Varta, Altech Advanced Materials, Freyr Battery - Different Outlooks

Varta AG - Is optimism coming back?

The stock market story of the former German flagship company Varta resembles a tragedy. Since its peak in January 2021 at EUR 181.30, the stock has lost around 90% of its value and is trading at EUR 16.46 after yet another sobering set of figures. Although the Varta share has recovered somewhat since the low for the year of EUR 13.82, it is likely to be only a counter-reaction in the overriding downward trend due to the fundamental circumstances - we are assuming another major capital measure.

The short-term oversold condition should technically end at EUR 18.40, where a gap remains to be closed. The 50-day line is currently at EUR 19.85. Two insider purchases are spreading some optimism. Rainer Hald, a member of the Board of Directors, bought shares with an equivalent value of EUR 26,385.63 and an average price of EUR 15.043, and Dr. Markus Hackstein, also a member of the Board of Directors, bought shares with a volume of EUR 43,652.14 and an average price of EUR 15.346.

Several analyst firms were much more pessimistic. The US investment bank Goldman Sachs lowered the price target of the battery manufacturer from EUR 30 to EUR 15 and downgraded Varta AG from "Neutral" to "Sell". DZ Bank also halved its price target from EUR 20 to currently EUR 10, the verdict remains "Sell".

Altech Advanced Materials - Important step

The share of the Heidelberg-based investment company Altech Advanced Materials developed much more positively. Since the beginning of the year, it has recorded a plus of over 160%. The reasons for this outperformance are based on two innovative business areas.

Firstly, Altech Advanced Materials and its Australian partner company Altech Batteries Ltd. are researching Silumina Anodes, a special nanocoating of high-purity aluminium oxide enriched with silicon. This significantly minimises capacity loss in batteries, as identified in lithium-ion batteries. In addition, tests have shown performance increases of over 30% in lithium-ion batteries with the help of Silumina Anodes technology. The German company holds a 25% stake in this joint venture.

The partnership between Altech Advanced Materials, Altech Batteries Ltd., and the Fraunhofer Institute for Ceramic Technologies and Systems IKTS has at least as much potential. With its CERENERGY batteries, the newly founded Altech Batteries GmbH, in which the Heidelberg-based company holds an 18.75% stake, focuses on the industrial production and commercial sale of solid-state sodium-alumina batteries. The revolutionary batteries will be produced at the Altech site in Schwarze Pumpe, Saxony. The battery technology uses common salt and small amounts of nickel, eliminating the need for lithium, cobalt, graphite and copper. CERENERGY batteries will be used primarily in stationary energy storage systems for regenerative energy sources such as wind, solar and water.

In mid-May, another milestone was announced with the start of prototype production of the CERENERGY battery packs with a capacity of 60-kWh. The innovative sodium-aluminium oxide solid-state battery prototypes are produced at Fraunhofer IKTS in Hermsdorf.

"We have built a dynamic and fast-paced project team that includes staff from Altech, Fraunhofer and several leading German engineering firms and industrial companies. The progress we have made in such a short time on the final designs of the 60 kWh battery pack is outstanding. I am very pleased with the progress", says Uwe Ahrens, CEO of Altech Advanced Materials.

Freyr Battery - analysts euphoric

Analysts polled by Reuters Refinitiv, on the other hand, see a price potential of over 100% for the Luxembourg-based company, which focuses on the development of batteries and battery cells for the target markets of electromobility, energy storage systems as well as marine and aerospace applications. Thus, the majority of experts see an average price target of USD 15.17. The current quotation is USD 7.39.

Freyr Battery is considering large-scale battery production in both Norway and the US. The company has started work on its Giga Arctic factory in Mo i Rana in Norway, but is still waiting for clarification on government subsidies. According to CEO Tom Einar Jensen, there are positive signals for EU-adapted framework conditions for the battery industry in Norway. He therefore expects clarification before the summer holidays.

An adjusted loss of USD 0.09 per share was reported for the first quarter. Freyr Battery did not make a cent in sales, although analysts expected revenues of USD 2.09 million. The quarterly loss amounted to USD 12.9 million. In the first three months of the year, the focus was on the construction of the Giga Arctic factory in Norway. Of the USD 64.1 million capital expenditure, 75% also went into the main project. For further growth, Freyr Battery relies on partnerships with big players. For example, the Company has been in talks to form a strategic coalition with Glencore, Caterpillar, Siemens AG and Nidec Corporation to accelerate the expansion of sustainable battery solutions in Europe and North America.

Despite a slight countermovement, the all-clear cannot yet be given for Varta AG. In contrast, several analysts are optimistic about Freyr Battery. Altech Advanced Materials achieved a milestone with the start of prototype construction for the CERENERGY series.