RWE, Almonty Industries, Nel ASA - Emission-free energy as a booster for the portfolio?

RWE - Transformation is progressing

The energy transition and climate change demand a reorientation from energy companies worldwide. A prime example of this transformation is RWE, once known as one of Europe's largest nuclear power producers. Today, RWE is transforming itself and pursuing an ambitious business concept that focuses entirely on renewable energies. On March 14, the Company presented its annual figures for 2023. Last year, RWE made significant progress in its 'Growing Green' strategy. The portfolio of green energy sources was expanded considerably. Specifically, more than 160 new plants with a total capacity of 6.3 gigawatts were added. This development went hand in hand with a remarkable 27% reduction in CO2 emissions.

RWE's business success in 2023 is reflected in an adjusted net result of around EUR 4.5 billion and the confirmation of the dividend target of EUR 1.00 per share. The Essen-based company invested a total of EUR 11.4 billion, EUR 7 billion more than in the previous year. A large part of this went into the acquisition of Con Edison Clean Energy Businesses in the US, for which RWE paid EUR 6.3 billion. Despite the massive investments, the Company's financial situation remains stable, with a net debt of EUR 6.6 billion and an equity ratio of 31%. The production of electricity from renewable energy sources increased by 27% to 45.2 terawatt hours (TWh) compared to 35.5 TWh in the previous year.

These figures demonstrate the determination with which the Company is being transformed. For 2024, RWE forecasts a continuation of the positive development and expects an adjusted EBITDA of EUR 5.2 to 5.8 billion. The dividend is to be increased to EUR 1.10 per share. This should please shareholders, as should the share purchases by CEO Markus Krebber, who bought shares for EUR 404,319.24 at a share price of EUR 31.10. This reflects confidence in the Company. However, it has not helped the share price much. The share is currently trading at EUR 30.65.

Almonty - Tungsten needed everywhere

One of the most promising methods of tapping into a clean and virtually inexhaustible source of energy is fusion technology. Fusion reactors, based on the principle of nuclear fusion, are the focus of intensive research and development. To enable the fusion of light atomic nuclei and release vast amounts of energy, materials capable of meeting extreme requirements are needed. Tungsten plays a central role here. Due to its outstanding properties, such as the highest melting temperature of all metals and minimal expansion when exposed to heat, tungsten is used in critical components of fusion reactors. The advantage of fusion reactors compared to nuclear power plants: there is no risk of a nuclear accident. They are still under development but will fuel demand for tungsten in the future.

This is good news for Almonty Industries, a tungsten producer currently pushing ahead with the expansion of its mine in Portugal and aiming to commission the Sangdong mine in South Korea, the largest tungsten mine outside China, by the end of the year. The latter is expected to have a lifespan of over 90 years, and Almonty already holds a 15-year offtake agreement with the Plansee Group that guarantees at least USD 580 million in revenue. In addition, the project in South Korea can be expanded. On the one hand, there is the large molybdenum deposit that can also be found on the property. On the other hand, the construction of a tungsten oxide plant would further strengthen Almonty's position.

The expansion of the Panasqueira mine in Portugal to Level 4 is expected to increase the EBITDA margin to over 30%. Even representatives of the US Department of Commerce have already been on site. This shows how important it is to become less dependent on China, especially as the demand for tungsten is increasing because developments in the battery and semiconductor sector are making more and more use of this critical raw material. The defense industry also requires significantly more tungsten due to the increased demand. Those who would like to learn more about the Company can look at CEO Lewis Black's presentation from the 10th International Investment Forum below. The share is currently trading at CAD 0.58. Once production starts in Sangdong, the share price should take off.

Nel ASA - Support in the USA

The Norwegian company Nel ASA, which specializes in hydrogen technologies, recently published its 2023 annual report. In the past financial year, the Norwegian hydrogen technology specialist recorded revenue growth of 78% compared to the previous year. At the end of 2023, the Company reported a cash reserve of NOK 3.363 billion, an increase compared to the previous year, 2022. In addition, Nel raised gross proceeds of approximately NOK 1.6 billion in a private placement on March 6, 2023.

However, Nel faced a decline in order intake in 2023, which amounted to NOK 1.4 billion. This compares to NOK 2.28 billion in the previous year. As a result, the order backlog at the end of the year fell by 6% to NOK 2.46 billion. Nel also announced it was considering a spin-off of its loss-making "Fueling" division. For its expansion in the US, the Company has received financial aid totaling USD 100 million from the US Department of Energy and the State of Michigan for the planned plant in Michigan.

In addition, Nel and partners will receive approximately USD 90 million from the US Department of Energy for seven research and development projects in the hydrogen industry, with Nel leading one of the projects. Analysts' opinions following the publication of the quarterly figures are mixed. While Jefferies issued a "Hold" recommendation with a price target of NOK 5.50 and criticized a slowdown in order intake, Goldman Sachs continues to see "Buy" potential with a target of NOK 8.00, just as RBC has issued the highest price target of NOK 14.00. One share is currently available for NOK 4.667.

Emission-free energy generation is a significant goal and will take some time to implement. The three companies presented here are making their contribution to this goal. RWE is in the middle of its transformation into an energy producer that relies on renewable energies. The figures for the last financial year were respectable. Almonty Industries is a tungsten producer that is expected to grow strongly in the coming months once the Sangdong mine comes on stream. Demand is being fueled by various industries, so the tungsten price is expected to continue to rise in the long term. Nel ASA has surprised with positive figures, but the hydrogen specialist is not out of the woods yet.