October 28th, 2022 | 11:48 CEST
The great race to catch up: Varta, Altech Advanced Materials, BASF - Who will build the best battery?
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"[...] Boron is one of the most versatile elements in the whole world! Everyone reading this text regularly uses hundreds of products that depend on boron. [...]" Tim Daniels, CEO, Erin Ventures
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.
Varta - Time for extensive consolidation
Varta shareholders need to have thick skin. After three profit warnings in a row, the technology company from Ellwangen crashed by 80%. The Q3 figures now reported confirm the red figures in the operating area and significantly less turnover. The battery manufacturer cited delayed customer projects in the high-margin Microbatteries segment and permanently high raw material and energy costs. According to preliminary figures, adjusted EBITDA slipped to minus EUR 2.5 million, compared with a profit of EUR 70.2 million in the prior-year quarter. Revenues fell by 8% to EUR 571 million after 9 months, and the experts were once again negatively surprised. From the V4Drive division, it is reported that 10,000 units are being shipped weekly for testing. Cooperation with a large car manufacturer is said to exist already. Here would lie the medium-term fantasy for Varta.
There was no guidance for 2022/23 from the new management. A lot is likely due to the delays in the placement of orders by the largest customer Apple, which is also experiencing a decline in demand. Varta's products are strongly represented by the Californian. Analysts reacted with little surprise, as they had already downgraded the Company sharply in recent months. The median price target of the S&P Global Market Intelligence experts is EUR 52, with a range of EUR 26 to EUR 68. The current consolidation is likely to continue for some time, as 2023 will not deliver any improvement in economic terms either. At EUR 28.50, however, the share has now reached a price-to-sales ratio of 1.5 and is, therefore, no longer too expensive if an improvement in the figures can be achieved in 2023/24.
Altech Advanced Materials - Moving forward with fresh funds
The young technology company Altech Advanced Materials AG (AAM) from Heidelberg, Germany, has raised additional capital to advance its proprietary Silumina AnodeTM battery material technology. The Company raised a total of EUR 4.2 million, and the capital reduction already decided in August will now be implemented by November 10. At the same time, a further EUR 3.5 million with subscription rights is to be raised via a convertible bond plus warrant. After the capital cut and registration of the implementation of the completed transaction, the Company's share capital will then amount to around EUR 7.06 million.
The Company's objective is to participate in the market for lithium-ion batteries for electromobility through innovative and high-performance anode material based on high-purity aluminum oxide (HPA). Another focus is on solid-state batteries for stationary battery applications. The parent company in Australia is currently testing the production of Li-ion batteries in pouch cell format, which are suitable for testing high-performance applications in electromobility under various thermal and physical conditions.
In October, Altech has now awarded a contract for engineering services for the recently launched feasibility study for the realization of a 100MWh production plant for solid-state sodium-alumina batteries. The contractor at the Saxony site is Leadec Automation & Engineering GmbH. The Leadec project team has already started its work at the future Schwarze Pumpe production site with the support of Fraunhofer IKTS. In the course of a joint venture, the Altech Group aims to achieve rapid commercialization of the revolutionary CERENERGY® sodium-alumina solid-state battery (SAS) with Germany's world-leading battery institute Fraunhofer IKTS.
CERENERGY® batteries are an environmentally friendly and resource-saving alternative to lithium-ion batteries for commercial and industrial energy storage in stationary applications using renewable sources. CERENERGY® batteries are fire- and explosion-proof, have a service life of more than 15 years and function in all climate zones. The basic material of this battery technology is common table salt; the extensive use of critical and environmentally harmful materials such as lithium, cobalt, graphite and copper is no longer necessary. Good news for the Altech share, it is once again trading at around EUR 1.50 following the capital measures. With their innovative strength, the Heidelberg-based company has what it takes to impact the battery market in the medium term. Investors should therefore stay on the ball.
BASF - The doubters are stunned
BASF is also doing better than many skeptics had thought, with Q3 sales of EUR 21.9 billion exceeding the previous year's figure by 12%. The decisive factor for the increase was significantly higher prices in almost all segments. It is clear that market leaders can pass on higher procurement prices to customers. Only the Surface Technologies segment reported lower prices as a result of lower precious metal prices.
"Despite persistently high raw material and energy prices, BASF achieved solid earnings in the third quarter of 2022. Our customer-focused downstream segments, Surface Technologies, Agricultural Solutions, Nutrition & Care and Industrial Solutions, increased their earnings significantly," BASF Chairman Dr Martin Brudermüller said when presenting the figures. As expected by experts, EBIT before special items fell YOY by EUR 517 million to EUR 1.3 billion. Therefore, the market's reaction was hardly noticeable; on the contrary, the share has already gained 17% since its turnaround at around EUR 38.
BASF's Catalysts division is working on modern battery materials with the aim of extending the range to 600 km with a charging time of just 15 minutes. Research is being conducted primarily on cathode materials, and the Company is cooperating with international giants such as CATL. The right cathode is central to the performance, affordability, reliability and sustainability of modern batteries for electric vehicles. BASF is already the leading global supplier of battery materials and continues to expand its market position. On the stock market, the value has been in demand again for a few weeks following the major correction.
With forward-looking decisions, politicians are ensuring that the goals in the area of e-mobility are implemented quickly. Thus, the signs are set for industrial implementation. Companies such as Varta and BASF are continuing their research despite an impending cyclical downturn to develop innovations for the next upswing. Altech Advanced Materials is also making consistent progress, although this will not happen overnight with budgets in the smaller millions.
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