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January 26th, 2022 | 10:07 CET

Siemens Energy, Nordex, Noram Lithium, Standard Lithium - After the crash, new hype ahead?

  • Lithium
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Climate change is one of the greatest challenges of our time. In order to jointly achieve the goals of the Paris Climate Agreement, a reduction of CO2 emissions in the transport sector is necessary. A significant contribution is being generated in the shift to e-mobility. Manufacturers in Europe and Asia are countering the industry leader Tesla with high double-digit billion sums for research and development. With 350,000 electric vehicles sold in Germany, 2021 will be a new record year for the industry. In 2022, experts estimate that there will be 450,000 plus hybrids. However, the green plans of the traffic light government require 1.6 million electric vehicles per year. Where are the opportunities lurking for climate-oriented investors?

time to read: 5 minutes | Author: André Will-Laudien
ISIN: SIEMENS ENERGY AG NA O.N. | DE000ENER6Y0 , NORDEX SE O.N. | DE000A0D6554 , Noram Lithium Corp | CA65542K1030 , STANDARD LITHIUM LTD | CA8536061010

Table of contents:

    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview


    Climate protection and scarce metals

    In order to implement climate protection projects, many old installations have to be replaced by new apparatus. Old diesel gensets give way to solar-powered electricity generators or hydrogen-based fuel cells. Copper and lithium have become extremely important in such transformations in the last 5 years, and they are now just as rare. Prices of the metals have gradually risen, adding to the cost of climate change. Consumers in Germany are now being charged high CO2 taxes if they still use old technologies. However, some companies are profiting from the shortage.

    Standard Lithium - Severe sell-off despite the good news

    First, it was a short seller, then the correction in the lithium sector. Arkansas-based explorer Standard Lithium (SLI) cannot catch a break. However, it is sitting on a promising next-generation brine production area. The project is already permitted for extensive brine production and processing activities, and it tested surprisingly well in the third quarter of 2021.

    The "SiFT" lithium carbonate plant has been installed and successfully commissioned at the "El Dorado" site. According to initial test runs, it is ideally suited for the production of battery-grade lithium carbonate. The reason is that the lithium carbonate was produced in a single crystallization stage instead of the multiple stages required in a typical conventional-type process. According to the release, the crystals were washed twice with hot deionized water to produce battery-grade lithium carbonate with 99.83% purity. Completing this phase of work is an important milestone for Standard Lithium in its market entry, which could now occur as early as 2022.

    Whether Blue Orca Capital has now closed its known short position is not entirely transparent. The fact is, the SLI share has lost almost 60% from the top and has become interesting for traders again. In the current wave, the price reached CAD 6.98 at the low - the high for the year was CAD 15.92 in October. Therefore, stay on the lookout during the ongoing sell-off.

    Noram Lithium - More lithium coming from Nevada in the future

    Mining group Rio Tinto warns that in the future, only 15% of the supply deficit of battery-grade lithium carbonate can be extracted from existing projects. Lithium producers and explorers will sustainably benefit from these conditions. Noram Lithium Inc. (NRM) is starting as a junior explorer based in Canada; it has already secured an exciting project in Nevada. The US state is known for gambling, has a long mining history, and shines with a mining-friendly policy. The infrastructure with easily accessible roads and cheap electricity could not be better either.

    Noram has owned the lithium project called "Zeus" in Clayton Valley since 2021. In August 2021, the resource estimate was updated according to Canadian standard NI 43-101. As a result, the deposit has an estimated and suspected quantity of 3.89 million tons of LCE, the standard unit of measure for lithium carbonate equivalent. With 40 years of mine life and an internal rate of return (IRR) of 31%, the target figures are excellent.

    As in Noram's case, the US has many of its own lithium deposits, which are now being realized with appropriate political pressure to reduce the domestic auto industry's dependence on foreign supplies. Noram Lithium's long-term strategy is to position itself as a multinational lithium company specializing in the production and sale of lithium in the European, North American and Asian markets. The timing for the venture could not be better.

    According to Fortune Business Insights, the global lithium market is expected to reach USD 8.24 billion by the end of 2027 - a compound annual growth rate of 9.2% from 2020 to 2027. Credit Suisse estimates that lithium demand could triple by 2025 from 2020 levels. In the current correction of the lithium sector, the stock ran into slight turbulence, but the market capitalization held at EUR 42 million. The project in Nevada is very promising overall, so take a risk-aware approach and buy a few pieces for a long-term lithium strategy.

    Siemens Energy versus Nordex - Who is a better fit for the energy transition?

    Siemens Energy and Nordex recently experienced a sharp sell-off. Both stocks are down 48 and 45%, respectively, on a 12-month comparison. Now we need to take a closer look to identify the share with the better opportunities. We look at the fundamentals.

    Siemens Energy is one of the world's leading energy technology companies. An estimated one-sixth of the world's power generation is based on technologies from Siemens Energy. At the beginning of the year, the Munich-based Company issued a hefty profit warning due to the poor figures posted by its wind power subsidiary Siemens Gamesa. Sales could fall by up to 2% this year. Siemens Gamesa posted sales of EUR 1.8 billion in the first quarter. EBIT before special items was in the red at EUR 309 million. The subsidiary adjusted its forecasts downward for 2022. In terms of revenue, Siemens Gamesa expects a decline of 2% to 9% for the current year. EBIT deviated by EUR 35 million from analysts' estimates. There is one glimmer of hope: despite a slight drop in revenue from EUR 4.3 billion to EUR 4.1 billion, the Gas and Power Group posted a profit of EUR 259 million, well above expectations of EUR 159 million. Because of its lineup in clean gas power and wind power, Siemens Energy should be a friend of the traffic light coalition and should be able to benefit in the medium term.

    Nordex had a lot of ups and downs in 2021. After a strong price correction due to the announcement of a larger capital increase, the value fell back to EUR 12.73 in the middle of the year, where the share ended up again in the current correction. Nevertheless, the wind turbine manufacturer has many new orders to report, and business is going well. Looking at the valuation, the Company pays only 40% of sales, but the book value per share is a low EUR 8.5 due to the debt. The annual figures will be available on March 29, but the markets will undoubtedly receive an indication before then. Nordex is a pure-play wind turbine company and thus positively affected by the climate protection program.

    Both Siemens Energy and Nordex are trading at 12-month lows. Chart-wise, both stocks are battered. On the analyst side, 12 out of 13 assessments for Siemens Energy are positive; for Nordex, 2 out of 4. In some cases, the respective price targets are 100% above the current quotation. Proof that the experts in their calculation have probably still counted on other interest rates and growth rates. It is worthwhile to keep both values on the Watchlist.

    These are not good times for growth stocks. The Sword of Damocles, "Rising Interest Rates & Inflation," hangs over the charts. Nevertheless, it is worth keeping an eye on good stocks. Standard Lithium, Siemens Energy and Nordex are clear climate protection winners. Noram Lithium has a great project and is poised to become an important lithium producer.

    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

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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