October 18th, 2023 | 07:10 CEST
Volkswagen, Altech Advanced Materials, JinkoSolar - Electromobility and Battery Technology: A forward-looking combination
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Volkswagen - Sales figures surprisingly good in Q3
After recent negative headlines on Volkswagen due to weak margins, problems with electric car software, weak demand in Europe and the introduction of short-time work in two German plants, the news situation is brightening. Production at the Zwickau and Dresden plants were ramped back up to normal levels. Nevertheless, 2,200 temporary employment contracts in Zwickau were not extended. The Group wants to cut costs. By 2026, the Company intends to improve its earnings by EUR 10 billion. In line with this, Volkswagen's Up model will no longer be produced from 2024.
The figures for the 3rd quarter, expected on October 26, promise to be much more positive. Most recently, it was announced that sales figures in Europe and North America have increased significantly. This more than compensated for a decline in sales in China. A total of 2.34 million vehicles were sold, representing an increase of 7.4%. Growth was particularly high in September at 9.9%. Sales of electric vehicles rose by 40.5% to 209,900, and yet the Company is not yet satisfied with demand. In addition, the Company naturally wants to grow in China, the largest market for electric vehicles.
Here, they are partnering with XPeng to develop two models specifically for the Chinese market. After the reports of the sales figures and the announced savings, there were buy recommendations from RBC Capital Markets and Jeffries, with price targets between EUR 150 and EUR 160. The buy recommendations were justified by the sales figures. Above all, the European market is important for VW, as it accounts for around 64% of total sales. Earlier this month, UBS set a sell rating on the stock with a target of EUR 100. A positive aspect for investors is the focus on margin optimization.
Altech Advanced Materials - With 2 strong products
Currently, the range of electric vehicles is one of the main problems of electromobility. However, renewable energy is also facing difficulties. When the sun shines all over Germany, too much electricity is generated, surplus electricity must be given away abroad, and electricity must then be imported at night. A more efficient solution would be to store the surplus electricity. For both challenges, Altech Advanced Materials offers innovative solutions. For electric vehicles, the Company provides Silumina Anodes™ drop-in technology. Through a proprietary coating technology process, silicon becomes a coated anode material. With the silicon, lithium-ion batteries experience a performance increase of at least 30%. The process can also be applied to graphite. The demand for anode material in the EU is expected to increase significantly by 2030.
The energy storage market will also grow strongly. Altech and the Fraunhofer Institute for Ceramic Technologies and Systems have developed the CERENERGY® battery, which requires no critical raw materials. Only nickel, salt, ceramics and metal are used. In this way, they have managed to create an electricity storage system that requires no cooling or heating, is non-flammable, can be transported without any problems, has a service life of more than 15 years, requires hardly any maintenance and is significantly cheaper than other electricity storage systems. The system can be plug-and-play and can also be expanded. Unlike other batteries, the battery can be 100% recycled. Production is to take place at the CERENERGY® plant in Schwarze Pumpe. Construction is to start in 2024, and in the first step, a capacity of 100 megawatt hours is to be built.
Later, the plant is to be expanded into a gigawatt factory. The corresponding plans are already in place. The market for electricity storage is projected to increase its capacity from the current level of around 2 gigawatt-hours (GWh) to over 40 GWh by 2030. By 2040, growth is expected to be as high as 25% annually. With all these positive developments, it is not surprising that the share price has risen by more than 370% since the beginning of the year to a peak of EUR 17.50. However, consolidation has set in, and the value is currently quoted at EUR 10.40.
JinkoSolar - Continued strong sales figures
The renewable energy sector has also suffered recently. Significant write-offs were necessary for wind farms, hydrogen is still in deficit, and there is great competition in the solar sector. Even one of the largest solar module manufacturers could not avoid these challenges. However, JinkoSolar has the additional problem of being a Chinese company, which means that a discount is pre-programmed due to geopolitical tensions. Nevertheless, the Company is technologically advanced, and the revenues are constantly increasing. If it becomes possible to establish energy storage solutions for standard home photovoltaic systems, the demand for both solar solutions and energy storage will increase significantly.
On October 10, the Company announced that its subsidiary Jinko Solar Co. had shipped solar modules with a total capacity of 52 GW in the first 9 months of the current year. About 57% of these shipments were of the high-efficiency N-type modules. In addition, a tender for 3.2 gigawatts was won for a project of the CHN Energy Investment Group. Currently, the subsidiary's order backlog is above the estimated module deliveries for the entire year 2023. There is no shortage of orders.
They received support from the French government, which announced on October 10 that it plans to double its renewable energy generation by 2035, with solar capacity potentially increasing more than sixfold. The share subsequently surged to over USD 32 but has since been declining. Currently, one share is priced at USD 30.47. With a dividend of USD 1.50, which is to be paid on December 6, the dividend yield is nearly 5%. However, investors should be aware of the risks associated with Chinese stocks.
Electrification continues. The market will grow strongly in the coming years. Those with innovative developments, such as Altech Advanced Materials, have good cards in the financial market. At the same time, the Company has 2 finished products at once that want to be put into series production. Volkswagen is trying to solve its margin problem with a savings rate and is building gigafactories in Europe to make itself more independent. JinkoSolar is innovative in the field of solar energy generation. This is also reflected in the sales figures. However, geopolitical tensions must be taken into account here.
Conflict of interest
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