Key Industry: Defense! Will Rheinmetall, Renk & Co. soon turn to dynaCERT? Stock Jump at Evotec?

dynaCERT: Soon a supplier for Rheinmetall and Co.?

This brings us to the new key German industry: defense. And first, a look at a suitable partner in the industry: dynaCERT. Despite all the euphoria surrounding the billion-dollar investments and new job engines, it is important to remember that defense is a dirty business. This also applies to the environmental balance. The heavy diesel engines of Leopard 2 tanks, howitzers, and troop carriers are real polluters. Rheinmetall, Renk, and others could significantly improve their environmental balance by working with dynaCERT. With their patented HydraGEN technology, the Canadians offer precisely what the industry needs: a hydrogen-based retrofit kit that can be installed in just two hours and reduces the pollutant emissions and fuel consumption of conventional combustion engines.

The focus is particularly on users of heavy diesel vehicles. The first orders have primarily come from the mining, oil, and gas sectors. Adapting the technology to tanks and similar military vehicles should not be a big challenge. And at dynaCERT, they even speak German. An experienced manager from the automotive industry, Bernd Krüper, has been brought on board. The German executive is expected to drive sales in Germany and the rest of Europe. Krüper recently reiterated in an interview with analysts from GBC Research that the Company aims to expand into new industries. He even mentioned shipping as a potential area of expansion.

But whether mining, defense, or shipping, large combustion engines will continue to power the world for decades to come – and it is far from certain whether they will ever be replaced by electric drives. dynaCERT is a hot stock for the current year. A capital increase of CAD 5 million was recently placed within just a few days. Now it just needs a few orders and the dynaCERT share could be up for re-evaluation.

Krüger is confident about the company's prospects, as he says in this recent interview (Link).

Rheinmetall: Ammunition instead of auto parts

It is common knowledge that Rheinmetall's armaments division is currently in the spotlight. But now the Company even wants to repurpose its plants, presumably also due to the weakness of the automotive industry. Rheinmetall announced that it could convert two plants that currently manufacture civilian components for vehicles to manufacture military goods. "In the defense business, Rheinmetall is currently taking every opportunity to increase unit numbers, particularly in the ammunition sector," the Düsseldorf-based company announced. Specifically, the plants in Berlin and Neuss, which currently belong to the "Power Systems" division, are being considered for conversion.

This is the beginning of a trend. Hensoldt, for example, had already confirmed that it wanted to take on employees from Continental and Bosch who were about to be laid off. And in Görlitz, Saxony, the tank builder KNDS is taking over a plant from the train manufacturer Alstom. A new key industry could develop in Germany, and it would be an exciting growth industry for dynaCERT.

Evotec: Brief price jump

Biotechnology is anything but a key industry in Germany. Bureaucracy and other difficulties are often cited, and research sites are often opened abroad. This is what BioNTech, for example, has recently done. And what is industry peer Evotec doing? After last year's horror stories and collapsing share price, the Company is currently focused on itself. It is investigating whether further write-offs are necessary, how it will restructure, and how it can prevent a hostile takeover. The results of this "self-discovery" are not expected to be presented until the figures for 2024 are published in April.

It is, therefore, not surprising that Evotec's shares have been stagnant so far this year. That there can be rapid momentum was evident at the beginning of the week. On Monday, the share price suddenly climbed by over 5% within a few hours, only to fall back to its initial level by the evening. The reason for this movement is unclear. However, it shows that many investors are waiting for a breakout from the sideways movement to the upside. Analysts from Warburg also share this expectation. Their target price for the biotech share is EUR 14.

Until Evotec's share price forms a reliable trend, it will likely take details of the Company's future strategic direction. By contrast, dynaCERT could see a much faster increase in its share price. It needs a larger order, whether from the defense industry or another. Rheinmetall's stock has quickly recovered from last week's brief correction. The music for rising share prices is currently clearly playing in the defense sector.