February 9th, 2021 | 08:20 CET
Siemens, Almonty, Rheinmetall: ESG check of classic industries
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"[...] Large tailings piles, such as those created in phosphate production from sedimentary rock, will not exist in our process. [...]" John Passalacqua, CEO and Director, First Phosphate Corp.
At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Siemens: Slim makes sexy
Siemens is the general store on the stock exchange. In addition to medical technology, such as X-ray machines and other equipment, which has now found its own place on the stock exchange as Siemens Healthineers, the Company also offers infrastructure, mobility and digital services. Although sales and profits have declined recently, incoming orders at the global corporation still cause optimism. As was the case with Siemens Healthineers, the electronics group also successfully floated Siemens Energy on the stock market. Although parts of Siemens Energy had also been growth drivers for the entire Group in recent years, the conglomerate had become increasingly confusing. Whenever several subgroups have little to do with each other, this results in high costs instead of synergies. Siemens actively countered this with its two IPOs.
Now the Company wants to focus more intensely on the areas of mobility and digital. The Company is also increasingly taking up the cause of sustainability but still has some way to go in this area. After the restructuring that has already taken place, the Company is well-positioned to attack again in the long term. On a one-year horizon, the DAX heavyweight has already gained more than 17%. Lean and sustainably positioned, there is undoubtedly more to come from Siemens in the long term.
Almonty Industries: Tungsten and ESG as a unique selling point
Tungsten producer Almonty Industries also demonstrates the fact that sustainability is increasingly reaching established industries. The Company recently announced that it had taken a significant step toward climate neutrality. In Portugal, the Panasqueira mine which is currently in production, is to be equipped with solar panels in the coming months. For the planned Sangdong mine in South Korea, the largest tungsten project globally, a sustainability report is being prepared to estimate the carbon footprint and take similar measures. For Almonty, an ESG concept is an important and unique selling point and a key to convince investors of the Company and its projects.
In addition to two active mines in Spain and Portugal, Almonty's stock thrives on the fantasy surrounding the South Korean Sangdong project. This mega-mine would lift Almonty's business to a new level. In addition, KfW, which recently granted a loan of USD 75 million, is a potent financial backer of the Company. The share price has been moving steadily upwards for months. Due to the wide range of tungsten applications, the projects outside China and the sharpened ESG profile, the share is by no means uninteresting.
Rheinmetall: A no-go for many
Rheinmetall shares are rarely mentioned in the same sentence as ESG criteria. The arms manufacturer is not included in the portfolio of many sustainably-minded investors as a matter of principle. However, almost half of the Company is also active in the automotive sector. The Company's figures for the first half of 2020 showed that armaments and automobiles complement each other well. While things didn't go quite as smoothly for automobiles, the armaments division boomed. As the year progressed, cars recovered and the figures got even better. Only recently, Germany announced that it had increased its defense spending. Other countries are also investing more in armaments again. Rheinmetall's shareholders are the beneficiaries.
However, as more and more investors follow sustainable criteria, Rheinmetall stock is always likely to be slightly disadvantageous. Investors must be aware of this. However, if one only looks at the bare figures, Rheinmetall is also not uninteresting. However, if you want to invest in line with the spirit of the times, it is better to focus on companies that have already sharpened their ESG profile. In addition to Siemens in blue chips, this includes Almonty Industries in the second-tier sector. The latter is also in an exciting corporate phase, thanks to the Sangdong mine currently under construction.
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