Super Micro Computer, Verve Group, Rheinmetall - Investing in market megatrends

Super Micro Computer - Demand remains high

Ever since ChatGPT began its triumphant advance, the topic of artificial intelligence (AI) has been on everyone's lips. AI requires large data centers, as these are essential for developing and using AI and provide the necessary computing power, storage capacity, and network infrastructure. They enable efficient use of energy, scalability and security. This is where Super Micro Computer comes into play. The Company is a Nvidia partner and equips its data centers with specialized hardware such as AI accelerators and GPU clusters that can shoulder the computationally intensive tasks. In the long term, in-house data centers can be more cost-efficient than cloud services, especially for companies with constant AI workloads.

Due to the high demand for high-quality hardware, Super Micro Computer has shown impressive financial results in recent months. The share price has risen by a whopping 750% since April 2023. This extraordinary performance underscores the strength of the Company and its leading position in building data centers. This is also reflected in Elon Musk's latest statement about his planned supercomputer. The CEO of X (formerly Twitter) announced that he has selected Super Micro Computer and Dell to build his computer. This news sent the share price soaring. Investors now see further potential in the Company.

The Company is well-positioned to benefit from the ongoing AI boom. Its expertise in liquid-cooled server systems, which ensure greater energy efficiency, gives the Company a competitive advantage. With a 200% increase in revenue in the last quarter and future-proof solutions for demanding AI applications, Super Micro remains a favourite among investors. Despite recent volatility, the stock is showing signs of a sustained recovery. The growth potential is reflected not only in the figures but also in the Company's promising projects and partnerships.

Verve Group - Strengthens position through the acquisition of Jun Group

MGI Media and Games Invest has become Verve Group. This was approved at the Annual General Meeting. This change reflects the Company's transformation into an advertising company. To deliver personalized advertising, it utilizes artificial intelligence and detailed data analysis. The recent acquisition of the Jun Group has sent a strong signal to the advertising market. This strategic move positions the Company for significant revenue and earnings growth. The integration of the Jun Group promises significant synergy effects, particularly on the revenue side. This transformative transaction will significantly increase the size and profitability of the Verve Group, with extensive revenue synergies expected, particularly through the combination of product and customer structures.

Verve Group SE's forecast revenue and profits have been raised due to this acquisition. The expected Group revenue for the current financial year 2024 amounts to EUR 380.12 million, with a forecast EBITDA of EUR 108.92 million. Revenue of EUR 475.91 million and EUR 596.79 million are expected for 2025 and 2026, respectively. The operating results are expected to increase accordingly. The Jun Group is expected to contribute around 23% to revenue and 43% to adjusted operating earnings, resulting in expected Group revenue of around EUR 447.0 million and adjusted EBITDA of around EUR 151.0 million in the current financial year.

Financially, the Company has gained significant breathing space through proceeds of SEK 450 million (around EUR 39.5 million) from a share placement and the issue of a bond in the amount of EUR 65 million. The money will be used to repay the existing 2020/2024 bond. The financing costs were thus reduced by 2.37%, which amounts to annualized savings of around EUR 10 million. The analysts at GBC rate Verve Group SE positively and have significantly increased the price target for the share. Based on a DCF model, the fair value of the share at the end of 2024 was set at EUR 6.00 per share. This reflects the optimistic assessment of the analysts, who continue to see considerable upside potential in the Verve share price due to the acquired Jun Group and the associated growth and synergy potential. The share price has more than doubled since the beginning of March and is currently trading at SEK 24.30.

Rheinmetall - Joint venture with Leonardo?

Since the Ukraine conflict, Rheinmetall's share price has risen considerably. But what is next? According to reports in the Italian newspaper II Sole 24 Ore, the German armaments group Rheinmetall and its Italian competitor Leonardo are in advanced negotiations about a possible joint venture. This is to focus on the processing of orders for new tanks and armoured vehicles by the Italian army. A corresponding letter of intent could be signed in the next few days. A possible order volume of around EUR 20 billion is on the table, including Leonardo's participation in the European MGCS tank project.

In addition, the Düsseldorf-based company recently received the largest order in the Company's history from the German armed forces. The order comprises the delivery of 6,500 military trucks with a total value of up to EUR 3.5 billion. The first part of the order, 250 trucks, will be delivered this year. The bulk order will be recorded in the third quarter and will be largely financed from the Bundeswehr's special fund. Rheinmetall is working on new tank concepts. A version of the Leopard 1 tank is currently being developed, equipped with the modern Skyranger anti-aircraft gun, which is particularly effective against drone attacks due to its ability to autonomously combat the smallest aircraft movements.

In addition, Rheinmetall has massively expanded its production capacities in various areas** in order to meet the high demand. CEO Armin Papperger is optimistic that Rheinmetall will continue to benefit from rising military spending. The figures for the second quarter are to be announced on August 8. In June, both Berenberg and Goldman Sachs issued a "Buy" recommendation. The price targets were between EUR 590 and EUR 635. The current share price of EUR 481.80 represents a potential upside of over 20%.

All three companies are currently operating in growth markets. Super Micro Computer is reporting impressive financial results thanks to the AI boom. The Verve Group strengthens its market position through the acquisition of the Jun Group and expects considerable revenue and profit growth. Rheinmetall benefits from increased military spending and faces positive future prospects due to a possible partnership with Leonardo. Analysts are optimistic and continue to forecast positive developments.