October 19th, 2022 | 11:51 CEST
The problem solvers: Plug Power, BioNTech, Almonty Industries
Table of contents:
"[...] While tungsten has always played an important role in the chip industry, it is now being added to batteries for e-cars. [...]" Lewis Black, CEO, Almonty Industries
Almonty: USD 590 million cash flow in sight
Problems with the supply of raw materials have been more noticeable than ever since Russia attacked Ukraine. But in the future, not only oil and gas could become scarce, but other urgently needed raw materials. After all, in addition to Russia, China is one of the leading producers. Photovoltaic and battery production and numerous other high-tech areas depend on raw materials from the Middle Kingdom. The aim is to change this. Therefore, industrial nations promote the exploration of new deposits in "safe" countries. This also applies to tungsten. And this makes Almonty interesting for investors. The Canadians already operate mines in Spain and Portugal. But those who buy the stock buy it because of the new project in South Korea. There, Almonty is currently building the Sangdong tungsten mine. When fully commissioned, the Sangdong mine will be the largest tungsten mine in the world. Almonty would thus be responsible for 50% of the world's tungsten production outside China in the future and therefore be of strategic importance for the security of supply in Western industrialized countries. For this reason, the project is also being co-financed by the German KfW.
Rapidly rising inflation is not causing the Company any headaches in terms of development. CEO Lewis Black says, "We are still well within budget despite inflationary pressures. Because we anticipated these pressures last year, we were able to manage them successfully." Currently, Almonty is planning to build a vertically integrated downstream nano-tungsten oxide processing plant to supply the South Korean battery anode manufacturing industry. The extent of the "hunger" for raw materials is demonstrated by the long-term offtake agreement with the Plansee Group. It has a term of 15 years and guarantees Almonty a cash flow of USD 590 million. Because of this positive outlook, the stock has long held between CAD 0.80 and CAD 1 in the bear market. But since September, it has slipped and is currently trading at CAD 0.64. As a result, the market capitalization is now only around CAD 130 million. With the prospects described, that is anything but a lot.
Plug Power: JPMorgan sees almost 50% price potential
Despite the price slide, Plug Power is still valued at almost USD 11 billion. It should be clear to investors that hydrogen stocks are largely traded for the future. The sales and profits of companies like Plug Power and Nel ASA have yet to grow into their valuation levels. However, this journey is taking longer than many had hoped. Plug Power, for example, has recently brought investors back down to earth.
The fuel cell company continues to struggle with global supply chains. As a result, sales for the current year will be 5 to 10% lower than expected. Previously, Plug Power had forecast USD 900 million to USD 925 million for 2022. But it said the completion of various projects will be delayed until next year. That is because problems in the supply chains mean that needed parts will not be received until later. Nevertheless, JPMorgan continues to recommend the Plug Power share as a buy. Many negative developments are already priced in, and the long-term outlook for the hydrogen industry remains positive. With a price target of USD 28, the analysts of JPMorgan see a price potential of almost 50%.
Incidentally, JPMorgan is more cautious about Nel ASA. The analysts rate the Norwegian hydrogen share as "Underweight" and name a price target of NOK 10.10. The latest major order is positive, but there are risks concerning margin development.
BioNTech: Vaccine against cancer in a few years?
In Germany alone, almost half a million people develop cancer - every year. In 2020, more than 200,000 people died of cancer in this country. These figures show how urgently a cure or vaccine against the disease is needed. BioNTech, among others, is working on the latter. The German biotech flagship is investing the billions in profits from the COVID-19 vaccine in cancer research, among other things. And there are signs of success. BioNTech CEO Ugur Sahin, for example, expressed great confidence in an interview with the British BBC: "We can make cancer vaccines available to many patients around the world before 2030. We have learned how to make vaccines better and faster." Thus, the Company benefits from the COVID-19 vaccine in more than just monetary terms. Regulators have also learned more about mRNA, added BioNTech co-founder Ozlem Tureci. This should save necessary time on the road to approval. These statements have not yet given the BioNTech share any new upward momentum, but the share should benefit if there are positive study results soon. And if cancer vaccines get approved, entirely different share price regions would no doubt be possible.
As different as the business models of Almonty and BioNTech may be, the two companies have something in common: Exploiting commodity mines and developing new vaccines takes time. If investors also bring time and patience, significant share price gains could be made. These are also possible for Plug Power, but the Company must get a grip on supply problems and shift up a gear or two in terms of growth.
Conflict of interest
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