Batteries as a crucial key technology: VW, NEO Battery Materials, and Hensoldt in a technological alliance

NEO Battery Materials – Fresh capital for dynamic expansion

A few months ago, the head of the Fraunhofer Research Institution for Battery Cell Production FFB issued a strong warning about the consequences of China's trade policy and the potential impact on lithium-ion battery cells and their production chains. In his estimation, further tightening could lead to complete export restrictions within a very short time. These statements illustrate the West's heavy dependence on the People's Republic of China. The overall situation clearly plays into NEO's hands.

The Canadians offer customizable high-performance batteries to manufacturers of drones, robots, and electric vehicles. The technology is based on silicon anodes developed and patented in-house. These are superior to graphite anodes with up to ten times higher capacity and are also significantly cheaper.

Silicon anodes are considered one of the most crucial innovations in lithium-ion technology. Experts predict market growth to exceed USD 10 billion by 2030. Growth drivers include electrification, higher energy density requirements, and geopolitical realignment of supply chains.

The list of successes reported by the Company over the past 12 months is long. Its accomplishments in Asia are particularly noteworthy. NEO won a multi-million dollar order from an Asian drone manufacturer that plans to use the batteries for cargo drones. The Canadians will supply lithium-silicon cells and packs to a South Korean provider of industrial robotics solutions as part of a development agreement.

In addition, a battery manufacturer that offers power-intensive special applications, including drones, UAS, and defense-related mobile systems, will purchase a total of 50 tons of silicon anode material over four years. There is also increasing demand from the automotive industry. A South Korean Fortune 500 supplier and a North American Fortune 500 automaker were the first to get involved.

We consider the cooperation with the Korea Institute for Defense Industry (KOIDI), an organization closely associated with the South Korean Ministry of Defense that aims to strengthen the national defense sector, to be groundbreaking. This step could open the door to South Korea's large defense industry ecosystem. The partners intend to establish a Joint Task Force (JTF) to technically evaluate the use of silicon-reinforced batteries in defense drones and unmanned systems and to promote their integration.

To finance further expansion, NEO successfully completed a capital increase of approximately CAD 7 million a few days ago. A total of 11.67 million share certificates were placed at an issue price of CAD 0.60. In addition, subscribers received one warrant per share with an exercise price of CAD 0.85 and a three-year term.

The share is currently trading at CAD 0.74, giving the Company a market capitalization of around CAD 100 million. In view of the operational progress, the strategic positioning, and the strong increase in demand, the shares continue to have significant price potential.

Volkswagen – Strong sales growth for electric vehicles and plug-in hybrids

The Wolfsburg-based group was able to maintain almost the same level as the previous year, with deliveries of around 9 million vehicles last year. Geographically, there were contrasting developments. While Europe and South America grew, losses had to be accepted in China and North America.

The growth in battery-electric vehicles was particularly surprising, with just under 1 million units sold, an increase of 32% over the previous year. The development of plug-in hybrids was even more dynamic, with an increase of 58%. Over 400,000 vehicles with this type of drive were delivered.

Over the course of a year, VW shareholders have earned very little. The prospect of a dividend yield of over 6% may serve as some consolation. Most recently, the good figures from the Traton subsidiary provided positive momentum for the stock. Visually, the shares are cheap with a 2026 P/E ratio of 4.4. Analysts are formulating an average price target of EUR 115, which corresponds to upside potential of around 15%.

Hensoldt – Technological leadership as a trump card

The German group is considered the European technology leader in several key areas of sensor technology and is even the global leader in some areas. Hensoldt focuses on radar, optronics, and electronic air/ground systems for customers in the security and military sectors.

Its main customers are government clients such as defense ministries and procurement agencies. Hensoldt also supplies its key technologies to system integrators and defense contractors such as Airbus, Rheinmetall, BAE Systems, and Lockheed Martin. In the area of internal security, its products are in demand from border guards, coast guards, police, and civil air surveillance agencies, among others.

Analysts forecast sales to rise to EUR 2.8 billion and profits to reach EUR 176 million in the current year. With a market capitalization of EUR 10.4 billion, the stock is trading at a P/E ratio of 59 for 2026. Analysts currently rate the stock as fairly valued at a price of EUR 88.

NEO Battery Materials offers a technologically superior approach and has great potential to transform the battery technology market. The list of successes in recent months is long. The share price does not yet reflect the Company's opportunities. Volkswagen performed extremely well in electric vehicles and plug-in hybrids last year, but the situation in China and North America remains complicated. Analysts believe the stock has only modest upside potential. Hensoldt is well-positioned technologically for an excellent market position; however, the stock is quite expensive.