May 18th, 2021 | 10:20 CEST
QMines, Leoni, Siemens Energy - Top picks for the energy turnaround
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"[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
QMines Ltd. - Copper and Gold Explorer now also listed in Frankfurt after successful IPO in Australia
A few days after its successful stock market debut on the Australian ASX, the gold and copper explorer QMines raised more than AUD 11.5 million from investors. The Company's shares have now also, since last Tuesday, been listed in Frankfurt. According to the Company, one of the reasons for this was the lively interest shown by European funds and private investors at the IPO a good two weeks ago. The Company from the province of Queensland specializes in the exploration and development of gold and copper deposits. These two metals are irreplaceable for the global energy transition and the associated technologies such as solar and wind energy and electric mobility.
The Company is pursuing the goal of becoming Australia's first emissions-neutral exploration company (zero carbon). To this end, QMines holds the sole rights to four projects at an advanced stage of development with a total area of around 1,000 sq km, including Mt. Chalmers, a flagship project consisting of a historic mine already in operation between 1898 and 1982. During that time, about 1.6 million tons of ore were mined there. Today, initial estimates still see an inferred resource of 3.9 million tons at grades of 1.15% copper, 0.81 g/t gold and 8.4 g/t silver. With the money from the IPO, further exploration is now to be advanced rapidly, which will involve further drilling of between 32,000 to 62,000 meters over the next two years.
QMines currently has a market capitalization of around AUD 32 million. The copper price, which is currently rising strongly, should give the investment story a boost. In addition, QMines has competent management in addition to high-quality projects. The prospects for the stock are therefore very tempting given the current developments in commodity prices.
LEONI AG - Finally back in the black
In addition to raw materials, the energy turnaround also requires the corresponding "hardware." Essential components are, for example, electrical cables as well as wiring systems for vehicles. From this perspective, a group like LEONI AG, which produces both parts, must also be among the winners. Consequently, the share price climbed by more than 200% from October 2020 to February 2021. Unfortunately, the Company's business figures were somewhat suboptimal due to portfolio downsizing and, not least, the Corona pandemic, so many investors lost their nerve and sold.
But since last week, there is a reason to breathe a sigh of relief. With the announcement of the business figures for the first quarter of the current year, LEONI succeeded in breaking free. The cost-cutting and restructuring measures have borne fruit: Where the Company had incurred a loss of EUR 67 million in the same period of the previous year, the Franconians were now able to report a profit of EUR 28 million. For the rest of the year, too, the Company's management expects a substantial increase in sales, despite further challenges such as the current semiconductor shortage. Increased cost-cutting measures and additional portfolio changes, such as the already completed sale of LEONI Schweiz AG in the first quarter, should contribute to this. This strategy makes sense, and we assume that the Company will be among the beneficiaries of the energy turnaround. From this perspective, it makes sense to have the share in the portfolio, especially if you have a long-term orientation.
Siemens Energy AG - Figures do not justify share price decline
Since the stock market launch last September, the Siemens Energy share has been on a roller coaster ride. After initially falling from the issue price of around EUR 22 to its all-time low of just under EUR 18 in October, the share price virtually doubled in the following three months. After a long period of correction, the share has now returned to a price of around EUR 24. Anyone who had hoped that the DAX listing would be able to halt the downward slide was bitterly disappointed. After all, the stock was able to gain around 4% intraday last Friday. Has the bottom been reached?
In any case, the recent price movements cannot be explained by the business figures. For the second quarter of the fiscal year, the Group reported a 39% increase in order intake to EUR 10.5 billion, and net income for the quarter was EUR 31 million, compared with a loss in the previous year. For the full year, the Company expects sales growth of 3% to 8%. Sixteen analysts are currently covering the share. Their average target price is EUR 36.48; ten recommend buying the share, five recommend adding to it, and only one recommends holding it. We also expect the share price to rise in the near future - all the data points in this direction. Not to mention that the business segment in which Siemens Energy operates will certainly show excellent growth potential in the coming years. So let the race begin!
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