June 20th, 2022 | 10:57 CEST
A lot of movement at Rheinmetall, Aspermont and Deutsche Telekom
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"[...] In Canada, there is $1.75 of debt for every dollar of disposable income - and that was true even before the pandemic. [...]" Karim Nanji, CEO, Marble Financial
New test of the all-time high
Far below the current price level of EUR 211.30, the shares of Germany's largest defence group Rheinmetall were trading at around EUR 80 when the Corona pandemic broke out in March 2020. Companies that produced tanks, weapons systems or ammunition were not needed to fight the virus and were still considered "socially harmful" until mid-February this year. But this state of affairs changed abruptly after Russia invaded Ukraine. Not only in Germany but to ensure peace in the world, there were discussions about significant increases in the respective defense expenditures, which would ensure a saturated growth for the respective corporations, such as Rheinmetall.
The announcement of a special fund of EUR 100 billion for the German Armed Forces gave the Rheinmetall share such a boost that its price has since exploded from around EUR 92 to EUR 225. Irrespective of the raw material bottlenecks, which could lead to delays and low margins, and the already extremely ambitious valuation, the Düsseldorf stock is moving back towards its all-time high after a price setback. However, when it reaches it, the momentum for a new breakout will likely be lacking due to the continued strong overbought condition. Already invested investors should secure their investment with a tight stop.
Aspermont - New platform creates fantasy
In contrast, the business of the world's largest B2B service provider for the mining industry, Aspermont, could gain momentum. The digital media company, which operates around 30 brands in the mining, energy and agricultural sectors in its portfolio and provides over 3.6 million users in 190 countries with high-quality content, is about to reach its next milestone by entering the fintech sector. Especially with booming commodity markets and demand for financing in the mining sector, the time to launch the "Blue Horseshoe" platform is prime.
With the establishment of a fintech joint venture with the two partners, Spark Plus and International Pacific Capital, the first step is to launch the platform to raise capital for professional investors on the ASX market. In the process, Aspermont owns the largest share in the newly founded company with a 44% stake. Spark Plus is a management consulting firm specializing in roadshows for Asian companies, while securities trader IPC provides asset management and corporate advisory services to large investors in Asia and Australia.
From a strategic perspective, the mining sector platform will likely be used as a proof-of-concept to expand this to other segments and countries. Fundamentally, Aspermont is well equipped. In addition to a cash cushion of EUR 4.4 million with a strongly growing operating cash flow and a gross margin of currently 65%, further growth is guaranteed. The reintroduction of live events after the corona-related closures also has a positive effect on the figures.
The stock market value of Aspermont amounts to EUR 30.94 million at a share price of EUR 0.013. The analysts of GBC AG see a target price of EUR 0.07, which would mean a more than fivefold increase compared to the current share price at EUR 0.013.
Signs of strength at Telekom
In contrast to the overall market, the Deutsche Telekom share has shown a strong recovery since Russia invaded Ukraine. After highs of EUR 17.81 before the war in Europe, the share lost almost 20% of its value at the beginning of March. However, this was followed by a strong rebound that took the telecoms company's stock to a new high for the year at EUR 19.30. The market capitalization currently amounts to EUR 89.97 billion.
The Bloomberg news agency has now reported that there are several interested parties for the EUR 20 billion radio tower division of the Bonn-based company. A consortium of financial investors, KKR, Global Infrastructure Partners and Stonepeak Partners, is said to have submitted a binding offer for a controlling interest in the business, Bloomberg reported, citing people familiar with the matter. This means competition for the consortium of investment firms Brookfield Asset Management and Cellnex Telecom from Spain. Vantage Towers, the radio mast division that Vodafone took public is said to be a third interested party. However, no confirmation of the alleged bidding companies has yet been given.
The correction on the stock markets continues due to recession fears and concerns about rising inflation. Rheinmetall is the clear outperformer but already ambitiously valued. Deutsche Telekom is also outperforming the market. Aspermont offers enormous potential at current levels.
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