Allkem is an important and steadily growing lithium player that does not receive the attention it deserves. What is the reason for this? On the one hand, we have the company reporting new records quarter after quarter, which are driven by the constantly rising lithium price. On the other hand, we have many explorers whose penny prices promise an X-fold return, while to many of the investors a price of AUD$10 at Allkem seems to be a high.
The investors or shareholders ignore almost every aspect that shows that the company they prefer may not be so profitable, because it has either signed gag contracts, through a partnership that halves the earnings of the whole company even before the start, or has so many shares on the market that almost every citizen of this planet already owns at least one share of it. How a substantial EPS is to be generated with such numbers of shares is then also ignored. Other explorers are so highly valued (price-to-book value) that even Tesla looks like a chip shop on the corner.
With other companies in the field of lithium, the fears play a significant role, or the advertising that stokes them. So only the suspicion needs to arise that a company could be brought in connection with Tesla, already the price jumps by 10% or 20% upwards. That it is often just pump & dump, the investors only notice when the money is lost and the rumors turn out to be such.
Also many analysts or investor leaflets shine only with half knowledge when it comes to Allkem. Often the aspect is forgotten that Allkem was and is one of the few companies that survived the lithium price decline and reacted correctly to it. To survive such a momentum, to draw the right conclusions from it, is for me a sign of real strength of a company. When everything is in your favor, making profits is a matter for amateurs. But when the wind blows in your face, threatening to sweep you off your feet, you have to be steadfast and blessed with a good foundation that prevents you from being swept away.
The fact is that many investors who do not continue to deal with the markets, simply follow the advertising or simply the chart technique, if you interpret it correctly. For me, these investors are the army of lemmings who enable the profits of the early initiators of advertising. Again and again tweets are reported as "the news" which, if you look closer, can quickly be unmasked as a bot. Others believe, almost fanatically, in the great breakthrough of a process from which all previous large companies are still keeping their distance, because too much is not known, no experience has been made with it, or because the population has its doubts about it.
In Germany, for example, opposition is mounting to every wind turbine, photovoltaic system and geothermal plant, and the EU has decided to classify lithium as a Class A1 hazardous substance, which makes it harder for companies to gain a foothold. Does it look different in America? No! Here, too, local residents and indigenous peoples object to having a lithium mine in their backyard or on their sacred ground. There are also stumbling blocks from other parts of the world. Canada with its restrictive environmental regulations, Chile with its threat of nationalization, and in China profits are capped at 25%, which in turn limits investors' returns. The safest haven so far, Australia as the largest lithium market with enormous growth potential, is left out.
In Germany, for example, there is resistance to every wind turbine, photovoltaic system and geothermal power plant, and the EU has decided to classify lithium as a Class A1 hazardous substance, which makes it more difficult for companies to gain a foothold (higher operating requirements). Does it look different in America? No! Here, too, local residents and indigenous peoples object to having a lithium mine in their backyard or on their sacred ground. There are also stumbling blocks from other parts of the world. Canada with its restrictive environmental regulations, Chile with its threat of nationalization, and in China profits are capped at 25%, which in turn limits investors' returns.
The safest haven so far, Australia as the largest lithium market with enormous growth potential, is left out. Thus also the country's largest lithium supplier, Allkem.
In the sense of the rising artificial intelligence, the speech of swarm intelligence is all too often, but in the world of the investors and it capital is to be recognized again and again, that it is this only a thesis in expert circles, the behavior however corresponds more to that of lemmings. Alone in the small print is to be read again and again with the announcements and the advertisement: "Attention the indicator manufacturer holds even shares in this enterprise! - or - The ad creator disclaims any liability for the accuracy of the statements or representations made here." This is even perceived as a mark of quality by the lemmings. That's how it seems to me.
Thus it does not surprise me also, that itself with more exact looking, some the Explorer not really around lithium strive but, actually after gold prospecting or in the individual case even as property speculators turn out, which sample a property minimally, in order to point out here could give something of interest, in order to sell it then with profit, whereby the profit does not come to the shareholders, this is eaten by enormous salaries and bonuses of the executive committees.
Conclusion : Given the apparent shortage of raw materials over the next few years, which all experts agree on (apart from Goldman Sachs with their lunar forecasts), and which will not improve in the foreseeable future, the price for a supplier like Allkem should long ago have a price-to-book ratio of 10 and more, because a Tesla with a current book value ratio of 23.77 can only continue to exist if enough lithium is purchased. Tesla is just one of the companies that has this hunger in itself, the others are in the starting blocks and are only just guessing at this hunger. What if this hunger manifests itself in you? Back to Tesla! Elon Musk, who propagates that lithium is a money printing machine and is so convinced that it is so easy to make money with it, why does he want to buy Twitter and not 5 to 10 of Explorer? Wouldn't they make a lot more money? This shows the need for validity of Hr. Musk, which he puts above such a simple return on investment? Or is lithium mining not that simple to implement for each and every company?
AKE Price at posting:
$10.24 Sentiment: Buy Disclosure: Held
