July 12th, 2023 | 07:35 CEST
This news drives share prices - Nordex, Globex Mining, Rheinmetall
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Rheinmetall AG - Soft landing after multi-billion deal
Weeks ago, the stock market lights were on "Sell" after breaking the downward trend formed since October 2022 at EUR 260, with the Rheinmetall share price dropping to a level of EUR 232. Since then, the share has gradually reduced its overbought situation by moving sideways in a corridor between EUR 240 and EUR 250. The share price is supported by continued positive news flow, especially from the defense division. The short-term downward trend is currently at EUR 260.60. Breaking this level would trigger a new buy signal with an initial price target of EUR 272.70. The Rheinmetall share is receiving a tailwind from the indicators. Both the MACD and the RSI are green at a low level.
If it is up to US bank JP Morgan, which continues to rate the share as "overweight", the DAX member should reach a new all-time high with a price target of EUR 320. According to the analysts, the Group made significant progress on three more major orders in the first ten days of July and has good prospects for very strong sales over the next five to ten years, even after the Ukraine conflict ends.
The most recent order is from the German and Dutch armed forces for the delivery of thousands of vehicles for the airborne troops. The framework agreement for 3059 Caracal vehicles is worth up to EUR 1.9 billion.
Globex Mining - Undervalued mining incubator
With the decarbonization of the economy and industry and growing demand from the defense sector, the need for critical industrial metals is increasing tremendously. Whether lithium, cobalt or copper, demand is already outstripping existing supply. But private investors can only estimate which of the up-and-coming exploration companies will rise to become future producers and who will have to pull out beforehand. For about 40 years, industry veteran Jack Stoch has led mining incubator Globex Mining, which has a market capitalization of CAD 42.22 million. Considering that the debt-free company has more than CAD 25 million in cash, stakes in publicly traded companies, and securities that can be sold at short notice, it is fair to say that its portfolio of a whopping 224 holdings is strikingly undervalued.
The diversified basket of holdings, which geographically focuses on eastern Canada, the US and Germany, includes 117 precious metals projects with gold, silver, platinum and palladium properties. With 45 projects, Globex Mining participates directly in the energy transition, as critical metals and minerals such as iron, rare earths, uranium, lithium and cobalt are stored here. Globex Mining's business model is also special. In addition to its own projects, the Company currently secures a continuous cash flow from 89 projects by optioning the land packages and receiving a steady inflow of royalties. In addition to paying royalties in shares or cash, the licensee assumes the exploration risk.
The latest news comes from Cerrado Gold, in which Globex Mining holds a 1% gross metal royalty on all iron production from the property, as well as a large equity position in Electric Royalties which has a 1% gross metal royalty on all vanadium production. Cerrado Gold announced the acceptance of an expression of interest from the UK Export Credit Agency to provide up to CAD 420 million in support for the Mont Sorcier Iron Vanadium Project east of Chibougamau, Quebec.
Nordex - Several orders from Europe
Like Rheinmetall AG, wind turbine manufacturer Nordex can shine with further orders. The Hamburg-based company secured an additional 363 MW for several wind farms in the Mediterranean region. In Spain, the Nordex Group will supply turbines with a total capacity of 149 MW for two wind farms. In addition, following a successful market entry in Serbia, a follow-up order for a 95 MW wind farm has been secured.
Further orders were received from France, Italy and Portugal at the end of the second quarter, with a total volume of 119 MW. "We continue to see high demand in several markets in Europe," commented Patxi Landa, Chief Sales Officer of Nordex Group.
The analysts at AlsterResearch initiated their coverage of Nordex Group with a target price of EUR 24.00 and a "buy" rating. Accordingly, the financial experts expect a loss per share of EUR 0.44 for the current fiscal year. The turnaround should then take place with earnings per share of EUR 0.18 in 2024. According to AlsterResearch, cost reductions and a strategic repositioning should lead to a significant improvement in margins.
Both defense contractor Rheinmetall and wind turbine manufacturer Nordex were able to fill their books with significant orders. The intrinsic value of Globex's portfolio, including its cash position, is likely to far exceed its stock market value.
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