02. June 2021 | 11:34 CET
Infineon, Defense Metals, Aixtron - It is getting tight!
Supply bottlenecks in various industries, e.g. wood, metals, semiconductors or chips (see Infineon and Aixtron in this article), are causing prices to skyrocket. Whether only a short-term phenomenon, it remains to be seen. One area that is heading for ever-increasing demand with manageable supply is "rare earths." Particularly for producers or prospective producers or exploration companies, such as Defense Metals, this should pay off in the medium term.
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ISIN: DE0006231004 , CA2446331035 , DE000A0WMPJ6
INFINEON TECHNOLOGIES AG - Analysts see 20% upside potential
Infineon is Germany's largest semiconductor manufacturer and is among the TOP 10 in the industry worldwide. The Company was spun off from Siemens and floated on the Neuer Markt in 1999 as a high flyer. At currently around EUR 33 per share, the stock is still a long way from the high of just under EUR 80 at the time. But the bearish phase, partly as a penny stock, has also been left behind. Overall, analysts are currently optimistic about the share and forecast an average upside potential of 20%.
Looking at the current developments and the raised outlook for the current fiscal year, one can only agree. Infineon offers semiconductor and system solutions with a focus on energy efficiency, mobility and security. The semiconductor market is booming thanks to the energy transition and digitalization. With sales of EUR 2.7 billion in the second quarter, the Group was 3% above the previous year. A weaker result was achieved at the operational level and the profit level. However, this reporting date view should not be overestimated.
The Group described the current market situation by saying that demand exceeded supply in most fields of application. Infineon's factories were running at full speed and the Group was investing in additional capacity. As a result, Infineon has slightly increased its guidance for the fiscal year. The Group is now forecasting around EUR 11 billion sales with an operating margin of around 18%. Free cash flow is now expected to reach more than EUR 1.2 billion.
DEFENSE METALS CORP - Drilling program to start soon
The Canadian exploration Company Defense Metals is focused on advancing the Wicheeda Rare Earth Project, which covers approximately 1,700 hectares in the state of British Columbia. To date, the following indications of rare earth metals have been made on the project: indicated mineral resources of 4.89 million tonnes averaging 3.02% light rare earth elements (LREO) and suspected mineral resources of 12.1 million tonnes averaging 2.90% LREO. The latest 2019 drilling campaign of 13 holes and approximately 2,000 meters delivered good results.
In May, the Company announced its intention to carry out a capital increase with gross proceeds of CAD 5 million. This will involve offering 15.625 million shares at a price of CAD 0.32 plus a whole warrant with an exercise price of CAD 0.425 and a 3-year term. The Company also announced further concrete steps to expand resources and delineate diamond drilling at Wicheeda at the end of May. Building on the success of the 2019 drill program, the deposit is to be extended northward. Defense Metals sees the potential here to uncover additional near-surface resources. The Company plans to drill at least 2,000 meters and up to 5,000 meters of diamond drilling to expand the deposit and further delineate existing resources. The next target will then be a preliminary feasibility study.
The underlying conditions for the stock are entirely correct. Rare earths are in demand by so many industries and are becoming increasingly scarce. China's dominant market position in these critical raw materials generally leads to a desire for production to be established outside the People's Republic, thus making supply chains more secure. This is especially true for the defense industry, Defense Metals' focus sector. With a market capitalization of only CAD 22 million, there is currently a favorable opportunity to invest in the Company. Good newsflow from the drilling program should pay off soon.
AIXTRON SE - Globally recognized and sought-after
The Aachen-based company is familiar to older investors from the New Economic days of over 20 years ago. The Company entered the trading floor in November 1997. In the phase of stock market euphoria, the share price shot up to EUR 80 in the following years and then crashed to below EUR 3. Today, after an eventful history, the share price is around EUR 17. The Company is thus valued at just under EUR 2 billion. What does Aixtron do? Aixtron is a specialty machinery company and is one of the world's leading suppliers of deposition equipment for the semiconductor industry, both to produce on an industrial scale and provide equipment for research and development (R&D) and pre-series production.
The devices produced are used in a wide range of innovative applications, technologies and industries. These include, for example, laser, LED, and display technologies, data transmission, communications, signal and lighting, and many other demanding high-tech applications. Demand is rising steadily, which is why the Company is repeatedly traded as a takeover candidate due to its market position. The driver of demand remains the desire for higher energy efficiency, processing and transmission speed of data, and 3D sensor applications and innovative display technologies.