TAKEOVER WAVE in ARMAMENTS and LITHIUM? Hensoldt, Standard Lithium, and BMW partner European Lithium

European Lithium share set to multiply?

"BMW profit collapses: Will the Neue Klasse be BMW's big breakthrough?" - This was the recent headline in "WirtschaftsWoche". This highlights the importance of the new generation of electric vehicles from the DAX-listed company, which will roll off the production line next year. Batteries will be a key factor in the success of the new series. In this regard, BMW relies on lithium from Austria. This is where European Lithium's stock comes into play. The analysts at First Berlin recommend the stock with a target price of EUR 0.14, while the share is currently trading at EUR 0.028. Accordingly, the analysts consider a multiplication to be possible.

European Lithium not only benefits from the increasing demand for lithium – it is clear that the future belongs to electric vehicles, thanks to BYD's recently introduced battery with a five-minute charging time – but also has a hand in rare earths.

Both essentially through the 60% stake in the NASDAQ-listed Critical Metals Corp. (CRML). The latter owns the Wolfsberg Lithium Project in Austria, the first fully approved lithium mine in Europe. Based on Wolfsberg, a supplier of battery-grade lithium is currently being developed. From 2026, the lithium is to be mined and processed into battery-grade lithium hydroxide in Saudi Arabia, where energy costs are 80% lower. A local company has already been brought on board for the construction of a refinery with an annual production capacity of up to 20,000 tons of lithium hydroxide. The lithium will then be supplied to BMW, which has already made a down payment of EUR 15 million.

However, there are other reasons to buy shares of European lithium. A direct 7.5% interest is held in the Tanbreez Rare Earth Project in southern Greenland, with CRML holding a further 42%, whereby the NASDAQ-listed company can increase its stake to over 90%. Tanbreez is fully permitted and is said to include the world's largest rare earths resource (JORC 2012 compliant). The results of the recent confirmation drilling are promising. More details are expected throughout the year. In addition, European Lithium owns a lithium project in Ireland and holds further projects near the Wolfsberg project in Austria.

The stake in CRML alone is worth significantly more than European Lithium's current market capitalization. Therefore, the multiplication potential described by the analysts seems entirely plausible. The price was suspended in the last few days due to the upcoming drilling results. Will the stock now get new momentum?

Standard Lithium with Energy company to become a producer

The fact that something is happening again with lithium is also evident in the USA. Standard Lithium, for example, has partnered with the energy company Equinor. The joint venture, Smackover Lithium, aims to develop lithium projects in Southwest Arkansas and East Texas up to production. The focus here is on Direct Lithium Extraction (DLE). Direct Lithium Extraction (DLE) is expected to be a more efficient, environmentally friendly, and cost-effective lithium mining technique.

The project in Southwest Arkansas is expected to utilize one of the world's first commercial-scale DLE plants. "Smackover Lithium is a natural fit for the joint venture, given the abundant resources of the Smackover formation and our joint venture's commitment to contributing to the incredible legacy of American energy production in this region," said David Park, CEO of Standard Lithium.

Equinor manager Allie Kennedy Thurmond commented: "We are excited to be part of Smackover Lithium, developing important mineral projects in the Smackover Basin, and building the next generation of lithium development."

Hensoldt: New employees and acquisitions?

While lithium is making a comeback, and European Lithium and Standard Lithium are expected to benefit from it, defense stocks seem to be heating up. This does not mean that companies like Rheinmetall, Hensoldt, and others won't continue to perform well.

This week, Hensoldt CEO Oliver Dörre showed that the industry is bursting with self-confidence. At the International Club of Frankfurt Business Journalists (ICFW), he spoke, among other things, about the thousands of new employees, the consolidation of the industry, and the billions for armaments investments as a huge economic stimulus package. In the past three years, the Company has already invested around EUR 1 billion in the expansion of production and innovations. Now the specialist in defense electronics wants to hire another 1,000 new employees, thereby increasing its workforce by over 10%. In doing so, the Company is working together with the automotive industry, where jobs are being cut, as is well known. Dörre sees the European defense industry as being on the verge of consolidation. Hensoldt wants to play an active role in the takeover wave. In addition to the share as a currency, the MDAX company also has financial leeway. Overall, Hensoldt's CEO sees the billion-euro investments approved by the Bundestag as a huge economic stimulus package and, thus, as an opportunity for Germany.

After the price fireworks, the Hensoldt share is currently falling sharply. Yesterday alone, it lost around 10% of its value. At EUR 70, however, the security is still more than twice as high as at the beginning of the year. Some analysts now also see that the price increase was exaggerated. Most recently, Jefferies rated the Hensoldt share as "Underperform". The valuation is simply too high. The analysts see the fair value at EUR 55. mwb research had already put the brakes on the euphoria. With a target price of EUR 48, the analysts recommended selling the stock.

A price correction in defense stocks is long overdue. Lithium, on the other hand, could make a comeback this year. European Lithium benefits not only from its partnership with BMW but also from its activities in the field of rare earths. The stock is too cheap given the majority interest in Critical Metals Corp. Standard Lithium also relies on a strong partner.