Close menu




April 19th, 2021 | 07:35 CEST

Rheinmetall, Airbus, Almonty Industries: Potential lurks here

  • Tungsten
Photo credits: pixabay.com

Certain industries may have a bad reputation, but they are still lucrative. Examples of these include the defense industry and aircraft manufacturing. Germany's military spending has risen steadily in recent years. The German government recently stepped it up a notch and spent EUR 51.4 billion on armaments in 2020. Given the consistent demand from the USA and NATO to further increase spending, defense companies are operating in an attractive market - demand is growing and growing and the market is also regulated.

time to read: 3 minutes | Author: Nico Popp
ISIN: DE0007030009 , NL0000235190 , CA0203981034

Table of contents:


    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview

     

    Rheinmetall: Armaments as a bomb-proof business

    Rheinmetall shares posted a 56% gain last year and are now on track to reach a new all-time high. From a chart perspective, the next price targets could be in the EUR 115 range, and this is where the stock's high came to an end in 2019 and 2018. In the meantime, the situation for stocks from the defense industry is even better than ever. The new US President Joe Biden reminds his NATO partners of their obligations with similar intensity as his predecessor did. Still, instead of aggressive rhetoric, he is also relying on diplomacy. Given the increasing competition with countries such as Russia and, above all, China, the chances are good that the US will be able to assert its interests and motivate NATO partners to spend more. One of the beneficiaries is likely to be the Rheinmetall stock.

    In addition to the defense industry, the company also offers components for automakers. Thus it is benefiting from the growing demand for security solutions in the civilian sector. The pandemic hit Rheinmetall hard and caused sales to slump. By contrast, the Defense division bucked the trend and grew even in the Corona Crisis year 2020. Given the approaching normality and the preference of many investors for cyclical stocks, Rheinmetall is promising. The automotive division will soon no longer be a drag. While the stock carries ESG concerns, it is quite solid and also offers a small dividend. Triple-digit share prices are very likely.

    Airbus: Shrinkage and hope for better times ahead

    Airbus shares could also be promising - even if that sounds a bit far-fetched in light of the pandemic. In the first nine months of the financial year, Airbus recorded a slump in sales of a whopping 35%. Business with helicopters remained stable and the defense sector also held up reasonably well. However, aircraft production, which has largely come to a standstill due to the pandemic, remains the problem child. At least Airbus delivered a few aircraft and was thus able to keep production at a low level. Nevertheless, harsh cost-cutting measures and also layoffs were necessary to keep the Group on track in the medium term.

    So why is the stock still attractive? The stock market trades in the future. Air traffic will return to more normal levels after the pandemic, despite environmental concerns. In the long term, the industry could even benefit from climate-neutral flying. Even if this is pie in the sky, the investments made by Ryanair, which ordered aircraft from Boeing in the middle of the Corona Crisis, show that courage can be rewarded. The stock has pedaled free and is heading for pre-pandemic highs.

    Will Almonty Industries soon control 10% of the tungsten market?

    If you don't want to invest in weapons makers and don't want the looming structural change in aerospace in your portfolio, you can take a closer look at Almonty Industries stock. Almonty operates as a tungsten producer in an exciting market. Tungsten is used whenever steel needs to be heat-resistant, so the metal is used in the defense and aerospace industries, among others. Other areas of application include medical technology. Since tungsten is unique due to its chemical properties, it cannot be replaced. China recognized this many years ago and now controls 85% of the world market.

    Almonty is bucking this trend and is currently operating tungsten projects in Spain and Portugal, the latter of which is already in production. In South Korea, the company is about to bring one of the largest tungsten mines outside China into production. The Sangdong mine can produce tungsten at a low cost year after year for more than ten years. Preliminary work will begin as early as 2021, and the mine's output is expected to increase steadily starting in 2022. At full production, Sangdong is expected to cover 7-10% of the world's tungsten supply or about one-third of all tungsten produced outside China.

    Given the advanced stage of the project, the company's existing experience with tungsten, which is sometimes considered a challenging metal in mining circles, and the company's strong partners, which include Deutsche Rohstoff AG, Austria's Plansee Group and KfW, investors should take a look at the stock. RaaS analysts see potential for the stock of more than CAD 2. Currently, the value is quoted at CAD 1.


    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 in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and etc. on news.financial. These contents serve information for readers and does not constitute a call to action or recommendations, neither explicitly nor implicitly. implicitly, they are to be understood as an assurance of possible price be understood. The contents do not replace individual professional investment advice and do not constitute an offer to sell the share(s) offer to sell the share(s) or other financial instrument(s) in question, nor is it an nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but rather financial analysis, but rather journalistic or advertising texts. Readers or users who make investment decisions or carry out transactions on the basis decisions or transactions on the basis of the information provided here act completely at their own risk. There is no contractual relationship between between Apaton Finance GmbH and its readers or the users of its offers. users of its offers, as our information only refers to the company and not to the company, but not to the investment decision of the reader or user. or user.

    The acquisition of financial instruments entails high risks that can lead to the total loss of the capital invested. The information published by Apaton Finance GmbH and its authors are based on careful research on careful research, nevertheless no liability for financial losses financial losses or a content guarantee for topicality, correctness, adequacy and completeness of the contents offered here. contents offered here. Please also note our Terms of use.


    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author



    Related comments:

    Commented by Armin Schulz on November 28th, 2022 | 11:44 CET

    Almonty Industries, ThyssenKrupp, Varta - Earning from growing tungsten demand

    • Mining
    • Tungsten
    • renewableenergies

    In 2021, 79,000 metric tons of tungsten were mined worldwide from existing mines. In 2015, production was still 89,400 tons. One might think that demand has declined and production has been cut back, but the opposite is true. According to the British Geological Survey report, demand will increase between 3% and 7% per year and will soon exceed available supply. But now, demand could increase significantly in the short term because US Department of Energy DOE researchers have found a way to charge electric cars in 15 minutes. This involves using a molybdenum tungsten niobate alloy as the cathode material instead of graphite. So we take a look at three companies around tungsten.

    Read

    Commented by Nico Popp on November 22nd, 2022 | 10:44 CET

    Batteries: The new premium class - BYD, Almonty Industries, Varta

    • Mining
    • Tungsten
    • Electromobility
    • Batteries

    When it comes to everyday products, we all have clear ideas about prices. For a long time, the EUR 2 mark, for example, was considered an average price for a piece of butter. But as soon as it becomes more expensive, it is worth a headline in a newspaper with big letters. It is a different story with cars or other high-quality products. Thanks to high-quality workmanship and technology, customers are willing to pay more than the actual market prices. In economics, the difference between the high price and the market price is called producer surplus. We present three companies that want to skim off this producer surplus.

    Read

    Commented by Fabian Lorenz on November 18th, 2022 | 10:15 CET

    Shares of Nordex, BYD, and Almonty Industries: Winners of the energy transition

    • Mining
    • Tungsten
    • Electromobility

    The energy turnaround is becoming unbearable. But it will take time for the world to switch to renewable energies in private and public life. Today, we take a look at three winning stocks. Among them is BYD. The Chinese carmaker has switched to hybrid and all-electric vehicles and is on track to take Tesla's place as the leading electric carmaker. The first three models for Germany have now been confirmed. At Nordex, sentiment is improving. The share price has jumped, and a large order gives hope. However, wind turbines and batteries cannot be manufactured without raw materials such as tungsten. Now a German research house has taken a closer look at Almonty Industries. The share is on the verge of a revaluation and has a price potential of 100%.

    Read