Royal Helium, Infineon, Boeing - Helium: The rise to a High-Tech commodity

Royal Helium - In production

Royal Helium is a player in the field of helium exploration and production, making great strides in transforming into an industrial gas company. The properties are over 1,000,000 acres (equivalent to just over 400,000 hectares) and are located in Saskatchewan. The Steveville helium plant is 100% owned by the Company and is expected to set a new standard for helium plant emissions in Alberta. Once permits are issued, the facility is expected to generate CAD 3 to 6 million per year in carbon credits at current prices, underscoring Royal Helium's commitment to environmental sustainability.

The state-of-the-art facility has a capacity of 15 million cubic feet of raw gas per day. The proprietary modular design allows for the utilization of other by-products such as nitrogen, CO2 and condensate in addition to helium. This allows for the production of 22,000 MCF of helium, 20 million pounds of food-grade CO2 and 2,920 bbl of condensate per year. Currently, 4 of at least 15 anticipated helium fields are in development. The Steveville project's proof-of-concept will shorten the development time, and ongoing production will make it considerably easier to obtain financing. This was evident at the beginning of January when the Company seamlessly extended its credit line by CAD 3.6 million to purchase additional helium trailers for transportation.

The importance of helium today is demonstrated by the Company's recent announcement on February 1 that it has received a CAD 3 million interest-free loan from the Canadian government under the Aerospace Regional Recovery Initiative to support its helium processing operations. The Company is selling its purified helium to an undisclosed US aerospace end customer for USD 538 per cubic foot. As helium is now used in semiconductor manufacturing, aerospace and defense and no longer primarily in healthcare, demand is increasing. The consistently positive news is not yet reflected in the chart. The share is currently trading at CAD 0.17. This is likely to change after the release of the figures for the first quarter.

Infineon - Collaboration with Honda

The production of semiconductors is a highly complex and precise process that requires the use of advanced materials and gases. One of these essential gases is helium, which plays a unique role in semiconductor production. Due to its exceptionally low reactivity and high thermal conductivity, helium is indispensable for several key stages of chip production. This will be no different for Infineon, Germany's largest chip manufacturer. At the moment, however, the focus is on the quarterly figures, which are expected today, February 6. After competitors have recently presented mixed figures, the tension remains high.

Sales are expected to reach EUR 3.8 billion with a margin of 22%. Traditionally, customers are keen to reduce their stocks at the end of the year. Experts hope the current year's outlook will provide a more precise indication of how the share will fare. On January 10, Infineon signed an agreement with SK Siltron CSS for the supply of silicon carbide wafers. This move is aimed at ensuring the production of SiC semiconductors. To avoid being surprised by bottlenecks in the future, the Company is pursuing a multi-supplier strategy.

At the beginning of February, it was announced that Infineon had agreed on a strategic collaboration with Honda. Together, they want to create product and technology roadmaps. This should accelerate the introduction of new technologies. Analysts are positive about the share, which currently stands at EUR 34.14. In January, there were 5 "Buy" recommendations with price targets between EUR 45 and EUR 50. Only JP Morgan recommended a "Hold" with a price target of EUR 38.50. With the quarterly figures, the volatile share is likely to move again.

Boeing - Quality problems

Helium plays a crucial role in the aerospace industry due to its unique physical and chemical properties - it is the second lightest element, non-flammable, and characterized by an extremely low boiling temperature and high thermal conductivity. It is used, for example, as a coolant in space technology and plays a crucial role in refuelling rocket fuels. Accordingly, Boeing, a name traditionally associated with aviation, also relies on helium as an influential player in space technology.

After the share had started a rally at the end of October, which only ended on December 21, the share price recently fell by over 25%. This was partly due to problems with the aircraft. On one flight, part of the aircraft wall fell out. Boeing 737-MAX production is currently being affected by quality defects. Up to 50 aircraft that have not yet been delivered require repairs due to inaccurately drilled holes in the fuselage. This is causing a loss of confidence, and trust is particularly crucial for aircraft manufacturers. However, the latest annual figures presented on January 31 exceeded expectations despite the current production challenges.

Although the loss was still around USD 2.2 billion, it is a clear step forward after around USD 5 billion in the previous year. Turnover climbed by 17% to USD 77.8 billion. Due to the quality defects, the increase in production to 50 aircraft of the 737 models per month by 2026 has been put on hold for the time being. The management is currently leaving it open as to whether the Company will be able to return to profit this year. The share, which cost almost USD 260 at the beginning of the year, is currently trading at USD 205.75.

There are few opportunities to invest directly in helium. Yet, the gas is indispensable for more and more high-tech applications. This gives Royal Helium a unique selling point on the stock market. The Company is already earning money today thanks to the purchase agreement and can generate additional income streams in the future through CO2 certificates and other by-products. Infineon is about to report its quarterly figures, and analysts are waiting for the outlook for the current year. At Boeing the figures are looking up, but the quality deficiencies** have caused the share price to slide. Once the problems have been rectified, the share price could rise again.