Close menu




March 28th, 2022 | 13:40 CEST

Rheinmetall, Hensoldt, Kleos Space - These stocks have the Ukraine perspective!

  • Space
  • armaments
Photo credits: pixabay.com

No one would have thought that the sense of peace and security that Europe has built over the past 75 years could dissolve in just 4 weeks. The war in Ukraine is taking on unimagined traits, with threats between East and West intensifying at what feels like 24-hour intervals. With each verbal attack by Joe Biden, communications become tighter and more threatening. What will our world look like after another 4 weeks? We do not know. At any rate, the capital markets are trying to price in the consequences of the war. They are still relatively optimistic, possibly even too positive, considering the enormous inflationary pushes and the still unclear economic effects. We look at some price outliers in this explosive environment.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: RHEINMETALL AG | DE0007030009 , HENSOLDT AG INH O.N. | DE000HAG0005 , KLEOS SPACE CDI/1/1 | AU0000015588

Table of contents:


    Rheinmetall - The fantasy seems endless

    Rheinmetall has now gained over 100% to EUR 208.60. A revaluation was to be expected given the relatively dovish guidance of recent years. Like other companies in the armaments sector, Rheinmetall suffered from export restrictions on war equipment and, as a result, cut back its investments to a minimum.

    A special EUR 100 billion budget for the German armed forces is now waiting to be allocated. In addition, Europe's governments are under enormous pressure to substantially expand their defense budgets, which have been shrinking for years. At the same time, they want to get their hands on the supply of high-tech equipment and weapons as quickly as possible. However, the defense sector, like many other industries, is still suffering from severe restrictions in the supply chains.

    Following discussions with Rheinmetall management, the analysts at Berenberg venture a positive outlook and, as a result, raised the price target in the last Rheinmetall report from EUR 155 to EUR 215. The analysts expect a doubling of sales in German defense spending and consider the production capacities to be given. Moreover, with a current price-growth ratio (PEG) of 1, the stock is undervalued relative to the industry. So the fantasy in the defense stock seems to be there still, but Friday's price is already quite close to the 12-month target price. Only the technology in the share currently appears very overbought. Short-term profit-taking with a consolidation target of EUR 185 would therefore not surprise us.

    Kleos Space SA - A good business model in the face of geopolitical instability

    One would expect a veritable wave of orders at the current time for Kleos Space (KSS). With its business headquarters in Luxembourg, the high-tech Company puts satellites into orbit to record primarily maritime and land-based radio and motion activities from a distance and process them in a customer-oriented manner. All application areas are highly sensitive and require high-quality standards in terms of security and validity.

    However, the Data-as-a-Service specialist announced a postponement of the third cluster in January; here, a further 4 satellites should have been launched. Those launches will now be made up in April. The Vigilance Mission satellite cluster, launched in June 2021, is currently being positioned and is expected to start generating revenue in April. The Patrol Mission cluster is now scheduled for re-launch in April 2022 using the SpaceX Transporter 4 rocket. A fourth cluster, the Observer Mission, is scheduled for launch later in 2022, which will give Kleos 16 satellites in orbit. Russia's recent invasion of Ukraine has led to a surge in requests for Kleos' RF data product.

    In February, Kleos published its audited results for 2021, with a net loss reaching EUR 6.4 million, and full-year revenue was also low at EUR 125,000. According to an analysis by First Berlin, it is expected to rise to EUR 8.19 million in 2022 and climb above EUR 25 million by 2024. The EBIT margin could then also rise to well over 40%. Likewise, it was published that some contract extensions could be achieved with NATO countries. Kleos covers many topics from the defense sector and should be able to profit from the increased public defense spending.

    After several months of consolidation, last week saw the first signs of life for the price in Australia. Both the price and the volume went up slightly. The share is now trading at around AUD 0.56 or EUR 0.37, 10% above its low for the year. With currently 177.6 million shares, the market capitalization is AUD 97.7 million. That brings the Company close to the AUD 100 million market value threshold, which should allow access to new customer groups. Kleos is a good addition to the portfolio in the current geopolitical environment.

    Hensoldt - Electronic warfare is the order of the day

    Another defense technology representative is the Munich-based Hensoldt Group. The specialist for radar and optoelectronic systems was created in 2017 from former business units of Airbus Defence and Space, formerly EADS. The product spectrum ranges from sensor technology to optoelectronic systems, avionics and electronic warfare. Its portfolio of services also includes data management, robotics and cybersecurity.

    A Scandinavian country recently awarded Hensoldt a contract to supply 17 high-performance cameras for national border surveillance on land and at sea. The order is worth just under EUR 10 million according to the Company. Many European countries will likely order special equipment from Hensoldt in the coming weeks. From an investor's point of view, this raises the question of how the currently still low estimates of analysts will soon be adjusted upwards and how dynamic the next few years will be. In any case, a newly formed management board can now hit the ground running.

    For 2022, experts recently expected sales of EUR 1.7 billion, rising to just under EUR 2.9 billion by 2025. That would bring the current P/E ratio down from 20 to around 10. According to the Company calendar, insight into the first quarter will be provided on May 5. At that time, the first estimates for an upward sales adjustment should also be fixed. The stock market is, of course, rushing ahead of the whole thing and has caused the Hensoldt price to explode by plus 115% since the beginning of February. The planned revenue is currently valued at 1.5 times, which is still manageable. The remaining 18% KKR stake could soon come back on the market after the rally.


    Equity investing in times of crisis is marked by particular stresses and volatility. Sustainability and ESG criteria are often included as a requirement in investment guidelines for institutional investors. However, this prevents investment in defense stocks, even if the focus is on the defense sector. Rheinmetall and Hensoldt have nevertheless gained more than 100%, while satellite and data specialist Kleos Space has just started to climb.


    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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

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

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author



    Related comments:

    Commented by Carsten Mainitz on September 29th, 2022 | 12:01 CEST

    Verbio, Kleos Space, KWS Saat - This news is moving share prices!

    • Space
    • Technology
    • Investments

    Increased uncertainties in geopolitics, rampant inflation with exploding commodity and energy prices, and higher interest rates are making it increasingly difficult for companies to meet the forecasts they issued at the beginning of the year. Recent examples include battery manufacturer Varta and real estate financier Hypoport, which had to withdraw their annual targets. In addition, however, a number of companies have been able to surprise on the upside despite all the challenges.

    Read

    Commented by Stefan Feulner on September 23rd, 2022 | 10:10 CEST

    BYD, Kleos Space, Palantir - Market leaders in the clearance sale

    • Space
    • Electromobility
    • Technology

    In the wake of the major interest rate hike, the US Federal Reserve increased by 75 basis points, and the stock markets again went into a dive. After the statement by Chairman Jerome Powell, the Dow Jones lost more than 1,000 points over the day, and the Nasdaq technology index also ended the day with significant losses. That threatens a further test of the lows for the year. In the course of this, established market leaders from various sectors corrected and now offer attractive long-term entry opportunities at a reduced level.

    Read

    Commented by Juliane Zielonka on September 9th, 2022 | 10:10 CEST

    Nordex, Kleos Space, Allianz - Cybersecurity is booming!

    • cybersecurity
    • Space
    • data

    The energy crisis in Europe is causing one sector in particular to boom: cybersecurity. The attack on Nordex in April or the current threat to the Ukrainian nuclear power plant in Zaporizhzhya illustrates the fragility of our energy supply. Surveillance technology from space helps entire countries and trade routes to increase their own security. Kleos Space is a technology pioneer in this. The Company provides global intelligence and geolocation Data-as-a-Service through appropriate satellite technology. The sector is also important for insurance companies such as Allianz.

    Read