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August 3rd, 2022 | 11:51 CEST

Tech stocks: BASF, Almonty Industries, JinkoSolar, Meyer Burger - Important materials for climate change!

  • Mining
  • Tungsten
  • GreenTech
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The energy crisis evokes in us consumers a whole new behavior, which we had almost forgotten due to the abundance of the last decades: Save energy! Undeterred by the preliminary results, Economics Minister Robert Habeck is pleased to report that four weeks after the public appeal, a wave of "joining in" has actually taken off. Private households have already reduced their gas consumption by 14%, and electricity consumption has sunk noticeably. All good, the inclined listener would formulate, but from a purely economic point of view, saving is contractive and leads to less growth in all areas. For fear of the future, Germans save not only on hot water and electricity but also at the store checkout. The consequence is a recession, or let's call it in more friendly terms: the return to normality! Here are a few investment suggestions.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: BASF SE NA O.N. | DE000BASF111 , ALMONTY INDUSTRIES INC. | CA0203981034 , JINKOSOLAR ADR/4 DL-00002 | US47759T1007 , MEYER BUR.TECH.NAM.SF-_05 | CH0108503795

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


    BASF - Looking for alternatives to gas

    The Ludwigshafen-based chemical giant is one of the largest gas consumers in Germany. BASF CEO Martin Brudermüller predicts the destruction of our prosperity if Germany stops Russian natural gas imports to stop financing Vladimir Putin's war in Ukraine. Germany is hugely dependent on Russian gas and will not get rid of it anytime soon.

    A large-scale breakaway would swallow up investments of more than EUR 50 billion. But there is still enough natural gas in the storage facilities; the level has risen to 63% due to the cost-cutting measures introduced across Germany, after dropping to 41% temporarily. Nevertheless, Nord Stream 1 is not yet fully back on the grid, and the German government does not dare open the barrel of Nord Stream 2 given the advanced severity of the Russian war.

    BASF and MAN Energy Solutions have agreed on a strategic partnership for greater future energy independence to drive forward the construction of a large-scale industrial heat pump with 120 megawatts of thermal capacity at BASF's Ludwigshafen site. This is expected to make an important contribution to reducing greenhouse gas emissions, establishing the use of low-CO2 technologies in chemical production and reducing gas consumption at the site. As a first step, the project partners are conducting a feasibility study that is to be completed by the end of 2022. During the project, CO2 emissions at the site are to be reduced by up to 390,000 metric tons per year. This initial mental step will help BASF in the long term, but in the short term, the share price will likely remain weighed down by fears of recession. At least, despite the adverse environment, the Company recently raised its forecast. Sales in 2022 are expected to land above EUR 86 billion, and the profit target is EUR 6.8 to 7.2 billion. Cautiously build up stocks between EUR 35 and 42, which is an attractive long-term entry zone from a chart perspective.

    Almonty Industries - Things are moving forward in South Korea

    Almonty Industries has fully focused on the tight tungsten market with its 3 sites in Spain, Portugal and South Korea. The highly heat-resistant metal is now used in many technical sectors, and for decades 85% of it has come from Chinese mines. But that is set to change abruptly with the development of the Company's Sangdong mine in South Korea.

    As a supplier of critical metals, it would then sit on the other side of the table and be able to partially relieve struggling industries of supply chain issues. Its China risk would also be significantly reduced. The geographic proximity of the new mine to the high-tech locations of South Korea and Taiwan is a strategic advantage for Almonty and comes in handy as an alternative for local high-tech producers such as Samsung and TSMC.

    The Company received the green light for KfW financing of USD 75 million in February. The necessary USD 3.3 million has been raised, and the first tranche from KfW in the amount of USD 12.82 million could flow as agreed. Strangely enough, the extremely positive news attracted little attention on the stock exchange. Nevertheless, it is the next milestone for Almonty. Then, at the end of July, there was also the first JORC resource estimate for the molybdenum deposit in Sangdong, which should be included as a pearl in the valuation of the assets because at prices beyond USD 50,000/ton, the industrial value can be estimated at USD 1.7 billion. The research house First Berlin sees the positive side of the coin and sets the fair value per share at CAD 1.70 after CAD 1.55 despite the challenging environment. That is a close double from the current level of around CAD 0.89. Very interesting in the long term.

    JinkoSolar and Meyer Burger - Solar from record to record, not everywhere!

    In the current environment of climate protection efforts, the solar industry is "the place to be" worldwide - or so one thinks. In the case of JinkoSolar, the statement is correct because the Chinese module manufacturer cannot save itself from orders. Capacities have to be constantly adjusted to the market situation. For its further growth, the most important subsidiary Jiangxi Jinko has announced that it wants to issue a convertible bond with a volume of up to CNY 10 billion. Even after the IPO, the parent company JinkoSolar still owns the majority of its subsidiary with 58.6%. Jiangxi Jinko plans to use the proceeds of the 6-year convertible bond to advance the construction and development of specific solar cell and module production projects. Jinko's share price has consolidated by 20% in the last month but is already back in upward mode with this news. Up 29% over the previous 12 months of trading, Jinko is one of the best GreenTech companies on the stock market.

    The forecasts of solar technology company Meyer Burger read differently. The Swiss company has to "update" its production plans for 2022 and 2023 once again, taking into account the challenging supply chain situation. Meyer Burger now expects a production volume of 320-370 MW in 2022 (previously 500 MW). In the first half of 2022, 108 MW of modules were produced, with a further 210-260 MW expected in the second half. By year-end 2022, the Company expects to reach EBITDA breakeven on a run-rate basis.

    These figures reflect the ongoing bottlenecks in the global economy, which are leading to a delay in the arrival of components required for the ramp-up of additional capacity. As a result, the Company expects production volumes of 1.0-1.2 GW in 2023 (compared to 1.35 GW previously). The stock market saw the announcement as a profit warning and punished the share price by 22% to EUR 0.54 yesterday. The value remains attractive in the medium term; perhaps the expectations were simply too high here. Jinko should also be accumulated on weaker days because the growth is right.

    The various high-tech sectors have to live with rising prices and artificial shortages, which can throw one or the other business plan into disarray. BASF and Jinko are established standard stocks. More speculative but no less interesting are Meyer Burger and Almonty Industries.

    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    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 also 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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