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Some of the companies in the list can always be debated. Tesla, with only 6% of revenue coming from energy storage solutions, is a stretch, but on the other hand the company will benefit from cheaper lithium-ion batteries. We have added two companies, Alfen and Umicore, which are normally not mentioned in this theme. Alfen, based in the Netherlands, was listed in 2018 and provides energy storage solutions but also charging stations for electric vehicles, so the company again will benefit from cheaper and more accessible batteries fueling demand for electric vehicles. Umicore, based in Belgium, is big in recycling, and the recycling of energy materials including lithium-ion batteries accounts for 16% of its revenue. As the adoption of lithium-ion batteries accelerates, recycling will grow in importance and this company seems to be best positioned to capture that trend. Another observation by looking at the table is that the pure plays on lithium-ion batteries are mostly Chinese companies, with Contemporary Amperex Technology Ltd (also called CATL) being the most interesting as it just recently signed a big contract to supply Tesla with lithium-ion batteries for its electric vehicle production in China. CATL, Eve Energy and Sunwoda Electronic are not available on Saxo’s trading platform as these stocks are not listed on the main board but part of the ChiNext market, which only certain institutional investors have access to. Panasonic is often mentioned in this theme as it was the first company to take a leap of faith on lithium-ion batteries for electric vehicles, becoming Tesla’s main partner in the early stages. However, while it is a play on lithium-ion batteries, the automotive batteries are only 6% of its revenue and thus not the real driver of Panasonic’s share price. The company is a big consumer electronics firm and could unlock a lot of shareholder value by splitting the automotive batteries segment out of Panasonic. In our basket we have a couple of lithium miners as this is by far the biggest component in lithium-ion batteries. Nickel and cobalt are the two remaining dominant metals, but we have not added any miners in those two categories. The average one-year revenue growth rate of these companies is 18% and the average EV/EBITDA valuation multiple is 35, which is almost three times that of the global equity market. This is obviously a steep price to pay, but our general view on long-term trends is that the market constantly undervalues compounding effects of multi-decade trends. While the battery and energy storage industry could experience a setback in its valuation multiples, our view is that the demand profile will remain strong for the next three decades as the world moves towards a less carbon-intensive economy fueled by electric vehicles and renewable energy.
Forwarded from Elliot Wave Technical Analysis
THE LITHIUM-ION BATTERY The first commercial lithium-ion battery was released in 1991 by Sony and has since undergone a rapid development in terms of energy density and costs. The entire history of battery technology leading up to lithium-ion batteries is well illustrated on the visualcapitalist website. As the picture below shows, the lithium-ion battery leads in runtime and energy density, highlighting why this technology is leading the trend around mobile electrification and storing excess energy from renewable energy sources
Forwarded from Elliot Wave Technical Analysis
The idea of the lithium-ion battery goes all the way back to the 1970s when Stanley Whittingham, an English chemist working at Exxon Mobile, started exploring the idea. Sony commercialised the idea and the laptop product started the mass demand for lithium-ion batteries. This battery technology is now crucial in the transition away from a carbon-intensive economy and this was recognised last year when the Nobel Committee awarded the Nobel Prize in Chemistry to the three scientists behind the battery technology.
After techx... My next focus for immediate stock watch is NWP