Rheinmetall, ARI Motors, Volkswagen – Trump sets the course

Rheinmetall – Profiting from the new world order

Much of what the Republican presidential candidate wants to implement during his term of office is still vague and unclear. However, he is clear on military spending. Not only does he want to continue rearming the US, but his call for NATO partners to increase their defense budgets by up to 5% of gross domestic product is likely to further fuel arms companies around the world.

One company that has taken off since Russia's invasion of Ukraine is Düsseldorf-based Rheinmetall, whose shares have exploded by around 550% to a new all-time high of EUR 705. In addition to the fact that the order book is full to bursting, the Federal Cartel Office has now approved the establishment of a joint venture with the Italian defense company Leonardo.

Rheinmetall and Leonardo, each holding 50% of the joint venture headquartered in Rome, had announced its formation last October. The Company will specialize in the production of infantry fighting vehicles, main battle tanks, and specialized vehicles for bridge-laying operations. Over the next few years, it could secure orders worth a total of EUR 23 billion from the Italian Army.

ARI Motors - Record results

The manufacturer of electric vans reported the best results in the Company's history. The Thuringia-based company's revenues totalled EUR 5,460,999, with earnings after taxes climbing to EUR 322,056. The current order volume amounts to 202 vehicles, which corresponds to sales of EUR 4.2 million. The second half of the year was somewhat sluggish, with customers showing a reluctance to buy. However, the managing director of ARI Motors Industries SE, Thomas Kuwatsch, expects this to normalize again immediately after the federal elections.

The innovative company's share price, which is traded in the primary market segment of the Düsseldorf Stock Exchange, is EUR 0.45. Analysts at SMC Research believe that the ARI share price could rise to EUR 1.80, reflecting a potential of around 300% on the current price.

The niche provider occupies the market for small electric transport vehicles, which can be personalized for commercial customers with a wide range of requirements due to their modular design. In addition to delivery services in city centres, which are served by three-wheeler variants, three four-wheeler models offer attractive options not only for large hotel and leisure complexes but also for city traffic.

In addition to municipalities and local authorities, customers also include companies such as Coca-Cola and BASF.

Volkswagen – Bottom Reached?

While the defense industry has boomed over the past two years, the German automotive industry has been going from one crisis to the next. Volkswagen shares, once the flagship of the DAX, have lost more than 60% of their value since the March 2021 high and are trading at EUR 95.20, close to the March 2020 Coronavirus low.

On the optimistic side, the sell-off could be followed by at least a short-term rebound. The fact that the aforementioned low was tested and defended exactly at EUR 78.86 allowed VW shares to start a countermovement. A break of the horizontal resistance at EUR 98.12 would currently be needed for further price gains and to end the bottoming phase. The 200-day moving average is also within reach at EUR 96.86.

Meanwhile, Volkswagen's management continues to work on the future. In addition to a cooperation with the US automaker Rivian, from which the Wolfsburg-based company expects improvements to its software, China is at the top of the agenda.

Through a strategic collaboration with XPeng, a Chinese NEV manufacturer, the German auto giant wants to establish an ultra-fast charging network in China. The partners plan to offer customers in more than 420 Chinese cities access to a network of over 20,000 charging points for super-fast charging. The aim of the collaboration is to achieve the broadest possible coverage in China, improve the charging experience for customers, and facilitate the integration of e-mobility into everyday life, both in urban and rural areas.

Rheinmetall is getting a boost from the election of Donald Trump, who is promoting increasing military spending by NATO partners. Volkswagen is planning further expansion into China through a joint venture with XPeng. ARI Motors has reported record results.