13. August 2021 | 11:39 CET
Steinhoff, Kodiak Copper, NIO - At the beginning of the trend
Rising inflation is making living more expensive. The culprit for the increase - in Germany, consumer prices rose by 3.8% in July compared to the same month last year - is increasingly expensive raw materials. In addition to agricultural commodities such as corn and wheat, metals in particular, which are urgently needed for the energy transition, are going through the roof. There is no end in sight to the price increase here; economists are already talking about a supercycle lasting years.
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ISIN: STEINHOFF INT.HLDG.EO-_50 | NL0011375019 , KODIAK COPPER CORP. | CA50012K1066 , NIO INC.A S.ADR DL-_00025 | US62914V1061
"[...] We have a clear strategy for neutralizing sovereign risk in Papua New Guinea. [...]" Matthew Salthouse, CEO, Kainantu Resources
Kodiak Copper - Profiteer of the copper boom
There are two main reasons for the massive rise in commodity prices. The first is the upswing following the lockdowns due to the Corona pandemic in major economies, the force of which many producers had underestimated. The demand for pent-up consumer desires rose dramatically, and in addition, the economy was pumped up by politicians and central banks with enormous support programs. Due to the increase in demand, bottlenecks in the supply of intermediate products ensued. These are likely to be reduced again relatively quickly as capacities are ramped up.
Secondly, the global economy faces a further, longer-term problem. The rapid and extreme expansion of renewable energies and electromobility, accelerated by the ever louder calls for climate neutrality from politicians, is causing the hole on the supply side for copper, which has already existed for two years, to become ever deeper. The red metal is considered the base metal of the energy revolution due to its nature and conductivity. As a result of the green revolution, experts believe that more copper will be mined in the next 25 years than in all of human history to date. However, the high demand is offset by an extremely scarce supply. Due to the weak base price, investments in new projects have been severely neglected in recent years.
The exploration Company Kodiak Copper, which belongs to the Discovery Group, should be mentioned here as one of the few promising companies that can make the leap to becoming a copper producer through successful drilling programs. Kodiak Copper's focus is on its wholly-owned copper porphyry projects in Canada and the USA. The MPD project in the Quesnel Trough in south-central British Columbia, where high-grade mineralization within a broad mineralized envelope was discovered last year, stands out. The likelihood of further drilling success is further enhanced because producing mines at Copper Mountain, Highland Valley and New Afton are located in the immediate vicinity.
The fully funded 30 km drill program has also consistently seen better than expected news across the ticker. Gate zone expansion was the proclaimed goal for the year by CEO Claudia Tornquist. It was already reported last month that the Gate zone discovery had been extended six times its previous strike length from about 125 to about 800 m north-south. In addition, the zone is showing increasing similarities to other large copper porphyry systems in British Columbia, such as the Red Chris mine, in which Newcrest Mining has acquired a 70% interest.
Kodiak Copper is considered one of the most prospective copper exploration companies, in our opinion. It would not be surprising to see takeover bids fluttering into the Canadians' office before achieving copper producer status. Kodiak's share price has been consolidating in recent months and is available at a discount of over 50% to last year's high.
Steinhoff - Shortly before the breakthrough
The German-South African retail group Steinhoff triggered a share price explosion of 30%, increasing the settlement offer by EUR 185 million to now EUR 1.34 billion. It was thus able to satisfy at least the plaintiffs of the Hamilton Group, which represents 14,000 predominantly South African small investors, asset managers and pension funds and a claim amount of EUR 800 million.
However, the claims amount to more than EUR 7 billion, made up of claims by creditors and investors from Germany, the Netherlands and South Africa. The process will only come to an end if all creditors agree to the settlement.
Overall, an investment in the highly indebted Steinhoff Group remains a gamble. A positive outcome at the meetings on September 6 could push the share price up further, but this still does not ensure the group's long-term survival.
NIO - Record figures
In the second quarter, a delivery record of 21,896 vehicles was posted by Chinese electric car startup NIO, representing sales of EUR 1.31 billion, up 127.2% year-on-year. The group thus increased sales by nearly EUR 100 million compared to the first quarter. The loss was USD 0.03 per share. NIO thus met the upper forecasts of analysts. Sales figures of between 23,000 and 25,000 units are expected for the next three months.
The outlook was too subdued for market participants, sending the stock about 5% lower at USD 41.98. In the short term, a test of the support at USD 40 is possible. In the long term, we are optimistic about the NIO share.
The energy transition, i.e. the green revolution, paradoxically requires a lot of metal. Copper is one of the most crucial raw materials and should continue to increase in value due to low supply over the next few years. Kodiak Copper is one of the most promising explorers in this regard. On the other hand, NIO is one of the most interesting players in the field of electromobility in the long term, but the value could still correct further in the short term.