August 18th, 2022 | 12:57 CEST
Watch out! BASF, Varta, Barsele Minerals and Nordex - These shares are mastering the energy crisis
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"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
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.
Varta - Poor figures but outstanding increase
"The desire for mobility and independence in all areas of life is unbroken," said Varta CEO Herbert Schein when presenting the detailed quarterly figures in Ellwangen. After a weak result in the 2nd quarter, the Group expects sales of only EUR 880 to 920 million in the current year, instead of the previous figure of just under EUR 1 billion. Adjusted EBITDA is expected to be only EUR 200 to 225 million, compared with estimates of EUR 260 to 280 million at the beginning of the year. If we take a closer look at the 2021 figures in comparison, it becomes evident that Varta will hardly grow at all in 2022 and will also earn less on the bottom line. Broken supply chains, increased margin pressure and difficult general conditions are cited as reasons. In 2021, the Group had increased sales by 4% to just under EUR 903 million; operating profit rose by 17% to EUR 283 million.
But the stock market is not interested. With the figures, the share price quickly fell back to EUR 76, but 3 days later, it was back at EUR 82. So the heart of the investors still beats loudly for the Ellwangen-based company because, at some point, the super battery is expected to be launched. Technically, the price should not go below the low from May at around EUR 68.35, in which case the traffic light is at least still on yellow. It only turns green over EUR 95, which means the value is still a good 20% away. The majority shareholder Montana Tech has kept its nerve for months. We continue to watch!
Nordex - Now it could work
A solution for the current energy shortage is certainly the further expansion of alternative energy production. For wind turbine manufacturer Nordex, the general conditions could therefore not be better. Economics Minister Habeck has made great promises in terms of approval times and distance rules. But the official steps are still taking far too long.
Unfortunately, the Hamburg-based company is still in trouble. Despite a flood of orders from all over the world, they are still struggling with interrupted supply chains and a shortage of raw materials. This leads to delays in production and claims for damages from customers. In addition, there is an inflationary cost explosion that has not been seen for 20 years. Therefore, Nordex also emphasized in its latest outlook that no net profit can be achieved in 2022.
In the first half of the year, sales fell by a good fifth to EUR 2.1 billion due to lower installations, with EBITDA slipping sharply into the red at EUR 173.3 million. In the previous year, a plus of EUR 68.4 million was achieved. The margin target of 0 to 4% is thus becoming an ambitious undertaking. However, analysts now see the light on the horizon. According to Jefferies, margins have already bottomed out, and selling prices have also been adjusted upwards, although they are still lower than the competition. Momentum has turned positive, with major resistance still lurking at EUR 12.20. Act on the long side only with tight stops about 5% below cost. The volatile stock could also turn again quickly.
Barsele Minerals - Capital increase doubled in volume
Good news from Barsele Minerals. The private placement announced a week ago could be expanded in volume to 2 million Canadian dollars. The new 6.66 million shares will be placed at CAD 0.30. In addition, there is also a 2-year warrant in the amount of 50%, with a subscription price of CAD 0.45, i.e. significantly higher than the current price. The capital increase went brilliantly and without discount to the traded price.
The Canadians have been working for some time on a prospective property of 34,000 hectares in the mining region of Västerbottens Län in northern Sweden. The ongoing drilling program has been carried out for some time by joint venture partner Agnico Eagle, and a further 3,000 meters were started in June. Testing will take place in the Norra and Bastutrask target areas. Major Agnico may decide to increase its stake by 15% following a pre-feasibility study. Commodity specialists in Canada expect the data to be good, as Barsele shares have already gained over 50% from the low.
In addition to the indicated 2.4 million ounces of gold, there is also mineralization of lead, zinc and nickel to be found - in-demand metals for GreenTech applications. For years, Scandinavia has been a developer of climate-friendly technologies and offers smaller mining companies appropriate opportunities to participate in the big picture. The share is currently trading around the placement price. If the price continues to rise, additional money from the warrants beckons. Barsele Minerals remains a promising speculative investment.
BASF - The chemical giant faces new burdens
In addition to the already known risks for the gas supply, there is now a logistical problem - the low water in the Rhine will force transport back onto the roads. Here, however, the costs are many times higher and more complicated to manage. These risks could not yet be assessed in the most recently reported figures for the first half of the year, as the pronounced drought in Germany only really became apparent in July and August. The water levels are falling, which means that the framework factors for BASF are also deteriorating. The price of liquefied gas has also risen again by 25% in the last 4 weeks and the gas levy to bail out gas importers is now a done deal. Gas is one of BASF's most important input factors for chemical processes, so further increases in costs are inevitable.
Despite all these factors, it has to be said that BASF shares have already suffered a 36% discount in the last 12 months. Analysts are not quite so pessimistic because of the good half-year figures. Bernstein Research has even raised the price target for BASF from EUR 72 to EUR 77 with a rating of "Outperform". Hamburg-based analyst firm Warburg Research adjusted its price target slightly from EUR 60.70 to EUR 60.00 after the latest figures but left its rating at "Buy". The shares of the Ludwigshafen-based company entice with a 2023 P/E ratio of 7.5 and a dividend yield of over 7%. As discussed several times recently, entry prices can be found in the corridor of EUR 38 to EUR 43. Despite its low valuation, however, BASF is a long play on a stable or growing economy. Those expecting a recession should keep their feet still.
GreenTech has had a bounce in the international markets in recent weeks. US President Joe Biden is to blame with his USD 430 billion Climate Bill. Although this is a short-term boost, the economic trend above it is significant in the long term. Dynamic investors need to keep an eye on this.
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