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October 12th, 2023 | 07:15 CEST

Stocks for bargain hunters: BYD, JinkoSolar and Desert Gold

  • Mining
  • Gold
  • Electromobility
  • Solar
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What do renewable energies and gold have in common? Despite attractive future prospects, shares from both sectors have taken a beating in recent months. Often for no apparent reason. This opens up opportunities for bargain hunters with a bit of patience. For example, with shares like JinkoSolar and Desert Gold. Both companies are historically cheap. JinkoSolar has just reported a new sales record and wants to grow further. Desert Gold lures with an almost ridiculously low valuation of its gold resources and continues to drill. A rebound or takeover beckons for patient investors. And BYD? The Chinese are on track to displace Tesla as the world's No. 1 e-car manufacturer. Nevertheless, the stock is stuck, and in Europe, the EU is investigating illegal subsidies.

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: BYD CO. LTD H YC 1 | CNE100000296 , JINKOSOLAR ADR/4 DL-00002 | US47759T1007 , DESERT GOLD VENTURES | CA25039N4084

Table of contents:

    Desert Gold: Rebound or takeover?

    The gold price has recently recovered from its lows and is marching back towards USD 1,900 per ounce. This should also give a boost to gold stocks. Explorers, in particular, have had a hard time this year, which offers attractive buying opportunities for bargain hunters, such as Desert Gold. The Canadians are successfully developing a project in West Africa. The SMSZ project in Mali covers an area of 440 sq km and is located near major gold companies. Thus, Barrick Gold, B2Gold and Co. should already have at least one eye on SMSZ.

    What makes SMSZ so intriguing is that, despite many areas of the property remaining unexplored, the measured and indicated mineral resource already stands at over 1 million ounces of gold. Further drilling programs are underway. Accordingly, shareholders should look forward to newsflow in the coming months. The current resource is matched by a market capitalization of around EUR 4.5 million, corresponding to about EUR 4.5 per ounce of gold in the ground. To put this in perspective, in the region, takeovers by large corporations have paid up to EUR 100 per ounce in the past. Even with a safety margin of 30%, Desert Gold is thus a real bargain. With the ongoing drilling program, the resources may increase further.

    JinkoSolar: Will dividends and record sales bring the turnaround?

    The JinkoSolar share is not expensive at the moment. However, this has been true for the solar group for years. Fears of overcapacity in the industry and the "China factor" regularly put pressure on the share price. Now, the start of dividend payments should bring about a turnaround. Because operationally, things are going well at JinkoSolar, as the latest shipment figures show.

    In the first nine months of the year, the Chinese solar group shipped modules with an output of over 52 GW. Sales increased each quarter, with 13 GW in Q1, 17.8 GW in Q2, and 21.2 GW in Q3. In 2023, as a whole, shipments are expected to rise to 77 GW. This would mean that JinkoSolar would again set a sales record in the final quarter. In the coming year, the 100 GW mark is to be attacked. The best-selling modules are those with the latest generation TOPCon cells. These account for around 57% of deliveries. They currently have an efficiency rate of 25.5%. The first cells, with 25.8%, are to be delivered by the end of the year.

    BYD: Overtakes Tesla and has no fear of the EU

    BYD is also rushing from one sales record to the next. In the third quarter, the Chinese group sold 431,603 fully electric vehicles. This represents a 23% increase compared to the second quarter and over 50% more than in the same quarter last year. BYD is thus well on its way to replacing Tesla as the market leader. Elon Musk's e-car pioneer delivered 435,059 vehicles in Q3 2023. As a result, its lead is melting away.

    The European market is expected to contribute more and more to BYD's growth. The group is sticking to its expansion plans despite the ongoing anti-subsidy investigation by the EU. Thus, a leading manager of BYD said in an interview that they are not worried about the investigation. It will cooperate with the authorities and provide clarification. The investigation will likely take many months and could result in a penalty or import duties.

    BYD is also going full throttle in other regions. In Brazil, construction of a factory complex has begun. Three plants are planned: one for e-trucks and bus chassis, another for producing up to 150,000 hybrid and electric cars annually, and finally, a third for processing raw materials for battery production. BYD will invest over EUR 500 million locally for this purpose, and production is scheduled to start as early as 2024.

    In the current market environment, there are real opportunities for investors with patience. The gold sector will recover, and then the currently almost ridiculously low valuation of Desert Gold should return to normal - whether through a "naturally" rising share price or a takeover bid. In the case of JinkoSolar, the valuation has been low for what feels like forever. Whether the dividend payout will turn things around remains to be seen. BYD is also struggling with the China factor. However, the Company is operating at full throttle and an economic stimulus package in China, its primary sales market, could provide new impetus.

    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.

    Risk notice

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author

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