November 30th, 2022 | 11:58 CET
What to buy cheap? BYD and Uniper, BASF and Manuka Resources are on the rise
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
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.
BASF and Uniper - Will the German gas emergency get through the winter?
This year there is a new perennial topic in the press and at private events. Will we freeze in winter or not? From Berlin, we hear the media's continuous loop of a relaxed government telling us, "Everything will be fine!" Now 96% full, the gas storage facilities will last well into 2023. However, experts believe that the main heating season, which has now begun, will empty the gas storage facilities very quickly and that a gas shortage is imminent by the end of January. We do not know, but we have to cope with the contingencies. In consumption, sales of blankets, sweaters, and firewood are increasing, and industry is responding by substituting other fuels for gas as much as possible. In some industrial processes, this can even work with oil, but a fixed gas heating system needs gas and only works with this one fuel.
For Uniper, this means a new imbalance in the income statement. The German government will probably have to pump another EUR 25 billion into the Company to cover the accumulated losses from procurement. The analysts at UBS also consistently downgraded the share to "Sell" with a price target of EUR 1.80. After almost complete nationalization, the last free shareholders will likely go home empty-handed. BASF, on the other hand, is now better valued by the experts again because its subsidiary Wintershall DEA is performing well in this environment, and the Ludwigshafen-based group will reduce its costs by a whole EUR 500 million by 2024. This will be achieved by shifting to foreign sites and a falling inflation expectation for raw material imports next year. BASF would be the classic winner if resources could be purchased more cheaply once again. The analysts of Goldman Sachs raised their price expectation from EUR 47 to EUR 54 but still maintain their "Neutral" rating.
Manuka Resources - Besides gold and silver, there is also a portion of GreenTech fantasy
In the next few years, the focus will be on those commodity companies that are able to support global efforts in the area of climate protection. Of course, this starts with their own production philosophy and continues through ESG guidelines to a deliverable commodity. Manuka Resources Limited, based in the Cobar Basin, New South Wales, not only has two highly prospective projects in gold and silver with historic production but is also positioning itself in the critical metals space with its recent acquisition of the South Taranaki Bight Project (STB). The giant vanadium deposit, which lies off the west coast of New Zealand, brings a whole new lineup to the table for the Company. That is because there are about 3.8 billion tons of iron sand, vanadium and titanium off the coast. After some lead time for permits and planning, they are waiting to be mined. For the world's strained supply chains of major metals, this would be a valuable contribution to solving green projects around the globe. Vanadium, in particular, is very rare and is hard to find except in China and Russia. To supply more materials to high-tech industries around the world, STB would be a viable supply option if the project goes ahead.
The transaction to acquire 100% of the Company's shares in Trans-Tasman Resources Limited (TTR) has now been completed, and a bankable feasibility study (BFS) for the offshore iron sands project has already begun. Manuka's vision is to produce approximately 5 million tonnes of vanadium-bearing titanomagnetite (VTM) iron ore concentrate per year over a mine life of roughly 20 years. Aside from its steel-hardening properties, vanadium is also at the forefront of the GreenTech industry. It plays a critical role in improving energy storage and battery life in the new vanadium redox flow battery (VRFB).
The file count increased from 287 to about 465 million units as a result of the acquisition. At a current price of about AUD 0.16, or EUR 0.11, Manuka has a market capitalization of just under EUR 50 million. If gold and silver turn sustainable in 2023, as many research houses expect, Manuka could become really exciting as a metal stock with "GreenTech additives".
BYD - Is the sell-off now over?
Anyone looking at BYD's share price cannot believe their eyes. First, the announcement of the market entry in Europe at the Paris Motor Show, then the start of the first deliveries and the announcement of a mega deal with Sixt - and the price drops by almost 50%. The reason: former patron and major investor Warren Buffet is taking his stake off the table after nearly 20 years of investment.
As transaction reports show, Berkshire Hathaway has been reducing positions in Chinese Tesla rival BYD, for several months on a large scale and at an increasingly rapid pace. The stake has now fallen to below 16%, and the Omaha-based holding company is said to have generated around USD 1.2 billion in profits as a result. The reasons for the sales are not publicly known, but for Berkshire, it was a huge success - the investment started with a price of about USD 1 in the financial crisis in 2008. The exit has now been at prices of over USD 25.
This year, China's best-selling electric car brand has remained on track for success, as it has neatly outperformed US rival Tesla in its home market with 103,157 vehicles sold to 71,704. The share was able to stabilize in recent days at EUR 20 to 22 again. However, to the old high of about EUR 42, the gain would now be almost 100% again. Percentage calculation is so nice!
The high interest rate is hurting stock market valuations. BYD and BASF are very interesting at EUR 22 and 49, respectively. Manuka shines through a super deal with GreenTech fantasy, which has not yet been considered in the valuation.
Conflict of interest
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