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March 11th, 2022 | 11:19 CET

Rheinmetall, Triumph Gold, Siemens Energy - Safe havens despite the crisis?

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

The Ukraine crisis finally broke the camel's back. Previously, neither the announcement of interest rate hikes nor galloping inflation could move the stock markets to a proper correction. With the beginning of the Russia attack on Ukraine, the indices have lost significant value. Mutual economic embargoes weaken each other, and in the end, the consumer will pay the bill. But as in every crisis, there are winners. Weapons manufacturers are suddenly booming, the price of gold has soared, and renewable energies are being given extra support to ensure independence from Russian energy imports. Today, we look at one company from each of the three sectors.

time to read: 4 minutes | Author: Armin Schulz
ISIN: RHEINMETALL AG | DE0007030009 , TRIUMPH GOLD CORP. | CA8968121043 , SIEMENS ENERGY AG NA O.N. | DE000ENER6Y0

Table of contents:


    Ryan Jackson, CEO, Newlox Gold Ventures Corp.
    "[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.

    Full interview

     

    Rheinmetall - First orders have arrived

    For a good two weeks now, the world has been out of balance with Russia's invasion of Ukraine. While there are peace demonstrations in many cities, Germany and Poland are supplying weapons to Ukraine. When the German government then declared that it would spend an additional EUR 100 billion on the German armed forces, the prices of arms companies exploded. Whether it is morally justifiable to invest in arms companies is something everyone has to decide for themselves. Still, enough investors invested in Rheinmetall and made a lot of money.

    Former President Trump already called for Germany to invest 2% of its gross domestic product in the country's defense. While he was laughed at back then, Germany now wants to invest even more than 2% in the future to ensure the country's security. Rheinmetall will undoubtedly benefit from this in the future and is reporting between 1,000 and 3,000 new employees to be hired in order to be able to handle the orders from the German armed forces. A first-order for helmets has already been received. Ammunition stocks are also expected to significantly increase to prepare for a possible emergency.

    Since the start of the war, the share price has risen by over 68%. Investors assume that the Company, which in addition to security technology is also a supplier to the automotive industry, will get a big piece of the EUR 100 billion pie. Profit-taking set in after the share shot up to EUR 162.95 in the initial euphoria. The share is currently trading at EUR 147.55. Several analysts issued new Buy ratings for the share, and most recently, UBS raised its price target to EUR 170 on March 8. A more detailed analysis can be found at researchanalyst.com.

    Triumph Gold - Mineralization extended

    It took a long time for the gold price to break out. Despite inflation throughout 2021, the price did not get off the ground, but with the flare-up of the Ukraine crisis, it finally succeeded. In the long term, gold explorers such as Triumph Gold will also benefit from this. The Canadian explorer holds more than 2 million ounces of gold, silver and copper, according to NI 43-101 report. Four projects are owned by the Company, with the focus on the flagship "Freegold Mountain". The property is located in Yukon, northwestern Canada and features more than 20 mineralized zones.

    On February 17, the Company released the latest results from its drill program at the Nucleus Zone of the Freegold Mountain Project. A total of 4 holes have been drilled, of which 2 have been completed. The two holes have a total length of approximately 756m and have extended the mineralization. At the top, 2 g/t gold and 1.57 g/t silver were discovered over 4.50m, and within 46m, 0.54 g/t gold and 0.53 g/t silver. In addition, the presence of a strong oxide profile was confirmed in the area of the proposed open pit. The gold recovery rate with heap leach using cyanide solubility is up to 87%.

    President Brian May expressed his satisfaction, "We are pleased with the drill results. We look forward to defining more oxide gold zones at Freegold Mountain." The more successful the Company becomes, the more interesting it will be to the major gold producers operating their mines around the Freegold Mountain project. Newmont already has a 12% stake in Triumph Gold as a strategic investor. Despite the gold deposits, the stock has been under pressure since mid-2021 and is currently trading at 0.095 Canadian dollars (CAD). The 2021 high was CAD 0.23. The value has not yet benefited from the rising gold price and offers catch-up potential. The market capitalization is just CAD 13 million.

    Siemens Energy - Will the turnaround succeed?

    Besides the defense industry, the green energy sector is the winner of the crisis. The EU plans to import two-thirds less oil and gas from Russia. That is to be compensated for with significantly higher investments in renewable energies. One of the beneficiaries could be Siemens Energy. The Munich-based company is a global power engineering group that operates in gas, electricity, and renewable energy segments. However, its wind power subsidiary Gamesa has been a source of negative news lately.

    As the German government wants to develop alternatives to Russian oil and gas, wind power is to be increased by 100 to 110 gigawatts by 2030. While the domestic market is booming, the Company announced that it would not accept any new orders from Russia. The Group is also abandoning all its projects in Russia. On the other hand, an order from Denmark provided positive news. The Munich-based company is to supply electrolyzers that produce eMethanol. The electricity for this will come from a solar park with an output of 300 megawatts. The customers will be a shipping company and a fuel retailer.

    The share was able to break out of the downward trend on February 28 and is currently trading at EUR 20.42. It is a little surprising because the Company has to leave the DAX and will be included in the MDAX in the future. In addition, one has to wait and see whether Gamesa manages to get into the profit zone on a sustainable basis. Margins in the wind power business are very thin, and a miscalculation like in Brazil immediately eats up potential profits. Management is currently examining the extent to which the sanctions surrounding the Ukraine crisis are impacting the Group.


    Even if the conditions are good, there is no guarantee that a company will turn a profit. Rheinmetall can at least expect an increase in incoming orders. Whether this directly justifies a share price jump of over 68% remains to be seen. Triumph Gold is valued very low for the number of raw materials it offers. Since the rising gold price has not yet moved the share price, this stock has the most potential. Siemens Energy must now show that the wind power division has learned from past mistakes and must secure a piece of the pie.


    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.

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    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author



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