SGL Carbon, Viva Gold, Formycon - Strong news in the bear market

SGL Carbon - Another increase

Business is humming at carbon fiber specialist SGL Carbon. The Wiesbaden-based company is involved in developing, manufacturing and selling materials and products made from specialty graphites, carbon fibers and glass and carbon fiber reinforced plastics. In particular, the high, robust demand for acrylic and carbon fibers and falling costs of acrylonitrile, the most urgently needed raw material, prompted the Company's management to adjust its full-year forecasts again, which had already been raised in June.

In addition, the other three business sectors Graphite Solutions, Process Technology and Composite Solutions, also performed better than expected. According to a company statement, management now expects revenues of EUR 1.2 billion. Adjusted EBITDA operating profit is expected to be between EUR 170 million and EUR 190 million, compared with a previous range of EUR 130 million to EUR 150 million.

The pulverization of the forecast was received by the stock market with double-digit price gains. The SGL share is trading at EUR 7.31. A break of the resistance at EUR 7.85 would generate a buy signal with a price target of EUR 10.88. The analysts at Baader Bank are less euphoric. Analyst Martin Schnee reiterated the price target of EUR 6.60 and the "add" rating. Even before the forecast increase, Hamburg-based private bank Berenberg lowered the price target from EUR 9.50 to EUR 8.50. The rating remains "hold".

Viva Gold - Successful drilling program

The fear of further interest rate hikes and a robust greenback continue to create problems for gold stocks. Thus, the gold price fell below the psychological mark of USD 1,700 per ounce and is in danger of significantly undercutting the low for the year at around USD 1,680 per ounce, which would bring the next prominent support at USD 1,620 per ounce into play. In the long term, however, the general conditions for a rising gold price look relatively positive. The rampant inflation, which in our opinion, can hardly be sustained, and the debt problems of several countries should soon make gold appear in new brilliance.

In addition to physical gold, it makes sense to invest in gold producers and selected exploration companies for diversification. Here, mining company Viva Gold stands out as it develops the 100% owned Tonopah Gold Project. The 4,250-acre deposit is located in Nevada's Walker Lane Trend, known for high mineralization. Nevada was ranked the #3 best gold deposit in the world by the Fraser Institute in 2021. Just 30 km from Tonopah is Kinross' Round Mountain mine, which produced 258,000 ounces of gold in 2021. The project has an indicated gold mineral resource of 394,000 ounces at a gold grade of 0.78 g/t and 206,000 ounces of inferred resources at 0.87 g/t.

Successful drill results have now been reported from the recently completed core drilling program consisting of 6 holes and 1,307m in length. Gold and silver were identified in 4 of the 6 holes, peaking at 19.9 g/t gold and 25.4 g/t silver. In addition, a significant amount of structural and geotechnical data was acquired that will be used in mine planning and drill hole location for a 3,000m reverse circulation drill program scheduled to begin next month. The data collected in this program will be the basis for preparing a pre-feasibility study.

Viva Gold's shares corrected more than 80% to CAD 0.08 in the wake of a weakening gold price since August 2020. At the same time, the Tonopah Gold project appears prospective. If the Canadian company's drill results continue to be positive and the feasibility study gets closer, a return to higher ground should be all the more likely.

Formycon - Solid half-year results

The half-year figures of the developer of high-quality biosimilars developed as expected. Revenues for the Group, which in addition to Formycon AG, include the fully consolidated subsidiaries Formycon Project 201 GmbH, FYB202 Project GmbH, Formycon Project 203 GmbH, Bioeq GmbH, and the 50% stake in Bioeq AG, which is consolidated at equity, totaled EUR 17.6 million in the first six months of 2022, compared to EUR 20.3 million in the same period last year. For the full year 2022, Formycon continues to expect revenues at the Group level above the previous year's level, which amounted to EUR 37 million.

The preliminary result for the period was dominated by a special effect affecting earnings but not liquidity. It resulted from the sale with ATHOS KG of the 24.9% minority interest in FYB 202 GmbH & Co. KG to Aristo Pharma GmbH, with which Formycon AG ceased to be a shareholder of FYB 202 GmbH & Co. KG. In parallel, the acquisition of 100% of the shares in FYB202 Project GmbH, where the global assets and commercialization rights to FYB202 are located, took place. Cash and cash equivalents amounted to EUR 18.2 million as of June 30, 2022.

Dr Stefan Glombitza, CEO of Formycon AG, commented on the preliminary half-year results: "We are extremely satisfied with the performance in the first half of 2022. The successful implementation of the transaction with ATHOS KG and the first market approval of FYB201 were certainly outstanding events. We also made encouraging progress in all other development projects and initiated two new biosimilar projects with FYB208 and FYB209. The international launch of FYB201, which has already taken place in the UK and is expected in the US and EU in the near future, is another important milestone for our company. Based on the expected cash flows combined with a broad and valuable pipeline and a strong development organization, we believe we are very well positioned for the continued consistent execution of our growth strategy."

The analysts at First Berlin Equity Research GmbH see Formycon as a clear buy candidate and issued a price target of EUR 103 following the half-year figures. The share is currently trading at EUR 70.4 million.

The stock markets are subject to high fluctuations and have been moving further south in recent days. However, several companies were able to come up with positive events. SGL Carbon again raised its annual forecasts, and Formycon published positive half-year figures. The results of the drilling program of Viva Gold also point to strong development.