Share about to jump? Rheinmetall, JinkoSolar, Almonty Industries

Almonty Industries: Revaluation underway!

It has long been known that China and Russia dominate the world market for rare earths and other critical raw materials and use their market position as a "weapon". Better late than never, the German government is now taking measures to reduce Germany's dependence. As the "Handelsblatt" was the first to report, around EUR 1 billion will be invested in strategic raw materials projects via the state-owned development bank KfW by 2028. "With this decision, the budget committee is strengthening Germany's economic security in times of geopolitical uncertainty," said Green budget expert Felix Banaszak in an interview with Handelsblatt. 'In times of geopolitical uncertainty, strategically securing access to crucial raw materials is of central importance for an affordable transformation.' In the past, KfW has supported projects of strategic importance with loans. For example, a few years ago, millions were made available to Almonty Industries for the development of a tungsten mine in South Korea. The Canadian raw materials producer's project is now nearing completion.

The stock has jumped, but the revaluation has arguably only just begun. Almonty will operate the world's largest tungsten mine with the Sangdong mine and thus massively change the situation regarding this critical raw material. The final technical review of the pilot processing plant has been completed. This confirmed a tungsten concentrate of over 60% and an ore yield of 82%. Official production is then scheduled to start in the first quarter of 2025. Almonty can draw on the experience gained in Spain and Portugal, where mines are already in operation.

With the opening of Sangdong, analysts at Sphene Capital expect Almonty to generate revenues of around CAD 100 million as early as next year and almost CAD 200 million in 2026. EBITDA is expected to reach around CAD 45.8 million in 2026. Therefore, their price target for the Almonty share is CAD 2.31. Despite a rise of around 50% in the current year, the stock is only trading at CAD 0.83. An investment, therefore, still seems worthwhile.

Rheinmetall: Consolidation over?

Rheinmetall has undergone a textbook revaluation in recent years. From around EUR 90 at the beginning of 2022, it rose to over EUR 550 within two years. Since March of this year, the share price of Germany's largest defense company – which, incidentally, also relies on tungsten and could, therefore, benefit from Almonty in the future – has been consolidating around the EUR 500 mark. Rheinmetall shareholders are currently watching the election campaign in the US. A victory for Donald Trump could significantly affect the war in Ukraine. An end to the war would initially likely weigh heavily on Rheinmetall shares. However, this should not impact the medium to long-term prospects. On the contrary, Europe would then have to take its defense into its own hands even more and invest accordingly. The analysts at JPMorgan also see it this way. They, therefore, recently confirmed their "Overweight" recommendation with a price target of EUR 680. Berenberg is also one of the Rheinmetall bulls. It has given the defence stock a "Buy" rating with a price target of EUR 655.

JinkoSolar: Share continues rollercoaster ride

JinkoSolar's stock has experienced a wild rollercoaster ride in recent weeks. After the Chinese government announced an economic package, the solar company's stock almost doubled within a few days. From over EUR 30, it then crashed again to EUR 18. Then, a few days ago, it jumped again from EUR 19 to EUR 25. In the latest chapter, the stock slid again yesterday by almost 10% to below EUR 23.

This means that the world's largest solar group is currently clearly at the mercy of the gamblers and seems to depend on the decisions of the Chinese government. Although the Company still appears to be in the best position in the industry, which is shaken by overcapacity and falling prices, this seems to be too little for a sustainable price increase. Jinko has announced the publication of its quarterly figures for today. The Company is expected to report further increases in sales figures, positioning it as a key driver behind the industry's challenges.

In 2024, Jinko plans to deliver 100 to 110 GW and achieve a positive operating cash flow. Following the latest quarterly figures, Jeffries analysts reduced their target price for JinkoSolar shares from RMB 10.68 to RMB 8.28 but maintained their "Buy" recommendation.

JinkoSolar is expected to emerge as one of the industry's winners from the current price war. At present, however, the stock is more for gamblers. By contrast, the Almonty share has initiated the revaluation, and with a view to analyst estimates, the tungsten producer's security still seems to have a lot of potential. Rheinmetall will continue to benefit from rising defense spending. However, the past few weeks have shown that rumors of an end to Russia's war of aggression could lead to price setbacks.