May 27th, 2024 | 07:15 CEST
Royal Helium, Rheinmetall, AMD - High-tech shares fly only with helium
On the stock market, certain sectors are in the spotlight when it comes to impressive growth rates and innovative technologies. One of these sectors is undoubtedly high-tech shares. Among the many components that are crucial to the success of these companies, there is one resource that is often overlooked but nevertheless central: helium. This inconspicuous noble gas plays an indispensable role in the manufacture and development of numerous high-tech products. From semiconductors and medical devices to defense technologies, helium enables precise and efficient processes that would otherwise be impossible. Without this valuable resource, many technological innovations would not be able to reach their full potential, and some stocks would falter.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
ROYAL HELIUM LTD. | CA78029U2056 , RHEINMETALL AG | DE0007030009 , ADVANCED MIC.DEV. DL-_01 | US0079031078
Table of contents:
Author
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.
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Royal Helium - Growth ahead
Investing in helium has been difficult in recent years. This changed at the end of last year. Royal Helium aims to play a market-changing role as an up-and-coming company in the field of helium production. Its approach is to develop into an industrial gas company. With the completion of the Steveville helium plant, the Company has proven that it has the expertise to implement this approach. The plant produces 22 million cubic feet of helium, 20 million pounds of food-grade CO2 and 2,920 barrels of condensate per year. By reducing emissions, the plant generates between CAD 3 and 6 million in CO2 credits when fully operational.
An off-take agreement has been signed with a customer from the aerospace and defense industry for all of the helium used in the plant. The proof-of-concept opens up completely new opportunities for the Company. On April 16, Royal Helium concluded an economic partnership and a letter of intent for USD 25 million with Sparrow Hawk Developments for the development of the Val Marie helium project in Saskatchewan. In return for the money, Sparrow Hawk will receive 57.5% of the wells and 46% of the processing plant. Progress is also being made on the Forty Mile project. The licensing and approval process for the approximately 2,800-hectare property has begun. Drilling is to start as soon as the procedures have been completed.
The Company has raised the money for this via a bought deal offer. A total of around 66.6 million shares were issued at CAD 0.09 each. The financing was completed on May 8, and the Company received CAD 6 million. Each investor also received a warrant at CAD 0.12, which can be exercised within 36 months. This would bring Royal Helium a further CAD 8 million. This brings the Company closer to its goal of installing a new plant every year. The share price suffered due to the capital measure and is currently quoted at CAD 0.08. This provides an opportunity to enter at a lower price than investors and benefit from future growth.
Rheinmetall - Business is booming
Defense companies are heavily reliant on helium as this scarce and valuable gas supports a variety of critical applications in the defense industry. Helium is used in military technology primarily due to its unique chemical and physical properties, such as its low density, non-flammability and extreme cold resistance. These properties make it an ideal coolant for superconducting materials in modern defense systems, including detection devices and advanced weapon systems. Helium is also used in rockets and satellite systems. Accordingly, Rheinmetall is also dependent on this raw material.
Since the outbreak of the Ukraine conflict, business has been booming for the Düsseldorf-based company. In the first quarter, the Company recorded sales growth of 16%, driven by the military business with a focus on ammunition. Group revenue rose to EUR 1.58 billion, an increase of EUR 218 million compared to the previous year. The operating result increased by 60% to EUR 134 million. Thanks to the successful integration of Rheinmetall Expal Munitions and projects in Germany and Ukraine, the order backlog and call-off orders increased to EUR 40.2 billion. The forecast for the year remains optimistic, with expected revenue of around EUR 10 billion.
The current boom the Company is experiencing shows no signs of ending anytime soon. Since the quarterly figures, several major orders have already been announced. These include exhaust gas recirculation and back pressure valves in the three-digit million range, HX trucks for Archer artillery systems valued at around EUR 71 million, and artillery ammunition worth almost EUR 300 million. Additionally, the Company secured funding for hydrogen and electrification projects amounting to EUR 7.7 million. The only thing that could halt this upward trend at the moment are the US elections. Donald Trump has announced his intention to end the Ukraine conflict as quickly as possible. The share is currently trading sideways at EUR 530.80.
AMD - Lagging behind Nvidia
Chip manufacturers like AMD require helium due to its unique properties, which are essential for high-precision manufacturing processes. As an inert and light gas, helium is used in semiconductor production to minimize impurities, efficiently dissipate heat, and detect leaks in high-vacuum systems. Helium is particularly critical in plasma etching and silicon wafer production to ensure chip performance and reliability. Without helium, the production of modern semiconductors would be significantly limited.
AMD reported strong financial results in Q1 2024. Revenue was USD 5.5 billion. The gross margin was a substantial 47%. CEO Dr. Lisa Su highlighted growth in the Data Center and Client segments, driven by the MI300 AI accelerator and Ryzen/EPYC processors. Non-GAAP operating income was USD 1.1 billion. The outlook for Q2 2024 is for revenue of around USD 5.7 billion. Investors were nevertheless disappointed. This is mainly due to the comparison with industry leader Nvidia. AMD is currently unable to keep up here.
In order to narrow the gap, the Company aims to increase the energy efficiency of its chips by a factor of 100 and thus usher in a new era in the performance of data centres and AI applications. The partnership with Microsoft, which uses AMD's AI chips for its cloud computing services, could further boost AMD. Analysts are also positive and see the share price between USD 225 and USD 250 by the end of the year. The share currently stands at USD 166.36 and would, therefore, have at least 35% potential.
Helium is an indispensable resource whose importance in the high-tech industry is enormous and makes the development of many technologies possible in the first place. With the commissioning of the Steveville helium plant, Royal Helium has positioned itself as an up-and-coming company in helium production and is planning major expansions. Rheinmetall is benefiting greatly from the geopolitical tensions, as evidenced by strong revenue growth and new large-scale orders. AMD uses helium for precise manufacturing processes in semiconductor production and, despite competitive pressure, aims to significantly improve the energy efficiency of its chips and thus strengthen its market position.
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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
In this respect, there is a concrete conflict of interest in the reporting on the companies.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
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