New WORLD ORDER and DEFENSE FANTASY: Deutz, Hensoldt, and Almonty Industries!

Almonty: Benefiting from the new world order

China, Russia, and India are working on a new world order. This is the main topic of the current summit of the Shanghai Cooperation Organization (SCO). Heads of state and government have been meeting annually in this framework since 2001.

Significantly, the 25th SCO Tianjin Summit was the organization's largest meeting to date. Never before have so many members, observers, and partner states come together. The focus was on China, Russia, and India, which—despite mutual tensions—presented themselves as the driving forces behind a new multipolar world order. Xi Jinping called for the expansion of China's own financial and security structures beyond Western-dominated institutions. Vladimir Putin spoke of a Eurasian countermodel to NATO, while Narendra Modi presented India as an independent yet cooperative global player. This dynamic is driven not least by Donald Trump's policies. With his confrontational "America First" approach, trade tariffs, and unilateral actions, he is weakening old alliances and making it easier for Beijing to develop common positions and bring partners like India on board.

Western countries are facing major challenges, particularly in the areas of energy and raw materials. Therefore, the current period of weakness in Almonty's stock may have presented an interesting entry opportunity — at least in hindsight, a few months from now. In July, the tungsten producer's share price fell from EUR 5 to EUR 3. Since then, it has at least recovered somewhat, rising to EUR 3.80.

The upward trend is likely to continue in the coming months, primarily because tungsten is urgently needed in the defense industry. Almonty CEO Lewis Black aptly noted a few weeks ago that rare earths are not actually that rare. Tungsten, on the other hand, is not only rare but also challenging to mine. Almonty has accumulated a wealth of expertise at its production mine in Portugal and is now set to make history in South Korea. The Company plans to start operations at the largest Western mine soon, and it is expected to be significantly more efficient. For example, analysts at GBC Research expect Almonty to achieve a net margin of around 40% on revenue of USD 212 million by 2027.

Overall, analysts are convinced of the tungsten producer's future prospects. Following the NASDAQ listing in July, the stock is now covered by 11 analysts. All experts recommend buying.

Deutz with drone fantasy

A bombshell at Deutz. Through a takeover, the SDAX company, known for its diesel engines, is entering the drone market. This marks a return to the defense sector fantasy that had faded in recent weeks. The news caused the share price to jump by over 5% yesterday.

Deutz has announced the acquisition of SOBEK Group GmbH, a leading manufacturer of electric drives for high-tech applications. The German company is active in several specialized fields of application, including motorsports, aerospace, and medical technology. SOBEK employs around people and is expected to generate revenue in the low to mid double-digit million euro range this year, achieving a significant double-digit EBIT margin. Deutz has not disclosed the purchase price for the acquisition of the SOBEK Group. It is said to be a multiple of around 11 based on the EBITDA forecast for 2025.

SOBEK supplies several top teams in Formula 1 and Formula E with high-performance pumps based on its electric motors and control electronics. The greatest potential is currently seen in the drone business. Accordingly, Deutz considers the acquisition as part of its strategy to become less dependent on the cyclical combustion engine business and expand its defense business. SOBEK supplies electric drive systems—consisting of motors, controls, and software—to leading European drone manufacturers.

Deutz CEO Dr. Sebastian C. Schulte commented: "SOBEK gives us direct access to the rapidly growing defense market and creates the basis for strategically tapping into this market beyond the use of conventional drives. Defense is changing rapidly as a result of new technologies and changes in warfare, and demand for military drones will continue to grow. Together with SOBEK, we are positioning ourselves early on as a relevant system partner in a still young, rapidly growing market. We will continue to expand our established business in motorsports and medical technology."

Hensoldt: Share price stabilizes, but analysts see little potential

Hensoldt's share price appears to have stabilized after weak half-year figures. In recent days, they have risen from EUR 80 to over EUR 90. Previously, the weak growth in the order backlog from EUR 1.359 billion to EUR 1.405 billion had raised doubts as to whether the military electronics specialist could grow into its high valuation.

Analysts currently consider the stock to be fairly valued. According to marketscreener.com, 5 out of 11 analysts rate Hensoldt as a "Hold", 4 recommend buying, and 2 recommend selling. The average price target is EUR 96, which is close to the current level. JPMorgan is bullish on Hensoldt with a price target of EUR 120. Citigroup and Jefferies recently changed their "Sell" recommendations to "Hold".

https://youtu.be/tlWIDhPq9JY?si=MaWLR_RB5cJzMaF3

The battle for energy and raw materials may have only just begun. Therefore, Almonty shares currently appear to offer an exciting entry opportunity. In any case, analysts see significantly higher prices. At Deutz, the defense fantasy is back. This could drive the stock further. At Hensoldt, larger orders are needed to give the stock a new boost.