque situation

    It was the shock news of the past week on the German stock market. As a result of the announcement of negotiations with the German government about possible government guarantees, the Siemens Energy share experienced a daily loss of around 40%. As reported by "WirtschaftsWoche" last Thursday, ongoing talks between the German government, banks and Siemens Energy include negotiations on guarantees totaling up to EUR 15 billion. For an initial sum of EUR 10 billion, the federal government is to provide a guarantee of 80%, while the banks would be liable for the remaining 20%.

    A day later, the news agency "Bloomberg" reported, citing sources, that the Ministry of Economics was quite willing to support Siemens Energy. The reason, according to a government spokesman, is the relevance of the Munich-based company in terms of the transformation of Germany as a business location.

    Last but not least, the Chairman of the Supervisory Board of Siemens Energy, Joe Kaeser, is trying to bring some calm into the tense situation. In an interview with the "Welt am Sonntag" newspaper, he emphasized that the talks with the German government were only about guarantees to help the Company grow.

    However, even the Supervisory Board boss could not play down the fact that there are clear problems in the wind division: "The situation with wind is very serious. The whole sector is making horrendous losses." The analysts at Deutsche Bank Research lowered their price target from EUR 13 to EUR 10 after the possible state aid became known, and the investment rating was reiterated as "Hold". The share is currently best kept on the watch list. An investment does not really suggest itself in the current opaque situation.

    Manuka Resources - Tremendous potential

    The market capitalization of the Australian mining company stands at just AUD 24.75 million or EUR 14.83 million. Compared to the potential that Manuka Resources has in the medium term, this is considered extremely low. Because the Australians, incidentally the youngest gold producer from Down Under, are striving to become one of the most important vanadium producers in the western hemisphere.

    Vanadium is becoming increasingly important for modern battery technology and is to be used more and more in large-scale industrial applications in the future. Vanadium-based batteries lose less energy than lithium-ion batteries, which is why vanadium redox flow batteries are used in solar or wind power plants. With the acquired South Taranaki Bight project, Manuka Resources aims to capture 15% of global vanadium production in the future. The project already has a mining license for 5 million tons per year, with an initial mine life of 20 years. Assuming a BFS1 production rate of 5Mt of VTM concentrate per year, annual concentrate production would include 25,000t of V2O5.

    The Mt Boppy mine, located in the Cobar Basin, serves as a fixed source of revenue and ongoing cash flow. It has historically produced half a million ounces of gold at an average grade of half an ounce per ton. After Manuka Resources ramped up production in the second quarter of this year, the Company increased gold inventory by 360% to 160,100 ounces. In addition, measured and indicated resources have picked up by nearly 80% to 76,500 ounces at a grade of 3.53g per tonne. Ongoing cash flow now allows the Australians to expand the overall resource by testing further exploration targets.

    The Manuka Resources share has been running sideways with little volume for months in a zone between EUR 0.02 and EUR 0.03. Particularly in the event of possible success reports with regard to the vanadium project, more significant price jumps are not excluded.

    Covestro - Analysts not very surprised

    One of the globally leading polymer companies based in Leverkusen had to revise down its profit targets for the full year 2023. The reason is the ongoing weak demand. "With the exception of the automotive industry, the outlook for our core industries has deteriorated further for the year as a whole," new CFO Christian Baier said in a company statement when presenting the quarterly figures.

    Covestro now expects EBITDA of around EUR 1.1 billion for the current fiscal year. Operating free cash flow is expected to be between EUR 0 and EUR 200 million. In the third quarter, the operating result was EUR 277 million, a decline of around 8% compared with the prior-year quarter. The net loss was EUR 31 million, compared to black figures of EUR 12 million a year earlier.

    Following the figures, Covestro shares lost around 6.5% to EUR 47. In view of the fact that analysts were already expecting a weaker result, they were surprisingly positive. Thus, analyst firm Jefferies reiterated its "Buy" rating for Covestro with a price target of EUR 60. The operating result was clearly better than expected by analyst Chris Counihan. However, it was below general market estimates.

    After the shock at Siemens Energy, the share was able to stabilize, but the further development is uncertain. Covestro continues to suffer from weak demand. Manuka Resources generates ongoing cash flow from its gold project. Concerning the promising vanadium project, the Company has considerable upside potential.

    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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