January 4th, 2022 | 07:00 CET
Unique opportunity in emerging markets: Nordex, Hong Lai Huat, NIO
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At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Nordex: From Rostock to the whole world
At first glance, the shares of the Rostock-based wind turbine manufacturer Nordex do not really fit into the picture when it comes to investments in emerging markets. But if you look at where the latest orders for the Rostock-based Company come from, the situation changes. The Company has landed orders in both Peru and Brazil in recent months. South America plays a significant role for Nordex, as the Company told researchanalyst.com a few weeks ago.
For Nordex itself, business abroad is also important because the domestic market is still challenging due to slow approvals and lengthy procedures surrounding new wind power projects. Although the new German government has announced its intention to improve this area, it remains unclear how far such process optimizations can be implemented in the German bureaucratic jungle. The still low profitability is considered a global stumbling block for Nordex's business. The Delta4000 platform introduced some time ago is also no longer expected to have any significant margin effects, as the platform already plays a major role. The Nordex share is attractive due to climate change, but the Company has some tasks ahead of it.
Hong Lai Huat: Unique opportunity in Cambodia
The real estate project developer Hong Lai Huat from Singapore also has big tasks ahead of it. The Company operates four projects in Singapore and Cambodia. Cambodia, in particular, which is still heavily influenced by agriculture and tourism, is said to offer enormous growth potential. Only recently, Hong Lai Huat succeeded in obtaining approval from the Cambodian authorities to reallocate 100 million square meters of agricultural land for a gigantic project. In the future, fish farms and commercial areas for light industry and residential complexes are to be built there, in addition to modern livestock farming. GEM Comm analysts expect this project alone to generate noticeable returns in the coming years. However, investors should take into account that the project is extremely long-term and will not be fully implemented until 2040. Hong Lai Huat intends to develop the land step by step.
The 9,818 square meter D'Seaview project is already completed, which was completed for USD 130 million in 2020. This building complex has 737 residential units and 67 commercial units in the Sihanouk Province. It is to be followed in 2023 by Royal Platinum, a similar but slightly larger project in Toul Kork District. Hong Lai Huat's stock is about 47% owned by the Ong family and has been trading within a sideways range in recent weeks. Although the real estate projects in Cambodia must seem speculative from the perspective of European investors, Hong Lai Huat brings the experience and know-how to make the projects successful. As travel between Singapore and Cambodia is possible again (Cambodia has a 100% vaccination rate among adults), sales of the apartments should also pick up again. Investors should keep an eye on the stock - where else is there an opportunity to invest in up-and-coming Cambodia?
NIO: One swallow does not make a summer
In a different category from Hong Lai Huat is the stock of NIO. The electric car maker from China is already well-known on the market and has already completed a large part of its revaluation. It is now a matter of getting off the ground in other countries and beating off competition from established brands. Nevertheless, NIO's customers could also become Hong Lai Huat's customers: Many people from China's emerging middle class treat themselves to apartments in surrounding countries. There, the cost of living is low and speculative profits beckon. While companies like NIO have great competition, the market for real estate in Cambodia is not yet as competitive. Those with a foot in the door usually play these advantages for longer. On the other hand, in the car market, established manufacturers are catching up. Even though the NIO share has recently shot up significantly, investors should invest with caution.
There are many opportunities to invest in emerging markets. Even Nordex is benefiting from these regions. However, as vaccination coverage is key to economic recovery, countries like Cambodia, where 100% of eligible adults are vaccinated, may have advantages. Given the early stage of development of the agricultural country, which is also popular with tourists, Hong Lai Huat's stock could be a long-term opportunity. However, the stock remains highly speculative.
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