Electric vehicle (EV) maker BYD Co. Limited (HK:1211) and miner Sigma Lithium Corporation (NASDAQ:SGML) are discussing a possible deal, as per a Financial Times report. No concrete details are available at the time since talks are confidential but the report suggested the possibility of a joint venture, acquisition, or supply chain agreement.
China-based BYD is one of the leading EV makers in the world. The company operates several units that produce vehicle and automotive components and manufacture and assemble electronic parts. 1211 shares have lost 6.5% in the past year.
Meanwhile, Sigma Lithium is a Canada-headquartered parent company with mining operations in Brazil. Sigma produces and sells high-quality battery-grade lithium in Minas Gerais, Brazil. SGML shares have lost 11.8% in the past year.
Here’s How a Deal Could Benefit Both
BYD’s chair in South America, Alexandre Baldy, said that both companies are engaged in “active” talks about the deal after he met Sigma CEO Ana Cabral Gardner in Sao Paulo last month.
BYD is already working on building a large manufacturing complex in Brazil with investments totaling 3 billion reais ($620 million). The complex includes one production plant for electric buses and truck chassis, one new energy passenger vehicle production plant, and a plant for processing lithium iron phosphate (LFP) battery materials.
Production at the manufacturing complex is expected to begin in the second half of this year with an annual plant capacity of 150,000 units of pure electric and plug-in hybrid models.
Sigma has initiated a primary listing of Sigma Brazil on the NASDAQ and the Singapore stock exchange. The company said in September last year that it received several bids for its Grota do Cirilo project in Brazil and Sigma Brazil units from potential strategic partners.
Is BYD Worth Investing in?
With six Buys and one Hold rating, 1211 stock has a Strong Buy consensus rating on TipRanks. The BYD Co. share price target of HK$322.92 implies 53% upside potential from current levels.
Is SGML a Good Stock?
With three unanimous Buys, SGML stock commands a Strong Buy consensus rating on TipRanks. The Sigma Lithium Corp. share price forecast of $41.81 implies 59.6% upside potential from current levels.
