Volkswagen, Altech Advanced Materials, RWE - Use the dip in electrification companies for your portfolio

Volkswagen - Dividend increase

The electric vehicle market is navigating stormy waters in a complex web of ecological challenges and political framework conditions. High acquisition costs, low resale values, and challenging economic times are causing a reluctance to buy. There was some tailwind from the Chinese automotive market, which grew by 7% in March. Experts had not expected this. The growth is attributed to measures initiated by the Chinese government to facilitate the granting of car loans. Future forecasts for the Chinese market are also positive. As the largest trading hub for electric vehicles, these prospects should also radiate to other markets.

Despite the challenges of a complex global economic environment, the Volkswagen Group presented convincing results in 2023, with revenues of EUR 322.3 billion and after-tax earnings of EUR 17.9 billion. Deliveries climbed by 12% to 9.24 million vehicles. The proportion of electric vehicles increased steadily last year and ultimately amounted to 8.3%, corresponding to an increase of 35%. The operating return on sales amounted to 7%. At the end of the year, the Company had net liquidity of EUR 40.3 billion.

These results reflect the efforts of all brand groups within the Group and confirm the Volkswagen Group's stable foundation for future challenges. The Board of Management and Supervisory Board will propose a dividend of EUR 9.00 per ordinary share and EUR 9.06 per preference share to the Annual General Meeting, corresponding to an increase of EUR 0.30 compared to the previous year's figures. The payout ratio corresponds to 28%. Since the end of October 2023, the share price has risen from EUR 97.84 to EUR 128.60. The share is currently trading at EUR 126.40.

Altech Advanced Materials - Final feasibility study on the CERENERGY® project

Altech Advanced Materials has developed solutions for both the automotive industry and the renewable energy sector, which is in urgent need of energy storage solutions. One such project is Silumina Anodes™, which has shown promising results in the production of coated metallurgical silicon as an anode material for lithium-ion batteries. The final feasibility study assumes investment costs of EUR 112 million. However, these will be amortized in 2.4 years. The cash value before taxes is EUR 684 million. The plant is expected to produce 8,000 tons of coated silicon per year. The drop-in technology allows customers to add 10% Silumina Anodes™ to their batteries, thereby increasing energy density by 30%.

On March 20, the Company presented the final feasibility study for the 2nd project, the CERENERGY® battery plant. The CERENERGY® battery is characterized by low operating costs and a long service life. These solid-state batteries, which do not require critical and price-volatile materials such as lithium and cobalt, are also safer as they do not require external cooling or heating systems. The revenue potential is estimated at EUR 106 million per year at full utilization. With an EBITDA margin of 47% and a pre-tax free cash flow of EUR 51 million, the future prospects are good - the estimated investment costs for the production facility amount to EUR 156 million.

The market for energy storage solutions is still in its infancy. Market analysts forecast strong growth averaging 28% annually until 2040. With its focus on environmental friendliness, performance optimization and cost optimization, the Company has a good chance of playing an important role in the field of e-mobility and energy storage. Following the last capital increase and the weakness in sales of electric vehicles, the share came under pressure and recently consolidated to EUR 5.05. Since then, it has risen again to EUR 7.75. The share has moved sideways between EUR 5.55 and EUR 7.75 and is currently trading at EUR 6.35.

RWE - Decent figures for 2023

Germany is the first industrialized nation to abandon the production of its own nuclear power completely. Several coal-fired power plants were shut down at Easter, as Economics Minister Robert Habeck assumes that the electricity supply is secure. This is good news for the energy supplier RWE, firstly because the Essen-based company is receiving compensation payments for the decommissioning of the coal-fired power plants and secondly because the portfolio restructuring towards renewable energies is paying off. On March 14, the Company presented its figures for the 2023 financial year.

With adjusted EBITDA of EUR 8.4 billion for the Company as a whole and EUR 7.7 billion in the core business, RWE exceeded its own forecasts for 2023. Growth was driven, in particular, by the flourishing international power generation business and the booming energy trading segment. The offshore wind business made a significant contribution to the adjusted EBITDA of EUR 1.7 billion, boosted by new capacities and favorable wind conditions. In addition, the onshore wind/solar segment increased its earnings to EUR 1.2 billion, driven by the integration of the Con Edison Clean Energy Businesses and the growth of wind and solar parks and battery storage.

RWE expects adjusted EBITDA of between EUR 5.2 and 5.8 billion for the current financial year. Despite a decline in electricity prices, the Company is sticking to this estimate but tends to see results at the lower end of this forecast. The same applies to adjusted net income, for which RWE forecasts a range of EUR 1.9 to 2.4 billion. Thanks to these developments, RWE reaffirmed its dividend promise of EUR 1.00 per share for the 2023 financial year and plans to pay out EUR 1.10 next year. One share currently costs EUR 30.75.

All the companies presented here are trading far from their share price highs. This is due to the fact that investors are currently avoiding the electromobility and renewable energy sectors. This could offer good entry opportunities. Volkswagen has achieved a good result despite challenging times and a major transformation within the Group. Altech Advanced Materials has two innovations of great importance for both stumbling sectors. Better batteries would make electric vehicles much more attractive. The energy storage can ensure that renewable energies are stored in order to secure the energy generated at peak times. RWE is focusing more and more on renewable energies. This could pay off in the future.