May 21st, 2021 | 09:14 CEST
Silkroad Nickel, NIO, Varta - Pre-programmed bottlenecks = price opportunities
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"[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel
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.
SILKROAD NICKEL LTD - Pure profiteer of electromobility
Nickel is probably the most crucial metal component in battery manufacturing and energy storage. The more nickel, the higher the energy density of the battery. The current nickel price is just under USD 18,000 per ton, down from its peak in 2007, which was USD 50,000 per ton. Since 2007, there has been no significant investment in new nickel capacity to date. In the past, excess inventories have been run down. But these are slowly coming to an end. In addition, there are signs of a very high demand for nickel from the electric vehicle sector. As production capacities can only be ramped up slowly, the nickel price is expected to continue its upward trend. As a result, the shares of nickel producers such as Silkroad Nickel are likely to attract investor interest.
Silkroad Nickel is the first and only pure nickel company listed on the Singapore Exchange, where it has been listed since summer 2018. In addition, the stock is also tradable in Frankfurt. Since its inception, the Company's vision has been to expand downstream and transform into a vertically integrated producer of nickel products such as nickel pig iron/ferronickel for the stainless steel industry and produce various nickel-related products used in cathode components for electric vehicle batteries. Indonesia dominates the global primary nickel supply. The island nation supplies just over a quarter of the global market. Silkroad Nickel is working with major Chinese companies, among others, to produce higher value-added nickel products in Indonesia for export. The title is still an insider tip and an opportunity to bet on a nickel price increase.
NIO INC ADR - Available in Germany as of 2022
The Shanghai-based company NIO designs, manufactures and sells electric vehicles and drives innovation in next-generation technologies in connectivity, autonomous driving and artificial intelligence. NIO sees itself as a pioneer in the Chinese market for high-end intelligent electric vehicles and has medium-term ambitions to become a globally established premium brand. The differentiating feature of NIO vehicles is the easy-to-change battery. Car buyers who opt for a corresponding model do not have to buy the battery but can instead subscribe to batteries with different capacities (Battery-as-a-Service). The system is already established in China. The Company has set up more than 170 battery exchange stations along highways in the People's Republic and has already carried out several million battery changes.
Earlier this month, the Company announced plans to sell its e-cars in Germany from 2022 and compete with Mercedes, BMW and Audi. "We hope to offer some of our cars and services here as early as next year," NIO founder William Li told Der Spiegel. Sales in Europe are expected to start in Norway, the first country, before the end of 2021. Sales figures are still low. In the first half of 2021, NIO aims to deliver around 42,000 cars worldwide. The Group is still operating at a loss, and a profit is not expected until 2023 at the earliest. A year ago, the shares were trading at around USD 3 and rose to just under USD 67. At present, the share price is approximately USD 34 on the stock exchange. Analysts are optimistic and expect the share price to rise by 80% on average over the next 12 months.
VARTA AG - Annual forecast confirmed
On May 12, the MDAX group published its figures for the first quarter. With sales growth of 2.9% to EUR 204.3 million, the southern German Company fell slightly short of market expectations. Operationally, the growth was much more dynamic at 15.9% to an adjusted EBITDA of EUR 59.9 million. In mid-March, the Group announced its plans to enter the market for electric car battery cells. Varta recently announced that it had won its first customer from the automotive industry for the planned high-performance cell, but the name was not yet disclosed. "Due to our further increased profitability and our low debt, we have the opportunity to continue to invest massively in the lithium-ion business," said CFO Armin Hessenberger, underlining the Group's good position. Varta is investing EUR 150 to 200 million in the plant this year alone.
In addition, Varta confirmed its forecast for the year. According to this, the benchmark for 2021 is sales of EUR 940 million, which corresponds to an increase of around 8%. The EBITDA margin is expected to increase by up to 2.5 percentage points to up to 30%. Overall, the analysts' assessment of the share improved slightly after the figures. However, the majority of analysts classify the share as a hold. At EUR 123, the stock is currently valued at EUR 5 billion on the stock exchange.
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