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Batteries, lithium and the Broncos - 2021 was a strange year on the ASX

Business

It was the year of tech and Trevor St Baker. Events around the world coalesced into a fantastic year for the energy entrepreneur who has invested heavily in clean energy and wisely in fossil fuels.

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As St Baker’s wealth grew another Queenslander, Lex Greensill, suffered a spectacular collapse when his business model for Greensill Capital fell apart and the potential for a $9 billion listing went with it.

For retail investors the market performed strongly. If an investor had done nothing more than put their money in a ASX 200 index fund, they would have enjoyed a 11 per cent return for the year.

Batteries, hydrogen, renewable energy were all likely to be key themes for 2022, backing up from a 2021 when lithium company Sayona Mining proved to be Queensland’s best performing ASX stock. Its shares were up 1150 per cent (as of December 28) as it progressed the development of mines in North America and Western Australia.

Headed by Brett Lynch the company has risen from 1 cent to 12 cents and along the way Lynch has added to his shareholding in the company and his stake is now worth $12.6 million, according to the annual report. At the start of the year his stake was worth $800,000. Lynch also holds a swag of options.

Other Sayona directors have done well. Paul Crawford sold down his holding from 149 million shares last year to 128 million, according to the annual report. However, he remains well ahead with the final value for the year at $15 million compared with about $1.5 million at the start of the year.

Although mining remains a powerful force in Queensland, the state’s corporate sector showed it was rapidly diversifying away from its resources base. The technology sector in Brisbane is booming and this year saw the emergence into the bright lights of companies like Octopus Deploy and Go1, both valued above $1 billion through fund raising.

Next year is likely to start well for Trevor St Baker with Tritium, a Brisbane company that develops fast-charging technology for electric vehicle batteries, listing on the American Nasdaq exchange with an enterprise value of $2.2 billion.

If the listing goes well, St Baker’s $40 million investment should be worth $385 million. That follows on from a year in which Novonix, a company in which St Baker holds about 15 per cent, was one of the best performing Queensland stock on the ASX with share price increase of 594 per cent. Not bad considering it lost a third of its value in one awful day in early December.

The strangest ride of the year was perhaps the NRL club the Brisbane Broncos whose share price doubled and then fell back to its original price. None of it seemed to have a reason, which summed up the club’s year.

Next on the higher performer list was little known Alligator Energy, a uranium hopeful, whose shares rose 450 per cent.

On the surface Li-S Energy looked to have had a bad debut year. Its shares were down 40 per cent but that’s because it had a spectacular first day of trading on the ASX when its shares jumped from an IPO price of 85 cents to $2.40. Since then, it’s been downhill because of a lack of news.

Lithium company Allkem (formerly Orocobre) had a busy year through the merger with Galaxy. Its shares were up 116 per cent. Vanadium company QEM cracked triple figures with a 105 per cent rise as interest rose on the back of the State Government’s commitment to a processing centre for vanadium in north Queensland.

Medical technology company Anteris rose 189 per cent.

At the other end of the scale Maxine Horne’s pivot from communications into beauty has not gone down well with the market. Her Vita Group was down 66 per cent for the year (Dec 28). The worst performer was Collection House (down 69 per cent), which has suffered a brutal two years because Covid essentially ripped apart its business model. It has restructured and reset its goals but it remains friendless. 

A key company in 2022 is likely to be Queensland Pacific Metals and its plans for a nickel refinery in Townsville. It’s not just any refinery. QPM is planning to produce a clean and green metal and ended 2021 with a $30 million equity raising to keep progress going.

It’s share price has risen 325 per cent in the year to date.

After the volatility of 2021, Morgans’ analyst Tom Sartor said he still held a pro-risk bias. To support that he said household balance sheets were in great shape, which should continue to support the recovery in consumption. 

“We also see upside risks to dividends as uncertainty from the virus clears through 2022, keeping payout ratios elevated,’’ Sartor said.

“Morgans analysts see solid opportunities among financials, energy and select cyclical industrial stocks.

“We are beginning to warm to upside risks in the major miners but are now cautious on traditional retailers due to ongoing disruption and Omicron unknowns.’’

Credit Suisse has six megatrends where it believes there would be investment opportunities. They included the ageing population and the need for pharmaceuticals. It said unlisted property, private debt and equity as well as infrastructure were also areas to watch.

Credit Suisse’s head of investment consultancy Stephen Cabot also said the firm estimated that 26 per cent of all greenhouse emissions could be attributed to feeding the planet and that was unsustainable. 

“So, we need to find a way of investing capital to get better at that,’’ he told Livewire Markets.

Wilsons Advisory also maintained a pro-risk bias for 2022.

“Our base case remains for above-trend global and domestic economic growth in 2022 as pent-up demand is released and pandemic headwinds eventually fade,’’ it said in a recent report. 

“Inflation pressures should ebb as 2022 progresses. This should remain a supportive backdrop for risk assets.  

“Our central case total return expectation for global equities is in the high single-digit to low double-digit range. 

“We are particularly bullish on the outlook for the Australian economy, which should support the Australian equity market. The heavy skew of big cap equities to banks and miners may not give optimal leverage to a strong local economy, so an overweight to small caps appears warranted.

“At this stage, we would advise investors to stay moderately overweight equities (and underweight bonds), even if there is the possibility of a correction over the next month or so caused by either Omicron or accelerated Fed tapering.’’

Coal companies can thank China’s cack-handed attempts to cripple Australian coal exports for the huge jump in prices they enjoyed this year while battery and clean energy companies have surged on hope and expectations.

Bowen Coking Coal rose 325 per cent.

Senex is in the middle of a takeover valuing it at $900 million and Gina Rinehart will eventually take a 49 per cent stake in the company once Korean company POSCO completes its Scheme of Arrangement.

Senex’s shares were up more than 80 per cent for the year.

New Hope Group finally emerged from the Land Court with a recommendation to the State Government to approve its Acland expansion, with conditions. Next year will reveal whether the State Government can accept that and whether the company wants to restart the project after 14 years of being buffeted by politics.

New Hope’s share price has performed well in 2021 with a rise of 60 per cent (December 28). 

 

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