ThyssenKrupp, Almonty Industries, Rheinmetall - Good buying opportunities

ThyssenKrupp - Portfolio reorganization

Since June 1, Miguel Ángel López Borrego has been ThyssenKrupp's new CEO, and since then, a change of direction has been taking place. He wants to make the Group more profitable with the APEX Performance Program and also optimize the portfolio. Rumors of a spin-off of the steel division have been circulating for years, but there are increasing signs that it could be realized. In an interview, Chief Executive Officer of the Krupp Foundation, Ursula Gather, said that a decision regarding the steel business is expected soon. Handelsblatt reported on talks with Czech billionaire Daniel Kretinsky. The sale of 50% of the steel business is under consideration.

Kretinsky's EP Holding could give the Essen-based company access to low-cost electricity, as the holding company owns energy producers in eastern Germany. In addition to the steel business, the marine business is also a focus. This unit could be floated on the stock exchange, as Nucera was previously. But a sale is also under discussion. The German government is interested in acquiring a stake, as confirmed by Defense Minister Boris Pistorius. These deals could help the Group solve its financial problems. In addition, rising interest rates mean that provisions for pension obligations can be reversed.

The current market capitalization is EUR 4.15 billion, but the figure is significantly higher if the values of ThyssenKrupp's individual segments are added together. This is also the view of analysts at Baader Bank, who have issued a buy recommendation with a target price of EUR 16 per share. From a fundamental perspective, the stock is a buy at a current price of EUR 6.67. Due to the Company's energy consumption, high electricity costs, and significant CO2 emissions, the stock is not the top choice for shareholders. From a purely numerical point of view, ThyssenKrupp is undervalued, and ultimately the fundamentals usually prevail.

Almonty Industries - Presented at the IIF

Tungsten is not only essential for the automotive industry in electric vehicles but also for robotics, which is experiencing a resurgence due to sensors and artificial intelligence. Making robotic parts requires tungsten carbide cutting tools, and tungsten is also essential in robotic arms and other heavy-duty machinery because of its unique properties, such as a high melting point, density and conductivity. China dominates the supply chain for this critical raw material, but Almonty Industries could help reduce that dependence with its Sangdong Mine in South Korea. The mine is said to have a lifespan of over 90 years and, at full capacity, could supply up to 15% of the global tungsten demand.

The property benefits from a high tungsten grade of 0.44 to 0.49%, 2.5 times higher than the average of other projects. In addition, it has an offtake agreement with the Plansee Group, which will take 50% of the production at a minimum of USD 235/t, or in line with the market price, which is currently around USD 315. The project also has room for expansion as it contains an additional molybdenum deposit, and the construction of a nano tungsten oxide plant would create additional sales markets. Tungsten oxide is used both in the production of tungsten hexafluoride, which is needed for the production of semiconductors and as a material for the production of anodes and cathodes for the battery industry. It is worth noting that South Korea is one of the largest producers of electric vehicle batteries.

Almonty is a specialist in tungsten mining and already has a mine in production, the Panasqueira mine in Portugal. The Los Santos mine is also expected to come back on stream this year. Interested investors can find out more about the current status of mine development at the upcoming International Investment Forum on October 10 at 4 pm. CEO Lewis Black will present the Company, report on progress and answer questions live from shareholders. On October 7, the Company announced that it will raise CAD 500,000, USD 733,333 and AUD 550,000 in fresh capital through the issuance of approximately 3.3 million new shares. What is noteworthy about this placement is that the CEO will invest CAD 500,000, and Daniel D'Amato, a director of the Company, will invest USD 366,666.63. This demonstrates confidence in the future of Almonty Industries. On Friday, the stock exited trading at CAD 0.465.

Rheinmetall - Business is booming

From October 9 to 11, Rheinmetall will be presenting its products at the AUSA trade fair in Washington, DC. Prototypes will be displayed there, and it is safe to assume that new orders will be placed at the end of the day, even if it still takes time to get from prototype to delivery. The best example is the Panther tank, which was presented in 2022 and is now to be used by the Hungarian army. Handelsblatt reported that the tanks will also be built in Hungary. Since many countries have supported Ukraine with tanks, there is a need for replenishment in these countries.

Operationally, things are going very well. Since September 26, the Group has announced 3 new orders. The first was an order in the automotive lightweight sector, valued in the three-digit million range. The German armed forces ordered 13 LUNA NG airborne reconnaissance systems for over EUR 200 million. Reconnaissance systems in the double-digit million range were also ordered from Ukraine. Recently, 155mm artillery ammunition was ordered from a framework agreement intended for use by Ukrainian and German armed forces. Here, a low three-digit million sum is flowing into the Company's coffers.

Demand for armaments will not abate any time soon, as the new conflict surrounding Israel shows. There are more and more trouble spots, and defense spending is being ramped up accordingly. The Group should achieve its annual targets, and ideally, even a new order record should be possible. Now, after the share has fallen almost 20% from its peak since the beginning of April, there is a buying opportunity. Berenberg also sees the price target at EUR 300 and recommends buying. The share is currently trading at EUR 233.80.

Each of the three companies has good future prospects. ThyssenKrupp is fundamentally viewed too cheap and has some upside potential. Almonty Industries produces tungsten, a raw material that is urgently needed for high-tech developments, as well as for steel alloys, the defense industry and the battery industry. The share will be revalued as soon as the Sangdong mine goes into operation. Rheinmetall receives order after order and benefits from the geopolitical tensions and its expertise in aluminum**, which is important for the automotive industry.