March 15th, 2021 | 08:51 CET
TESLA, NIO, Kodiak Copper: E-mobility drives the copper price!
The copper shortage continues as demand continues to rise steadily. The battery of an electric car uses about three to four times as much copper as a conventional combustion vehicle. It should also not be forgotten that the charging infrastructure's construction also requires considerable amounts of copper. And growth in renewable energies is also driving demand. Last year, the largest copper mine in the world was again the Escondida mine in Chile's Atacama Desert. With a production of 1.2 million tons, it alone accounts for about 5% of global output. However, Chile will not be able to meet the world's copper demand on its own.
time to read: 3 minutes
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Author:
André Will-Laudien
ISIN:
US88160R1014 , US62914V1061 , CA50012K1066
Table of contents:
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Author
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.
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Tesla Inc - The first wave of correction has taken place
The first correction wave has been completed. Tesla shares rose as high as USD 900 in January, and last Wednesday, they temporarily stood at USD 570. The correction of a considerable 37% in 4 weeks cost a market capitalization of USD 180 billion, which is more than the valuation of all German car manufacturers together. Bubbles can burst so quickly. We had warned about Tesla stock many times in this space - and no, the stock is still not a buy.
A little more rationality is at least returning to the e-mobility sector, even if this word is still far from fitting the current valuations. After all, some analyst firms are already blowing the whistle on the stock again. Mizuho's Vijay Rakesh set a USD 775 price target for Tesla, saying the Company remains a global leader in the e-mobility sector with its vertically integrated manufacturing, advanced battery and driver assistance system, everlasting innovations and remarkable market presence. Undeniably, Tesla is at the forefront of arguably the most significant automotive transformation in the last 100 years, but the industry is not sleeping (anymore).
In our opinion, the calculation is made here without the world market leader in technological vehicle manufacturing: Germany. For 100 years, the best automobile has come from Germany, and Tesla may still have 24 months to enjoy its leading role in the e-sector. By then, at the latest, "Made in Germany" will have recaptured the market, and European consumers will be firmly back on board. Where the Tesla share will stand then is not something we are philosophizing about today.
NIO - Valued completely irrationally despite correction
The first correction was also noticeable for NIO. It went from a high of USD 67 back to USD 36, then on Friday it was again up to USD 45. So the correction cost 46%. We should add that the stock was about USD 2.50 in March 2020 and then gained about 2680%. So it outperformed even the crazy Tesla stock.
NIO disclosed its fiscal 2020 fourth-quarter numbers in early March. For fiscal 2020, they reported a loss per share of CNY 4.74. Analysts had, on average, tipped a loss per share of CNY 3.82 here, compared to a loss of CNH 11.08 per share in the corresponding period before. NIO posted total sales of CNY 16.26 billion (equivalent to around USD 2.5 billion) in the past fiscal year, which was in line with expectations. Here, experts had expected CNY 16.22 billion, following revenue of CNY 7.82 billion generated in the previous year.
NIO's 2020 figures give it a price-to-sales ratio of 21, while Volkswagen (VW) has a ratio of 0.37 and still generates about EUR 10 billion in profit. As a side note, VW sells 100 times the number of cars with a rapidly increasing electric ratio. Decide for yourself!
Kodiak Copper - An emerging copper explorer
The most important commodity for the e-mobility and energy industries is the copper market. Remarkably, only 2 of the top 10 copper mines have started operations this century. The Buenavista mine in Mexico has been mining copper for 120 years. Fundamentally, copper grades at existing mines are dropping significantly, and in this market situation, copper companies are facing rising demand. Therefore, analysts at BMO Capital Markets forecast that the supply deficit will increase to around 3 million tons per year by 2025. That's about one-seventh of today's global market.
Canadian explorer Kodiak Copper owns a promising project in the Gate Zone, close to well-known mines such as Copper Mountain, Highland Valley and New Afton. The MPD copper-gold porphyry project is located in the prolific Quesnel Trough (BC). In addition, they are also exploring the Mohave copper-molybdenum-silver porphyry project in Arizona (USA), near the world-class Bagdad mine. Exploration work will continue in 2021.
Kodiak Copper shares began trading in early March on the OTCQB marketplace under the symbol KDKCF, in addition to the TSX. Claudia Tornquist, Kodiak's President and CEO, said, "Our new OTCQB listing will provide increased access to a large U.S. investor base. With greater liquidity and ease of transaction, it will allow U.S. based investors to participate directly in Kodiak's continued growth."
Kodiak's stock is currently priced at CAD 1.60. With very few prospective copper projects, Kodiak Copper is an attractive option for the current commodity shortage.
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