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March 23rd, 2022 | 14:01 CET

Rheinmetall, Altech Advanced Materials, K+S - Seizing the momentum

  • Electromobility
  • Lithium
Photo credits: pixabay.com

Since the outbreak of the Ukraine conflict about three weeks ago and the announcement of sanctions against Russian goods and companies, the winners and losers on the stock market have clearly emerged. While defense companies were not an investment object for fund managers or private investors from an ethical point of view in the recent past, there is now a strong investment in companies such as Rheinmetall, Hensoldt & Co. At the same time, no defense contracts have yet been awarded by the German government, nor is it clear whether the necessary raw materials will be available. Therefore, it would come as little surprise if the currently inflated valuations were to implode soon.

time to read: 3 minutes | Author: Stefan Feulner
ISIN: RHEINMETALL AG | DE0007030009 , ALTECH ADV.MAT. NA O.N. | DE000A2LQUJ6 , K+S AG NA O.N. | DE000KSAG888

Table of contents:


    Uwe Ahrens, Director, Altech Advanced Materials AG
    "[...] We know exactly what we are doing and are implementing what we consider to be a proven technology in an industrially applicable and scalable way. [...]" Uwe Ahrens, Director, Altech Advanced Materials AG

    Full interview

     

    New highs for Rheinmetall

    From a technical point of view, it is not unusual if a stock, after opening a huge price gap, does not close it immediately but marks a new high again. That is what happened to Rheinmetall, the Düsseldorf-based armaments company. After the announcement of a EUR 100 billion increase in the German defense budget for this year, Rheinmetall exploded by more than 50% to EUR 160 on the following trading day.

    As explained in a detailed report, Rheinmetall CEO Papperger stated in a Handelsblatt interview that the Group had already offered the German government a comprehensive supply of armaments. The package consisting of ammunition, helicopters and tracked and wheeled tanks would have a volume of EUR 42 billion. In addition, the CEO expects orders not only from Germany but also from other countries. He has already received inquiries from a number of NATO countries, especially from Eastern Europe.

    Naturally, the question arises as to how the processing of orders can be guaranteed from a personnel point of view. However, the situation is even more dramatic regarding the raw materials required. In the past year, the Düsseldorf-based company had to contend with shortfalls due to a lack of supplies of the required materials, which led to lower customer call-offs and lost sales. Total sales here were only EUR 5.66 billion, and the potential order volume that could come Rheinmetall's way would have been a factor of 7.4. Overall, invested investors should set a tight stop and let the positive trend run its course. In the long term, the gap at EUR 107 should be closed, and normalization should occur.

    Innovator of the climate and mobility turnaround

    Altech Advanced Materials is neither about the production of raw materials nor the construction of tanks. Instead, the Heidelberg-based company, whose market capitalization is currently just EUR 8.58 million, could revolutionize the market for lithium-ion units. Conventional lithium batteries lose significant power on the first charge cycle, and automakers globally are looking for alternative technologies. Altech uses anode coating with high-purity aluminum oxide (HPA) and silicon enrichment.

    It can increase battery performance by more than 15% and even extend battery life by up to 30%. Currently, the Company is conducting research to increase the silicon content at the anode, which would result in performance increases of between 50% and 100%.

    In the near future, Altech plans to build a production plant for anode material with a capacity of about 10,000 tons per year. Altech has recently acquired an industrial site of approximately 14 hectares through a subsidiary. The site is located in the Schwarze Pumpe industrial park in the municipality of Spreewald in Saxony. As lithium prices continue to hit new highs, the automotive industry is likely to keep a close eye on the development of Altech technology for its battery development. In our opinion, this already makes the Heidelberg-based company an attractive takeover candidate.

    K+S as a beneficiary of the sanctions

    In the past, a performance similar to that of the German mining company with a focus on potash and salt production was only seen from high-tech or crypto stocks. Nearly 400% share price performance is on record since September 2020. Due to the sanctions against Russian competitor companies, particularly against the Russian Uralkali and Belaruskali from Belarus, the potash supply was again cut by about one-third for the Western world.

    In addition to the third-largest European supplier, K+S, only two other potash producers, Nutrien and Mosaic, are currently still in the running. The Canadian potash producer Nutrien has announced that it will increase production due to the sanctions against Russian companies, which is likely to weigh on the potash price and thus also the K+S share. Like Rheinmetall, the strategy here is to set a relatively tight stop and let the profits run.


    The beneficiaries of the current crisis, such as defense and commodity companies, have put in an impressive performance in recent weeks but have already run hot. Supply shortages for raw materials such as fertilizers are likely to continue to weigh on us for some time, which should play into the hands of K+S in the long term. Rheinmetall is likely to correct more strongly when the situation eases, and Altech Advanced Materials could become interesting for any electric car manufacturer thanks to its innovation.


    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

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



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