RWE, Regenx Tech Corp., Varta - Under the spell of the numbers

Varta AG - It remains critical

As we mentioned in one of our recent reports, the producer of microbatteries, household batteries, and energy storage systems is still facing challenges, and the current price recovery appears to be a bear market rally within the overall downtrend. Now the said rally was abruptly ended by disappointing figures for the second quarter, which did not yet bring any improvement in operating activities.
Based on preliminary figures, sales in the second quarter amounted to approximately EUR 175 million, around 8.6% less than in the same period last year. While the second quarter of 2022 still brought in an adjusted operating profit of EUR 30.8 million, the battery group slipped into the red with minus EUR 5 million.

Due to the weak first half of the year, sales for the full year have been adjusted downward. The SDAX-listed company now only expects to achieve the lower range of EUR 820 to 870 million. Ebitda is forecast to be between EUR 40 million and EUR 60 million, significantly below analysts' estimates.

Following the publication of the figures, the analyst firm AlsterResearch reiterated its "sell" investment recommendation and lowered the price target for the Varta share from EUR 16 to currently EUR 15.

Regenx Tech Corp. - Unlimited potential

Regenx Tech, listed on the Canadian Securities Exchange and in Frankfurt, is not so convincing because of its half-year figures but rather because of its market potential for the coming years. The Company, which has a market capitalization of EUR 22.74 million, focuses on the recycling of diesel catalysts. The market volume, still at USD 24.7 billion in 2017, is expected to grow to USD 39.8 billion by 2025. Using an environmentally friendly processing technology, the Canadians recover over 90% of the precious metals platinum and palladium, in contrast to conventional methods.

Approximately 84% of the world's annual palladium supply is needed for catalytic converters in cars, heavy vehicles and industrial equipment. However, roughly USD 21.2 billion of precious metals from diesel catalytic converters are not recycled each year, ending up in landfills and contributing to the depletion of elemental resources.

Regenx Tech uses proprietary chemical and process engineering technology that extracts the metals from the ground materials, puts them into a solution through chemical processes, and dissolves them out as a concentrate using the proprietary system process. As a result, significantly less carbon dioxide is emitted, leading Regenx Tech to seek carbon credit trading in the future.

The St. Albert-based company is providing proof of concept with the startup of Module 1 of the processing plant in Greeneville, Tennessee. The recycling plant is expected to reach a capacity of 2.5 tons per day at full capacity. To further develop Catalyst Module 1, Regenx Tech closed the first tranche of its previously announced financing for gross proceeds of CAD 2,113,830. Several plants are planned to follow in the future, initially in North America and, in a second step, overseas.

RWE AG - Convincing performance

While the battery producer disappointed with its figures for the first half of the year, the energy supply company RWE AG impressed analysts and investors. The Essen-based company exceeded forecasts for the first half and subsequently raised estimates for the full year 2023.

The Company said that RWE's adjusted earnings before interest, taxes, depreciation, and amortization at the group level are now expected to be between EUR 7.1 billion and EUR 7.7 billion instead of EUR 5.8 billion to EUR 6.4 billion. For its core business, RWE expects adjusted EBITDA of between EUR 6.3 billion and EUR 6.9 billion and adjusted EBIT at Group level of between EUR 5.0 billion and EUR 5.6 billion. Previously, the forecast here was EUR 3.6 billion to EUR 4.2 billion. In terms of adjusted net income, the Essen-based Group sees an increase of between EUR 3.3 billion and EUR 3.8 billion for the full year.

On a preliminary basis, RWE generated adjusted EBITDA at the Group level of EUR 4.5 billion in the first six months of the year, compared with EUR 2.86 billion in the same period last year. Adjusted EBIT reached EUR 3.5 billion, and the Group's adjusted net income increased to EUR 2.6 billion. Only EUR 1.57 billion was earned in the first half of 2022.

Following the convincing figures, analysts at DZ Bank upgraded RWE shares to "buy" and raised the price target from EUR 53 to EUR 55. US investment bank Goldman Sachs reiterated its price target of EUR 60 and also sees the energy supplier as a buy candidate.

Varta disappointed its investors once again with the figures for the second half of the year and had to concede the forecasts for the full year. In contrast, the energy group RWE impressed with a better-than-expected first half and consequently raised its estimates for the current fiscal year. Regenx occupies a gigantic market with its recycling technology.