April 15th, 2024 | 06:15 CEST
Varta, Carbon Done Right Developments, Bayer - Buy when the cannons are firing?
The stock market is a fascinating place where investors have to weigh up their opportunities and risks. An often-quoted stock market adage is: "Buy when the cannons are firing". The idea behind this is that one can find opportunities for lucrative investments in times of crisis when market sentiment is particularly poor. Warren Buffett also supports the idea of buying securities or companies at times when the majority of investors are pessimistic, causing prices to fall below the actual value of the investments. He said: "Be greedy when others are fearful and be fearful when others are greedy." We have selected three candidates who have recently lost ground and shed light on whether an investment is worthwhile.
time to read: 5 minutes
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Author:
Armin Schulz
ISIN:
VARTA AG O.N. | DE000A0TGJ55 , CARBON DONE RIGHT DEVELOPMENTS INC | CA14109M1023 , BAYER AG NA O.N. | DE000BAY0017
Table of contents:
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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Varta - Share price in decline
Varta shareholders must really have a thick skin. First, the forecasts were no longer met, then came a restructuring plan, a hacker attack and finally, the annual figures had to be postponed. Further bad news came on Thursday evening. The original restructuring plan is not sufficient and must be corrected. Weakening demand and aggressive price wars on the market have considerably impacted the battery manufacturer. Added to this is the business interruption caused by a cyber attack, the full impact of which is still unknown.
Due to the worsening market situation, the existing restructuring plan needs to be reviewed. The Company is seeking support from investors and consultants. In this context, Varta has called in the advisory service Rothschild & Co. to develop options for additional financing strategies. Despite the postponement of the consolidated financial statements and the uncertainty associated with the cyber attack and market developments, Varta aims to convince with a revised restructuring opinion from AuxilPartner and to initiate further restructuring steps.
Despite the lenders' standstill agreement and the commitment of the majority shareholder, the outlook for Varta remains uncertain. This uncertainty has weighed on the share price, which stood at EUR 9.75 at the end of Xetra trading on Friday. Market experts and analysts are urging caution, with some already downgrading the price target significantly and advising to sell the shares. No investment is currently advisable, given the poor prospects for the future.
Carbon Done Right Developments - Offers transparency in CO2 certificates
Greentech shares from the hydrogen, renewable energy and electromobility sectors have not performed well recently. The high-growth sectors are suffering from the rise in interest rates. This also includes Carbon Done Right Developments (CDRD), formerly known as Klimat X. The Company generates emission certificates through reforestation projects in rainforests and marine ecosystems, such as mangroves. It invests in the restoration and protection of ecosystems in order to increase their capacity to sequester greenhouse gases. The Company deploys capital at risk under various agreements, including cooperation, assignment, and profit-sharing agreements, with landowners and governments in various suitable jurisdictions worldwide.
The Company is currently mainly active in Sierra Leone, where it has secured 57,000 hectares of forest and mangroves. The Carbon Quantification System (CQS), a remote sensing and monitoring system that uses artificial intelligence to monitor every tree and quantify carbon, is being used. An operating, licensing and purchase option agreement has been concluded for CQS. On March 8, the Company announced that it would acquire the London Carbon Exchange in an equity transaction worth USD 450,000 to strengthen its position in the carbon credit market. This move has created another pillar for the Company. In combination with CQS, the Company offers its customers absolute transparency and traceability of emission certificates.
The Company is aiming for a dual listing on AIM in London to gain access to new investors and further financing opportunities. AIM admission is expected to be completed by the beginning of Q2. In addition, the Company has announced a brokered private placement at CAD 0.05 to raise approximately CAD 2.1 million. The Company also receives milestone payments from its customers, including a Fortune 100 company, when certain points of the Sierra Leone project are completed. The market for emission certificates is growing rapidly, and this trend toward sustainability is set to continue. The share is trading at CAD 0.05, which is the price of the private placement. For those who want to know more, do not miss the Company presentation at the 11th International Investment Forum on April 17.
Bayer - Light and shadow
Legal disputes continue to dominate the news at Bayer. Most recently, a US court reduced the fines for the controversial Roundup herbicide from USD 1.5 billion to USD 600 million. In addition to the numerous glyphosate lawsuits, there are also problems in connection with polychlorinated biphenyls (PCBs). The provisions here are significantly smaller. Further issues could arise from a lawsuit against the US partner Regeneron for allegedly manipulating reimbursement prices for Eylea®. Collective bargaining with the chemical union, which is demanding a 7% wage increase, is also due to start on April 15.
The partnership with Google Cloud could have a positive impact. The aim is to develop AI-supported tools for radiologists that minimize repetitive tasks and provide insights into large amounts of data. The commitment to digital health solutions demonstrates Bayer's ambition to be at the forefront of innovative medical technology. The first extended tests of the new platform are planned for this year in Europe and the US and could further strengthen Bayer's position as an innovation leader in the healthcare sector.
There was further positive news from the Pharmaceuticals division. Bayer's drug Elinzanetant shows promising efficacy and safety as a potential non-hormonal treatment option for moderate to severe menopausal vasomotor symptoms (hot flashes), with positive results from the Phase III OASIS 3 study. Even if the share appears favorable at first glance, one should not lose sight of the high level of debt. However, the share has significant potential if Bayer succeeds in settling the legal disputes. The Group is examining all options here. The share is currently trading at EUR 26.97.
It does not always make sense to buy shares when they are falling. This can be seen in the example of Varta, which has fallen into a slump due to increased costs and other factors. The weak growth prospects are also a deterrent at present. By contrast, the growth prospects for Carbon Done Right Developments (CDRD) are very good. If large corporations want to achieve their climate targets, they must buy emission certificates to improve their climate footprint. CDRD can now cover the entire value chain of certificates. Bayer's prospects are not as bad as repeatedly portrayed. The Group is significantly reducing its dividend in order to strengthen its financial power. If it succeeds in reducing its debt or settling the legal disputes, the share has significant upside potential.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
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