April 7th, 2022 | 14:20 CEST
Varta, BYD, Nevada Copper: Shares under power
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"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Nevada Copper ramps up production and faces reassessment
In electromobility, raw materials are also at the beginning of the value chain. That includes not only lithium but also copper. Nevada Copper is exciting in this area. The Company owns the Pumpkin Hollow copper project in the US state of Nevada and is currently taking the step from explorer to producer. Successfully so, as CEO Randy Buffington confirmed in the Q1 2022 update: "We are pleased with the progress being made at Pumpkin Hollow in the underground mine, open pit project and exploration initiatives. The team has done a remarkable job of safely advancing the ramp-up in key development, mining, and processing areas. We look forward to continuing this progress towards stable production on schedule later this year." The underground mine mined 1,300 tonnes of copper concentrates in March alone. Optimizations are expected to increase production volumes again in April. As a result, 4,500 to 5,000 tons are expected to be extracted in the second quarter.
As a result, Nevada Copper should regain lost confidence. The share's revaluation potential is correspondingly high. After all, in 2018, the share was still over EUR 5. Then delays in exploration and changes in management caused the price to crash to around EUR 0.50 today. In the same period, the copper price increased by more than 50%. The new management has been on board since the fall of 2021 and initially secured the financing - among other things, through KfW loans and the major shareholder Pala Investment. If production continues to ramp up, a higher share price should only be a matter of time. In addition to copper, Nevada Copper also has gold and silver resources.
Varta does not convince analysts
The Varta share has performed strongly in recent days. Surprising because the figures published last week gave no reason for euphoria. The battery pioneer did not ignite any fireworks with its outlook either. Investors even waited in vain for statements on partners in the new field of batteries for e-cars. Accordingly, the current analyst comments are also restrained. DZ Bank has at least upgraded Varta from "sell" to "hold" and raised the price target from EUR 90 to EUR 95 - the share is currently trading at around EUR 94. The current framework conditions are likely to have weighed on Varta's business development in the first quarter of 2022. Berenberg also recommends holding the Varta share. The analysts have reduced the price target from EUR 115 to EUR 105. The medium-term outlook of Varta is very positive. However, the current year will be challenging, and therefore it remains for the time being conservatively below its reduced estimates for 2022 and 2023. Somewhat more optimistic are the analysts of Warburg and JPMorgan. However, they do not see much room for improvement in the Varta share. Both have a target price of EUR 113.
BYD now without combustion engine - share accelerates
The BYD share is currently stepping on the gas and is convincing with positive reports. Thus, the manufacturer of passenger cars, commercial vehicles and energy storage systems took cars with pure combustion engines out of the program in March. The Company, in which investor legend Warren Buffett also has a stake, will focus on vehicles with battery and plug-in hybrid drives. As part of the model offensive, the Group subsidiary Denza alone is to launch three new electric models on the market this year. The move is also intended to reduce the valuation discount compared with electric manufacturers such as Tesla or NIO. There is also a lot going on in the commercial vehicle sector at the moment. For example, Hungary's largest public transport company Volánbusz Zrt ordered 48 electric buses from BYD. The twelve-meter-long low-entry E-buses are to be delivered this year, and production will take place at the BYD plant in Hungary. BYD had previously landed an order in Finland. There, the local transport operator Nobina has ordered 30 electric buses for use in the Finnish capital region of Helsinki. Delivery is scheduled to take place by the end of this year.
Germany is finally getting serious about the energy and mobility transition. Companies along the value chain are benefiting from this. Nevada Copper is stepping on the gas with the expansion of production, and the share has opportunities for a revaluation. Analysts are currently waiting to see what happens with Varta, as the focus will remain on high investments in automotive batteries until 2023. BYD is currently doing well.
Conflict of interest
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