May 18th, 2022 | 10:21 CEST
RWE, Almonty Industries, Daimler Truck - Increasing signs of strength
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Daimler Truck Holding, the world's largest commercial vehicle manufacturer with more than 35 central locations and around 100,000 employees, was a source of joy. The Stuttgart-based company was able to top its original revenue forecasts by more than expected. According to a press release, revenue climbed 17% to EUR 10.55 billion in the first three months. However, due to write-downs in the Russian business and higher costs, the EBIT of the industrial business fell by three quarters to EUR 414 million.
However, what also caused the share price to jump by more than 7% was the increase in annual forecasts for both sales and operating profit. CEO Martin Daum now expects sales of EUR 48 to 50 billion in 2022, compared with a maximum of EUR 47.5 billion originally planned. Adjusted return on sales for the industrial business is expected to remain at 7 to 9%, thus above the previous year's level. At the same time, management now sees EBIT "at the previous year's level" after a "slight decline" was previously expected.
In addition to investors, various analyst firms were also positive. The US investment bank Goldman Sachs, for example, reiterated its "buy" rating for Daimler Truck with a price target of EUR 35. Jefferies also continues to see a buy candidate with a price target of EUR 40.
Almonty Industries in pole position
One of the most critical issues due to the current geopolitical situation is the securing of raw materials, which are elementary for industry and society, as well as independence from exporters such as Russia and China. Almonty Industries plays a vital role in tungsten production and should cover a lion's share of production for the Western world from the third quarter of 2023. The CEO of the emerging market leader Almonty Industries, Lewis Black, will speak about this on the occasion of the 3rd International Investment Forum (IIF) and explain the further development of the Company. Registration for the virtual event is free of charge.
Last hurdle cleared
When fully commissioned, the Sangdong mine at the Almonty Korea Tungsten deposit is shown to be responsible for 50% of the world's tungsten supply outside China in the future. Demand for tungsten is also increasing enormously due to the need because of the energy transition. Besides the Austrian Plansee Group, CEO Lewis Black is the second-largest shareholder of Almonty Industries. In addition, Deutsche Rohstoff AG owns around 12.2% of the promising company, which in addition to the main project in South Korea, is also active in Spain and Portugal.
With the closing of a private placement of USD 3.3 million to directors and existing insiders, the last condition precedent for closing the KfW financing of USD 75.1 million has now been completed. The drawdown is expected to occur later in May. With this step, Almonty is approaching the start of production with great strides. After a substantial price correction, the West's largest tungsten producer, after completion, is at an attractive share price level with a stock market value of EUR 128.45 million.
A significant jump in profits
The energy group from Essen, RWE, also attracted attention with good figures for the first quarter. The main reason was the enormous price increases for electricity. Sales to customers outside the Group amounted to EUR 7.94 billion (excluding natural gas and electricity taxes). That is 69% more than in the same period last year. Despite lower generation volumes, revenues from electricity climbed by 55% to EUR 6.21 billion. Due to the price explosions, gas revenues were almost four times as high, amounting to EUR 1.24 billion.
Following the strong figures, Deutsche Bank Research upgraded the share to "buy" and reiterated its price target of EUR 48. In chart terms, the high for the year at EUR 41.83 is getting ever closer. However, a short setback would not be unlikely due to the overbought indicators.
Despite the current uncertainties, the indices can further break away from their correction lows. Daimler Truck, like RWE, shone with strong quarterly figures. Almonty Industries managed to overcome its last hurdle towards the start of production and is attractive at the current level.
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