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October 31st, 2023 | 07:40 CET

Power Nickel, Mercedes-Benz, BYD - No electromobility without nickel

  • Mining
  • Nickel
  • Batteries
  • renewableenergies
  • Electromobility
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Nickel has undergone a remarkable transformation in recent years and has become a key component of electromobility. While the demand for environmentally friendly vehicles is steadily increasing, nickel is becoming increasingly important as an indispensable component in batteries. Nickel contributes to achieving higher energy density in batteries, which translates into greater driving range. It also allows for a reduction in the amount of cobalt in the batteries, making electric vehicles even more environmentally friendly. Therefore, we look at a future nickel producer and analyze Mercedes-Benz and BYD in terms of opportunities and risks.

time to read: 4 minutes | Author: Armin Schulz
ISIN: Power Nickel Inc. | CA7393011092 , MERCEDES-BENZ GROUP AG | DE0007100000 , BYD CO. LTD H YC 1 | CNE100000296

Table of contents:

    Terry Lynch, CEO, Power Nickel
    "[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel

    Full interview


    Power Nickel - Exciting news ahead

    Power Nickel has a whole range of battery metals. In addition to the main product, nickel, there is copper, cobalt, palladium and platinum on the properties. The Company attaches great importance to environmental protection and, for this reason, intends to build its planned nickel mine in a CO2-neutral manner. It is a clever move because in the long run, clean nickel will fetch higher prices. The CO2 consumed is to be offset by the company Karbon-X, which is Verra certified. Green hydropower is to be used as the energy supply. To plan its drill targets, the Company relies on Ambient Noise Tomography, which allows it to visualize the structure of the NISK property and thus plan its drill targets more accurately.

    NISK is Power Nickel's flagship project located in the mining-friendly region of Quebec and covers an area of 45.9 sq km. The fall drilling program has been underway since August 23, and the effectiveness of Ambient Noise Tomography technology was already evident in early September. The Company detected massive and semi-massive sulphides at a depth of 457 meters in a Step Out drill hole located 300 meters south and east of previous drilling at the NISK Main deposit. This discovery represents a promising new growth zone for the deposit. CEO Terry Lynch said, "The scientific team has done a terrific job [...] to guide us to an exciting new growth zone for Nisk Main."

    These positive results have led a mining industry great, Rob McEwen, and the Lynch family to invest CAD 2 million in the Company through a private placement. In the process, the 4 million flow-through units were placed at a price of CAD 0.50. This is remarkable, as the share price currently stands at just CAD 0.20. A further CAD 750,000 are to be placed shortly. The reason for the premium is the critical raw materials the Company has. The money will be used for further exploration. In November, the updated NI 43-101 study is due out, which will significantly expand the old mineral resource. Drill results from the current drill program are expected by April next year.

    Mercedes-Benz - Third quarter in focus

    Mercedes-Benz's latest quarterly report shows a drop in profits in the 3rd quarter, with net income falling 7% to EUR 3.7 billion. This decline was primarily due to a drop in vehicle deliveries and parts shortages. Nevertheless, the Company exceeded analysts' forecasts, who had expected only EUR 3.4 billion. Sales fell by 1.4% to EUR 37.2 billion. In the all-electric vehicle segment, sales climbed by an impressive 66%. By comparison, the top-of-the-range Mercedes recorded an 11% drop in sales. This shows that electromobility is gaining in importance for Mercedes-Benz.

    However, there is fierce price competition for electric cars. Despite these challenges and a somewhat more cautious outlook from management, Mercedes-Benz maintains its commitment to electromobility and profitable growth. At the IAA in Munich, the Group unveiled its Concept CLA Class, an electric vehicle which boasts a range of more than 750 km. The Company is also investing in the expansion of its global charging network for electric vehicles. Mercedes-Benz is also trying to become more climate-neutral in other ways. It plans to buy CO2-reduced steel from Steel Dynamics in the future.

    The coming quarters will show how the Company can survive in a competitive market environment and how it manages rising costs. Although management is more cautious about the end of the year, adjusted return on sales should be between 12% and 14%. Despite the challenges, there have been quite a few buy recommendations. A total of 5 analyst houses are positive about the future and have issued price targets between EUR 78 and EUR 120. Only Jeffries recommended Hold with a price target of EUR 72. Currently, the share is quoted at EUR 56.05.

    BYD - New record profit

    BYD, also known as Build Your Dreams, is a Chinese company specializing in the production of electric vehicles. Compared to other car manufacturers, BYD stands out for its innovative approach. Initially, the Company focused on battery production and leveraged this knowledge to enter the electric vehicle market early. This strategic advantage has paid off, as they invested early in the development and production of electric vehicles. The group also sells its blade batteries to other automakers. The Company is characterized by a vertical value chain.

    On October 30, BYD presented its Q3 figures. Despite a weaker demand environment and increasing competition, they were able to post another record profit. Net profit increased by over 80% to around EUR 1.34 billion, while sales grew by almost 40% to around EUR 20.94 billion. This was slightly below the Company's own expectations. In the 2nd quarter, the Company still recorded a 145% increase in profits. The price war on the Chinese market, which is considered to be the largest sales market for electric cars, has, therefore, not left BYD unscathed.

    However, the Chinese have yet to really attack the international market. The expansion of the factories and the development of a sales network outside of China will probably enable further growth opportunities. The cooperation with the Amazon subsidiary AWS has already shown that the Company is keen on internationalization. The share price has not been undermined by the sales of Berkshire Hathaway or by minor scandals. Currently, one share costs EUR 29.71.

    The global market for electric vehicles is growing, and the trend has only just begun. This puts producers like Power Nickel in a good position. The market urgently needs critical battery raw materials. In order to become less dependent on China and Co., we must set the course for the future now. Mercedes Benz is also selling an increasing number of electric vehicles and has positioned itself well with its premium strategy. Things look even better at BYD, which is trying to have as much as possible in its own hands, from batteries to semiconductor chips. If internationalization succeeds, the Company will be able to secure a significant market share.

    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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