Salzgitter AG, Volatus Aerospace, and Rheinmetall with spectacular news

Salzgitter – Shock after the defense rally

How quickly sentiment can shift! Just last week, Salzgitter shares were among the high flyers on the German stock exchange, surging by over 35% to a new yearly high of EUR 29.72, following approval for the delivery of its SECURE 500® security grade steel. However, the end of the week brought a sobering reality check.

A profit warning caused the stock to lose not only the gains it had made in the previous week, but also investor confidence. The stock closed at EUR 20.70, and further losses cannot be ruled out following the debacle. Should the price slip below the significant support zone at EUR 20.26, new lows for the year and a drop to around EUR 18 are likely.

In addition to the drastic profit warning, the reduced forecast for the year as a whole due to the continuing weakness of the steel industry also caused alarm. The Company now expects revenue of between EUR 9.0 and 9.5 billion for the current fiscal year. The previous forecast was EUR 9.5 to 10 billion.

The adjustment to the operating result is even more severe: Instead of the EUR 350 to 550 million previously expected, Salzgitter now anticipates only EUR 300 to 400 million. The Company is even facing a pre-tax loss of up to EUR 100 million. In the best-case scenario, it may just break even.

Volatus Aerospace – Momentum seized

Since the conflict in Ukraine, drones have established themselves as game changers in modern warfare. Whether for reconnaissance, target acquisition, or logistical support, unmanned vehicles have become indispensable. As a specialized provider, Volatus Aerospace is benefiting from this trend.

The Canadian company is broadly positioned, serving not only the defense sector but also the energy supply, infrastructure, logistics, and public safety industries. The Company offers a full-service package with a strong focus on data collection and analysis.

According to the management of Volatus Aerospace, which has over 100 years of combined aviation expertise, the order books are full with a volume of CAD 600 million. The most prominent customer was recently a partner from a NATO member country, to whom a fleet of tactical drone systems for reconnaissance and surveillance worth CAD 1.85 million was delivered.

With a fully subscribed private placement, Volatus took advantage of the favorable conditions to secure further growth. 19,230,770 units at CAD 0.52 each were issued, representing gross proceeds of approximately CAD 10 million. Each unit comprises one common share and one-half warrant to purchase additional shares at CAD 0.76 within 36 months. Net proceeds will be used to expand the Company's defense business, scale up its drone fleet, and meet growing international demand.

https://youtu.be/6Lr6jbeytfA

Rheinmetall – Spin-off planned

Before the start of the war in Ukraine, defense companies were largely overlooked. Declared "socially harmful", these corporations had problems obtaining both external financing from banks and equity capital from investors. Düsseldorf-based Rheinmetall also positioned itself as an integrated technology group, highlighting business areas beyond weapons and ammunition production. The Company took particular pride in its automotive supply division. But the turning point changed everything. Today, defense companies are now the darlings of investors, and names like Hensoldt, Steyr & Co. are now even considered ESG-compliant.

It is now even possible for defense companies to present themselves as pure-play arms manufacturers when approaching banks, in order to replenish or expand their lines of debt capital. At Rheinmetall, the Power Systems division, in which the DAX-listed company bundles several automotive suppliers that produce components for gasoline and diesel engines in both passenger and commercial vehicles, also appears to be under scrutiny.

According to Handelsblatt, citing financial and industry circles, the spin-off of its automotive supply business is being considered. Revenues, margins, and profits have been in decline for years, with no improvement in sight. According to Handelsblatt, initial talks have already taken place with financial investor One Equity Partners.

Rheinmetall shares are consolidating sideways after reaching an all-time high of EUR 1,936. Although the valuation is grossly overvalued, with a price-to-earnings ratio of around 62, it is not unlikely that the shares will climb to another historic high.

Salzgitter shocked investors with a drastic profit warning. According to Handelsblatt, Rheinmetall is planning to spin off its automotive supplier business. Volatus Aerospace secured CAD 10 million in a private placement.