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June 29th, 2023 | 07:30 CEST

The profiteers of the new super cycles - SAP, Defense Metals, Hut 8 Mining

  • Mining
  • RareEarths
  • Tungsten
  • AI
Photo credits: pixabay.com

Every new innovation takes time and is also not protected from delays. This can be clearly seen in the example of listed renewable energy companies. At the beginning of the new decade, these companies were praised with great anticipation, but disillusionment quickly set in due to the lack of sales and profits. On the other hand, the fact that this sector will prevail in the long term due to the energy turnaround is a foregone conclusion. The situation is similar for artificial intelligence and blockchain technology.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: SAP SE O.N. | DE0007164600 , DEFENSE METALS CORP. | CA2446331035 , HUT 8 MINING CORP (NEW) | CA44812T1021

Table of contents:


    SAP - Artificial Intelligence is advancing

    The current megatrend of artificial intelligence hardly stops at any company, including Europe's largest software company, in terms of turnover. CEO Christian Klein emphasized the importance of the digital revolution in an interview in the "Handelsblatt". In his view, generative AI will not only fundamentally change how people will work with SAP software in the future, stating: "Currently, as SAP, we address a market of 500 billion dollars. We expect the potential to increase significantly through generative AI. The whole development is an enormous growth driver for SAP".

    In future Enterprise Resource Planning (ERP) programs, digital helpers could explain business data and provide recommendations. Klein also emphasized extensive automation of operational processes, especially in human resources. He stated, "The system should be capable of self-configuration and automating tasks in the future."

    On the other hand, the Walldorf-based company has completed the sale of its subsidiary Qualtrics. For USD 18.15 per share, the investment company Silver Lake Management and the Canada Pension Plan Investment Board now own all Qualtrics shares, including the 61% SAP package. The sale proceeds will be used to launch a major share buyback program, which is expected to commence in the second half of the year.

    Defense Metals - The supplier of climate change

    Last year, the renowned commodity experts Leigh Goehring and Adam Rozencwajg predicted a decade of commodity scarcity. The upward trend was slowed down in the short term by the onset of the recession. Nevertheless, metals such as copper, lithium and rare earth metals are likely to continue their supercycle in the long term, as demand is too high, especially due to the energy transition, and supply is too scarce. In the case of rare earth metals, there is also the problem that more than 90% of the entire value chain, from mining and processing to the production of rare earth metals and alloys, is in China's hands.

    Western deposits, on the other hand, remain rare. Besides the Australian mines of Lynas and Iluka Resources, there has been only one rare earth mine in the US in the recent past, the Mountain Pass mine of MP Materials. This mine has recently received millions of dollars in government support. Another great opportunity to minimize dependence on the second largest economy is the 4,262-hectare Wicheeda project in British Columbia, which is 100% owned by the Canadian company Defense Metals. The stock market value of the hopeful project is currently still a manageable CAD 56.15 million. In addition to the first-class infrastructure, the conditions are favourable due to similar metallurgy to Mountain Pass. Wicheeda contains the same coarsely crystalline metals, bastnäsite and monazite, which can be processed cost-effectively using conventional methods.

    Following the completion of the pilot hydrometallurgical plant test, the next milestone, the preliminary feasibility study, is now planned to be completed in the first half of next year. With the completion of a CAD 12.5 million private placement, Defense Metals is well positioned. In addition, a new strategic investor, RCF Opportunities Fund II, was won, which placed around 25.5 million shares in the portfolio.

    Hut 8 Mining - Significantly more flexibility

    Despite all the crises with the bankruptcy of the crypto exchange FTX and uncertainty about future regulations, the largest virtual currency, bitcoin, is one of the outperformers, with a price increase of over 50% since its low for the year in mid-March. At around USD 30,100 per bitcoin, the reserve currency is not far from another buy signal at USD 32,376. Should this be cracked, chart technicians trust the cryptocurrency to move further to the area of around USD 45,000.

    A positive sign for a further rise is the fact that crypto-related companies have also switched into rally mode in recent weeks. For example, Hut 8 Mining, a leading pioneer in the mining of digital assets in North America and provider of high-performance computing infrastructure, outperformed the market by a whopping 281% year-to-date. The Company, with a market capitalization of USD 654.23 million, is currently trading at USD 2.96. If the USD 3.70 mark is exceeded, Hut 8 would complete a saucer formation and thus generate a striking buy signal. As a reminder, the share's high dates back to November 2021 with an all-time high of USD 16.57.

    To maintain flexibility in the future and continue its dynamic Bitcoin treasury strategy after the upcoming halving, the Company and its subsidiary Hut 8 Holdings Inc. secured a credit facility of USD 50 million with Coinbase Credit as the lender. In addition, Hut 8 Mining is preparing for an increasing mining business. Thus, a hosting agreement was signed for about 6,400 ASIC miners, previously powered at the Company's North Bay site, to come online in Texas from the end of July, giving the Company about 600 PH/s of additional installed operating capacity. Furthermore, an additional 988 miners previously operating at the North Bay site were energized at the Hut 8 Medicine Hat site back in March.


    Artificial intelligence, cryptocurrencies as well as the scarcity of commodities are likely to mutate into the most important sectors on the stock market in the coming years. While SAP is increasing its commitment to integrating AI into its systems, Hat 8 is getting greater flexibility through outside capital. Defense Metals is moving at a fast pace towards a preliminary feasibility study.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



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