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February 29th, 2024 | 08:00 CET

Renk, Hensoldt and Desert Gold: Price gains with armaments and gold

  • Mining
  • Gold
  • armaments
Photo credits: pixabay.com

German defense stocks are currently in high demand. Rheinmetall shares have already gained 40% in the current year, while Hensoldt achieved a performance of 35% in the first two months of 2024. The figures for 2023 only dampened the mood briefly. What do analysts say about Hensoldt's share price potential? Stock market newcomer Renk still has to establish itself. But the IPO is beginning to bear fruit. Gold shares should also benefit from the global uncertainties. However, the performance of Barrick & Co. in recent years has been disappointing. Desert Gold could become the surprise stock of the year. According to experts, the explorer was the talk of the town at the recently concluded Mining INDABA trade fair in Cape Town, South Africa.

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: RENK Group AG | DE000RENK730 , HENSOLDT AG INH O.N. | DE000HAG0005 , DESERT GOLD VENTURES | CA25039N4084

Table of contents:


    Brodie Sutherland, CEO, Tocvan Ventures
    "[...] One focus will be on deposits near the surface. These would be good arguments for a quick production decision using the low-cost heap leaching method. [...]" Brodie Sutherland, CEO, Tocvan Ventures

    Full interview

     

    Desert Gold: The highlight of the trade show and soon the stock market?

    For the experts at researchanalyst.com, Desert Gold was one of the highlights at this year's Mining INDABA 2024 trade show in Cape Town. The Canadian explorer has been active in Mali since 2015 and is now entering the most exciting phase in the Company's history. With a 60% increase in gold production, Africa is the industry's hotspot. Global growth was 26%.

    With 440 km² in the Senegal-Mali Shear Zone (SMSZ), Desert Gold has a real prime piece of land. The fact that industry giants such as Barrick Gold, Endeavour Mining and B2Gold already have producing mines in the immediate vicinity shows the potential of Desert Gold. In addition, the Canadians have already identified 24 gold zones, and the number is expected to increase further with new drilling programs. Discussions are currently underway with strategic partners to finance the pre-feasibility study and mine development. Heap leach production could commence in 2025. The mining of near-surface gold may contribute to earlier cash flows. Desert Gold is considering implementing this through a joint venture.

    Desert Gold owns a prime asset in a proven gold region and is making great strides towards production. Despite this, the Company is currently valued at less than CAD 13 million. The experts at researchanalyst.com believe that, from today's perspective, the stock is unlikely to be available at a lower price, especially if the looming takeover fantasy materializes. A more detailed report can be found here.

    Hensoldt: Disappointment quickly shaken off after figures

    With an increase of around 35%, the Hensoldt share is one of the high-flyers of the year. The preliminary figures for 2023 only dampened the mood briefly last week. The Company increased its turnover to EUR 1,847 million (previous year: EUR 1,707 million). A key driver here was a significant 16% increase in sales volume in the core business. Adjusted EBITDA rose by 12.8% to EUR 329 million. Hensoldt CEO Thomas Müller stated: "*In a time of security policy uncertainty, governments and international alliances like NATO need one thing above all: a reliable partner for innovative defense and security technologies. Hensoldt is precisely that partner. We demonstrated this again in the 2023 fiscal year. Despite economic and political challenges, we significantly increased the sales volume in our core business and even exceeded the strong order intake of the previous year. *The demand for integrated defense and security solutions from Hensoldt is high worldwide and is expected to increase further given the global conflict and crisis situation."**

    At the current price level of EUR 34, however, analysts currently see no further upside potential. Warburg Research is still the most optimistic, stating that, from the analysts' perspective, the armaments boom is beginning to be reflected in the Company's figures. Following the figures for 2023, they raised the target price for the Hensoldt share from EUR 34.00 to EUR 39.50. Their rating is "Buy". Other analysts are less optimistic, with JPMorgan setting a price target of EUR 28 and Deutsche Bank seeing the fair value of Hensoldt at EUR 35.

    Renk: Thumbs up from Moody's

    Renk is the newcomer to the German stock market among defense stocks. Following the successful IPO, the Company has now reported on debt refinancing and a rating upgrade. A corporate bond with a coupon of 5.75% and a volume of EUR 520 million was redeemed before its maturity next year. A term loan from a bank consortium with a volume of EUR 525 million, which has a duration of 5 years, was used for this purpose. The debt restructuring and the IPO have positively impacted Renk's rating. The rating agency Moody's has upgraded Renk from B1 to Ba3. The outlook is "Positive" (previously "Stable").

    Renk CFO Christian Schulz stated: "*We are very pleased that we have been able to put our debt financing on a solid footing in the medium term with this competitive package. The 5-year term provides good planning security, while the extended guarantee line gives us flexibility to drive our growth forward. The rating upgrade by Moody's confirms our view that after the successful IPO, we are solidly positioned on both the equity and debt side."


    Geopolitical times are likely to remain uncertain. Defense stocks such as Hensoldt and Renk should continue to benefit from this, as Europe needs to rearm and will consider domestic manufacturers in the process. Gold also shines in times of crisis. Sooner or later, gold stocks will likely bounce back. Irrespective of the gold price, Desert Gold offers good reasons for rising prices.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author



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