08. November 2021 | 10:25 CET
Varta, Manganese X Energy, BYD - Batteries are becoming more and more important
Batteries have been around for a long time, but the old lead-acid batteries are gradually being replaced by lithium-ion batteries, which can be recharged much more often and thus have a much longer life. All these batteries require raw materials such as cobalt, nickel or manganese. The mining of cobalt does not have the best reputation, so Tesla has already reduced the proportion of cobalt. The alternative is called manganese, and this raw material is also absolutely needed by the steel industry. With the electrification of cars, demand will increase. The battle for the longest-lasting battery, greatest range and fastest charging capability is in full swing. We, therefore, take a look at three companies involved in batteries.
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ISIN: VARTA AG O.N. | DE000A0TGJ55 , MANGANESE X ENERGY | CA5626781028 , BYD CO. LTD H YC 1 | CNE100000296
Varta - Lowering forecasts
Varta has been floating on a wave of euphoria for a long time, as the Company is a leader in button cell batteries. These batteries last longer, and that is extremely important, especially for wireless headphones. In this way, large customers such as Apple and Co. could be won. The Company also quickly took on the e-car battery. V4Drive was presented this year, and a well-known partner was won with Porsche. The pilot plant is to be completed for production before the end of this year.
While investors are still waiting for the quarterly figures on November 11, the Company had to revise its forecasts downwards in advance last Friday. The reason lies in the disrupted supply chains, which meant that some Varta customers could no longer produce and thus, fewer batteries were needed. For the battery manufacturer, this means only EUR 900 million in sales instead of EUR 940 million. The profit will amount to about EUR 270 million. The margin is thus around 30%.
Investors reacted with panic selling, pushing the stock down to EUR 99.70. From the support zone there, the share was able to correct to EUR 110.85 and is now back at the level of early October, when the rally to EUR 135.60 began. The coming days will show whether the price gap can be closed or whether the selling will continue. Investors should take a closer look at the quarterly figures on November 11.
Manganese X Energy - On the way to becoming a producer
Manganese X Energy is based in Canada and is exploring and developing its Battery Hill project, where manganese deposits have already been proven. The area is 1,228 hectares in size, has 55 claims and is located near Woodstock. It is divided into five zones: Iron Ore Hill, Moody Hill, Sharpe Farm, Wakefield and Maple Hill. It is believed to host the largest source of manganese in North America at approximately 194 million tons. The official mineral resource estimate is for 34.86 million tonnes of proven manganese at a grade of 6.42%. The suspected mineral resources were reported as 25.91 million tons at a grade of 6.66%.
Kemetco Research has been commissioned to undertake the preliminary economic assessment, and the Company was able to announce on October 12 that the Phase 3 metallurgical program had delivered significant cost reductions. It also confirmed the purity of the manganese sulfate monohydrate required for cathode production at 99.95%. Thus, EV-compliant values are achieved. The completion of Phase 3 should take place in the coming weeks. Therefore, the Company is one step closer to mapping the complete value chain of manganese production.
In addition to the main project, the Peter-Lake project, which covers 2,568 hectares and is located in Quebec. Copper, nickel, cobalt, gold and silver have already been found there. The battery market is growing rapidly, and the demand for manganese will also grow. In terms of independence from China, Manganese X Energy, the only manganese exchange-listed company in North America, offers a unique selling point. The stock is currently trading at CAD 0.365 and is still far from the highs at CAD 1.11. If the profitability analysis turns out to be positive, the share is likely to jump.
BYD - Strong sales figures in October
BYD is known to most as a manufacturer of electric vehicles, but the group started with the production of batteries. In the EV sector, the Company has made a name for itself with its so-called blade batteries, produced based on lithium iron phosphate (LFP). There are always rumors that Tesla has secured BYD's batteries, but this has not been confirmed yet. However, it is known that Elon Musk wants to focus more on LFP.
In October, the Company sold 249% more electric vehicles than the previous year. A total of 81,575 cars were sold. This figure surpassed even the good numbers from September by over 12% again. The Company has also developed a photovoltaic electricity storage system to optimize the bottleneck in renewable energies. Here, too, its expertise in battery development can pay off.
After hitting lows in May at EUR 14.12, the stock has resumed a robust uptrend and is currently trading at EUR 34.15. This trend remains intact as long as there is no closing price below EUR 25.05. If sales of electric vehicles continue to go so well, the trend is unlikely to be broken. If there are then still contracts with Tesla, the share will continue to rise.
Batteries and rechargeable batteries will play an increasingly important role in the future. Companies are researching better and better technologies to increase efficiency. Varta is the undisputed number 1 as far as button cells are concerned. Whether V4Drive can prevail against the competition remains to be seen. Manganese X Energy is taking a different approach and wants to supply battery manufacturers with high-purity manganese sulfate. Demand for this raw material will increase. BYD is now very diversified. The electric car sector currently dominates, but the Company also wants to sell its blade batteries to other manufacturers. So it will benefit from the synergies.