Korea, Supply Chains and Naval Power: How Almonty Industries Is Laying the Foundation for Defence Champions Renk and TKMS

Almonty Industries: The Frontrunner

Almonty Industries is at the forefront of this new era. With the commissioning of the Sangdong tungsten mine processing plant in South Korea, the company has reached a decisive milestone. Tungsten is generally classified as a critical metal. Its extreme hardness, heat resistance, and density make it irreplaceable for high-tech applications. Whether in semiconductor manufacturing, high-performance industrial drill bits, or the production of hard-penetrating ammunition and armor, modern production chains grind to a halt without tungsten.

China dominates the global tungsten market with a share of around 80%. Almonty is now gradually breaking this monopoly. As production ramps up, the company will be able to supply about 40% of demand outside China starting in late 2027. The goal is to establish a fully integrated Western tungsten platform spanning North America, Europe, and Asia. Western industrialized nations are eagerly awaiting this development.

Analysts are uniformly bullish on the stock and forecast sharply rising profits and high cash flows with phenomenal margins. High tungsten prices, rising demand, and production volumes create a perfect synergy. Most recently, the existing long-term offtake agreement with a specialized processor was extended to 21 years. A minimum annual purchase commitment ensures Almonty predictable cash flows for decades to come. Production in the US is also set to begin this year. There, Almonty acquired an advanced tungsten project in 2025.

By issuing a convertible senior notes offering with a volume of USD 800 million, Almonty secured long-term financial flexibility. The offering, which matures in 2031, carries an interest rate of just 2.25%. Recently, the company launched a new share buyback program of up to USD 300 million, which boosted the stock. The shares are currently trading at just under USD 19. Analysts at Jefferies recently initiated coverage with a price target of USD 26.25, indicating attractive upside potential.

The planned development of the molybdenum project right next to the Sangdong Mine in South Korea adds further upside potential in the long term. The project can leverage the existing infrastructure. Recent drilling results confirm the historical ore grades; however, the ore body must first be further delineated before production can actually begin. Molybdenum is an indispensable strategic industrial metal that imparts extreme heat resistance and hardness to steel, thereby forming the basis for high-tech applications ranging from defence and aerospace to semiconductors and renewable energy.

Renk: Takeover Speculation?

As the global market leader in high-performance specialty gearboxes, this long-established Augsburg-based company powers NATO's most advanced tracked vehicles while simultaneously dominating the niche market for advanced maritime-military propulsion systems. This makes Renk an irreplaceable systems supplier to Western armed forces. This is also reflected in the company's business performance, which, driven by geopolitical tensions and rising defence spending, is running at full speed.

The order backlog recently reached an all-time high of EUR 7.4 billion. This historic figure provides the group with exceptionally high revenue visibility for years to come. In addition, Renk recently raised its revenue and margin outlook for the current fiscal year.

The stock is one of the analysts' favourites within the defence industry. Based on the current price of around EUR 43, experts estimate the stock has upside of around 50%. JPMorgan is even more bullish. The US bank has set a price target of USD 75 and raised the possibility of a takeover. However, this remains unfounded for now.

TKMS: Analysts Raise Price Targets

The spin-off from the conglomerate and last year's initial public offering have given the global market leader in conventional, non-nuclear submarines and medium-sized warships the full entrepreneurial agility to benefit directly from the global trend toward rearmament on the world's oceans.

Business is booming. The recently reported quarterly figures have significantly exceeded market expectations. With a phenomenal order backlog of over EUR 20 billion, capacity utilization at the shipyards in Kiel is secured for many years to come. In addition, TKMS raised its outlook for the current fiscal year. Revenue is now expected to grow by 10 to 12% (previously 2 to 5%), with an operating margin slightly improved to 6.5%.

Unsurprisingly, the analyst community is enthusiastic about the company. Experts have raised their price targets for the stock across the board. Current price targets are around EUR 85. Metzler and Bernstein have set targets of EUR 115 and EUR 125, respectively. mwb has issued the most optimistic recommendation at EUR 140.

The big picture points to an investment case in the critical metals and defence sectors. With its superior strategic and geopolitical position, Almonty occupies a key role. Growth is inevitable. The company also has ample cash on hand to generate value for shareholders. Analysts are bullish. Renk and TKMS are both among analysts' top picks in their respective segments of the defence industry.