05. July 2021 | 14:19 CET
Almonty Industries, K+S, Airbus - Rising demand will be reflected in share price increases!
The metal tungsten has special properties that make it unique as a material. The metal is highly resistant to corrosion, as heavy as gold and, as tungsten carbide, as hard as diamond. In addition, at 3,422 degrees Celsius, it has the highest melting point of all metals. However, processing it is expensive and time-consuming. At the moment, researchers in Karlsruhe are working on processing tungsten using 3D printing methods. Due to its unique properties, tungsten plays a vital role in high-temperature applications in energy and lighting technology and space travel and medical technology. How can investors profit from the rising demand? We will show you.
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ISIN: ALMONTY INDUSTRIES INC. | CA0203981034 , K+S AG NA O.N. | DE000KSAG888 , AIRBUS | NL0000235190
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
ALMONTY INDUSTRIES INC - Capital increase as an important milestone
Recently, the investment research house First Berlin Equity Research published an update on Almonty Industries. The responsible analyst Simon Scholes confirmed his buy recommendation and increased the price target slightly to CAD 1.55 per share. Currently, a capital increase, which ends on July 8, is underway in the volume of AUD 15 to 25 million, whereby the lead manager has guaranteed a minimum amount of AUD 15 million (hard underwriting). In addition, this capital measure also marks the start of the Company's initial public offering (IPO) in Australia. With the capital increase, the Company takes an essential step towards building the largest tungsten production facility outside China in Sangdong, South Korea, which is expected to start production in the next few years.
In December 2020, Almonty announced the signing of a loan agreement with KfW-IPEX Bank for USD 75.1 million for project financing of the Sangdong tungsten mine on favorable terms. The main condition precedent was a sufficient equity/hybrid capital increase. At the beginning of the year, the Company put the necessary volume at USD 10.1 million (net sales), corresponding to AUD 13.4 million. That amount should now be raised shortly without any major problems.
In the coming weeks, Almonty will also be advancing the Sangdong molybdenum deposit through further drilling. This deposit is located 150m below the Sangdong tungsten mine and has a vertical thickness of up to 400m. In the 1980s, 22 vertical holes totaling 15,200m were drilled on the property by the then-owner Korea Tungsten Mining Co. Ltd. Estimates, which did not meet international standards, concluded a potential ore reserve of 17.0 million tonnes grading 0.4% MoS2 (molybdenum disulfide). Currently, Almonty shares are trading at CAD 1.05, which values the Company at CAD 202 million and thus promises price increases in the medium term.
K+S AG - Things are going well
Even away from the critical commodities, numerous attractive investment opportunities are opening up for investors. The K+S share is no exception. The Group has been extracting mineral raw materials for over 125 years. The products made from them are used in agriculture, nutrition and road safety worldwide. Potash-related activities are the focus of the Company's business activities. Sufficient potash fertilization causes plants to adapt better to drought and increases frost hardiness, thus improving plant stability.
The largest potash salt deposits outside Germany are found in Russia, Belarus and Ukraine, Canada, the United States, and China. The sanctions against Belarus have boosted the German share price in recent weeks. In addition, investment house Kepler Cheuvreux recently raised its price target for the stock from EUR 13 to EUR 22 - the experts pointed to the recovery of the potash market and the Group's debt reduction. K+S has reduced its mountain of debt by significantly more than half a billion euros. Bonds with a nominal value of EUR 560 million were repurchased, as the MDAX company recently announced. Initially, a volume of around EUR 450 million was targeted. Recently, the increased annual targets of competitor Nutrien due to higher fertilizer prices also created a good mood.
Airbus SE - Limited imagination only
Airbus develops, manufactures and supplies commercial aircraft, helicopters, military transport aircraft, satellites and launchers. In addition, the Company offers, among other things, data services, navigation and solutions for secure communications. The ArianeGroup is the joint venture of Airbus SE and the French Safran Group. Founded in 1980, Arianespace is the first commercial launch service provider. The Company is primarily responsible for launches of the Ariane and Vega rockets and performs the Russian Soyuz rocket launches. ArianeGroup holds almost 74% of the shares in Arianespace.
Due to its high melting point, tungsten is used in rocket systems such as the Ariane launcher. Ariane SE shares are currently trading at EUR 112, valuing the Company at EUR 88 billion. On average, analysts believe the share price is EUR 124, representing an upside of around 10%. The Group will present its half-year report on July 29.
Whether tungsten or potash, the respective raw materials are predicted to have a rosy future due to increasing demand and, in part, strategic importance. In our opinion, the Almonty share will benefit in particular. Analysts estimate the price potential of the title at 50%. The analysts of Keppler Chevreux certify the share certificates of K+S even an Upside of 80%. For Airbus, on the other hand, the experts see a potential of only 10%.