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November 8th, 2022 | 10:15 CET

Varta, Kleos Space, ThyssenKrupp: Wrongly valued? It cannot be!

  • Space
  • Technology
  • GreenTech
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What a wild ride! The US technology exchange NASDAQ fell by a full 33% in the last 12 months, while the German standard share index DAX fell by only 16%. That is astonishing because the leading German index usually reacts disproportionately to the US growth stocks. Ultimately, however, it is becoming clear that foreigners dominate German share prices. After all, if the euro's currency losses are considered, both indices are back on par. The euro has, after all, also depreciated by 15% since a year ago. Some high-tech stocks in Germany lost significantly more than average. We take a closer look.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: VARTA AG O.N. | DE000A0TGJ55 , KLEOS SPACE CDI/1/1 | AU0000015588 , THYSSENKRUPP AG O.N. | DE0007500001

Table of contents:

    Varta - Light at the end of the tunnel?

    The crash of the Varta share is incomparable. In 2021 the value still reached price levels of EUR 175, then it went steeply down to EUR 26.70 with several profit warnings. Management recently withdrew all forecasts. The high energy costs and the purchase prices for raw materials and supplies are too unpredictable. In addition, there were some delays in placing orders in the Coin Power division, one of the core divisions of the Varta Group. The operating margin has come under strong pressure and could even fall below the zero line in the third quarter.

    Analysts punished the Company one after the other and lowered their price targets, in some cases drastically. The Hamburg-based private bank Warburg, like Hauck Aufhäuser, rates the Company "Sell", with price targets of EUR 21 and EUR 24 respectively. Further assessments with "Neutral" were provided by the US banks JPMorgan and Goldman Sachs, with price expectations in 12 months at EUR 50 and EUR 45 respectively. This is a wide range, but the operating situation is depressed and it is currently difficult to develop price-increasing fantasies. Fundamentally, the price/sales ratio for 2023 is only 1.3, but earnings estimates have been lowered by more than 80% in parallel. The only bright point: Technically, a good barrier seems to be forming in the chart between EUR 26 and EUR 29. On November 15, the Company will publish figures, so there is still enough time to look a bit at the bottoming out.

    Kleos Space SA - Good business in the US

    Kleos Space SA (KSS), a high-technology and data specialist with business headquarters in Luxembourg, puts satellites into orbit to remotely capture primarily maritime and land-based radio and motion activity. They are then processed to high quality and customer specifications. At the end of the quarter, the Company can look back on 260 promising supply contracts. Most of these are from government-related agencies, with the US being a major customer. Coast guards, security and sanctions authorities and other data aggregators are also interested in the high-resolution image and motion data from space.

    Given the ongoing geopolitical uncertainty, the information and intelligence business is doing well and growing strongly. On-the-ground knowledge of conditions without actually being there has become essential for strategic decision-making, both in the private sector and for governments. After a multi-stage bidding process, Kleos was most recently awarded the first stage of the NRO SCE BAA Framework. It relates to the analysis, modeling and simulation of Kleos' capabilities to support the US government's current and future commercial radio frequency intelligence needs. The Company's digital signal processing expertise is driving demand for Kleos' LOCATE product, which is suitable as a stand-alone data set or to complement other commercial data.

    The launch of the Vigilance Mission (KSF1) satellites into orbit is nearing completion. Three of the four satellites are expected to be in formation by November 2022, providing high-quality data for existing DaaS and MaaS contracts. KSS shares suffered somewhat from the correction in growth stocks, reaching prices around AUD 0.25 to 0.28. Currently, the trend is pointing upward again, and revenues are rising again. The Kleos business model fits well into current global political events, which makes the KSS share attractive.

    ThyssenKrupp and Nel ASA - At the forefront of important GreenTech projects

    The former steel giant from Duisburg has completely restructured itself in recent years. Under the new Group structure, ThyssenKrupp is now attracting attention in the areas of GreenTech, in particular. The technology subsidiary Nucera, which until recently was called Uhde Chlorine Engineers, has been developing large-scale hydrogen production plants for years.

    Its American offshoot Nucera USA Inc. has now been commissioned by Cypress Development to supply the planning and engineering for a chlor-alkali plant as part of an ongoing feasibility study for the Clayton Valley lithium project in Nevada. The chlor-alkali plant is an essential component to produce two key reagents required to process lithium-bearing claystone into a lithium carbonate product. ThyssenKrupp Nucera USA Inc. offers world-leading technologies for high-efficiency electrolysis plants, and demand has increased sharply as a result of various climate protection projects worldwide. Meanwhile, the IPO of ThyssenKrupp subsidiary Nucera has been postponed indefinitely.

    European hydrogen expert Nel ASA had recently disappointed analysts with slightly worse third-quarter figures but reported an exceptionally high order backlog of NOK 775 million. In addition, the Company has a highly liquid position of NOK 3.5 billion thanks to two previous capital increases. Most recently, subsidiary Nel Hydrogen Electrolyser AS secured a contract for alkaline electrolysis equipment from Australia's Woodside Energy for its planned H2OK hydrogen project in Ardmore, Oklahoma. The blockbuster contract has a total value of around NOK 600 million. The stock market rewarded the Norwegians' good position, and the share price turned sharply at the EUR 1.10 mark.

    Both ThyssenKrupp and Nel ASA are in a good position in the context of the climate debate and the expansion of new GreenTech technologies. After the sharp corrections in the last 12 months, both stocks should be returned to the watch list, as the major downward pressure could soon be over.

    The correction on the stock markets is well-advanced. For bombed-out stocks, there are already observable bottom formations. If the outlook for industrial stocks improves, the stock market could go through a longer recovery phase. Varta, ThyssenKrupp and Nel ASA are beaten-up blue chips, and the rising demand for strategic data benefits Kleos Space.

    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.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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