Varta, Aspermont, Rheinmetall - Full speed ahead for expansion

Varta - Back on track

The chart of the battery company Varta shows a sad picture. After highs of EUR 181.30 in January 2021, the title lost around 85% of its value and, following the latest news, is trading at EUR 24.90 with a daily minus of more than 7%. The potential for further setbacks is still present. The next support is EUR 21.72, the low from last year.

The reason for the further drop in the share price was the announcement of a capital increase and the planning of a far-reaching restructuring concept to stabilize the Company financially and operationally. As part of an expert opinion, a concept that includes targeted measures to increase profitability and improve the financing structure was drawn up. The Company plans to invest in important areas of innovation by selling new shares worth EUR 50 million.

The subscription of the new shares will be underwritten exclusively by VGG Beteiligungen SE, a wholly-owned subsidiary of Montana Tech Components. Varta plans to place approximately four million new shares at a selling price not significantly below the current stock exchange price of the Varta shares. The capital increase will be secured by a subscription guarantee of Montana Tech Components, which, however, depends on a final agreement with the financing banks.

Aspermont - Expansion picks up speed

The mediatech company Aspermont has already left restructuring far behind. In the past 26 quarters alone, the Company has seen rising subscriber numbers and an average annual growth rate of 20%. Since this year at the latest, it has taken significant steps towards exponential growth. In addition to adding staff, the market leader in B2B media for the global commodities industry continues to expand its business units. With the establishment of a content agency division, Aspermont aims to significantly increase its service offering to customers. Content Works has been developed through pilot tests supported by major customers such as IBM, Amazon, ThyssenKrupp, and SAP and through the recently announced partnership with the Kingdom of Saudi Arabia.

The division's mission is to develop products tailored to clients, such as audience identification, content creation and creative production, to deliver targeted marketing campaigns for clients with regional or global reach. Aspermont's goal is to strengthen recurring revenue, which is currently at a high 75%, through deeper client relationships. After Content Works contributed only 2% to total sales in the past fiscal year with a pilot project, a significant share of sales is already expected this year.

In addition to the establishment of the new division, the increase in margins and the quality of revenues and organic growth are at the top of CEO Alex Kent's agenda. However, this is not to be financed by raising new equity and debt capital but exclusively from the generated cash flow and the built-up cash reserves. In addition to further increasing the workforce, Aspermont is also looking to enter new markets. North America is the next target. In conjunction with this, a Nasdaq listing is likely to be targeted.

Rheinmetall - Profiting from the turn of the times

Since the beginning of the Russian invasion, the share price of the defence company Rheinmetall has developed magnificently. From around EUR 90 in mid-February of last year, Rheinmetall shares climbed by a staggering 180% to EUR 237. The Düsseldorf-based company's market capitalization exploded to EUR 10.37 billion. As a result, the Company has found itself in the leading index of the German stock exchange, the DAX, since the start of this week. The party to suffer was dialysis company FMC, which now finds itself in the MDAX.

It is well known that Rheinmetall benefits from the rearmament of NATO and its allies, which is already reflected in last year's figures. The outlook for 2023 also speaks in favor of a further expansion of the defence budgets of the individual states. Rheinmetall expects sales of between EUR 7.4 billion and EUR 7.6 billion in 2023, an increase of around 15% compared with the past fiscal year. The operating margin is expected to settle at 12%.

If Rheinmetall CEO Armin Papperger has his way, things could move much faster in terms of ammunition deliveries; the only thing that needs to be added are orders from European governments. "I need orders. Without orders, I do not produce anything," CEO Armin Papperger said in an interview with the Bloomberg news agency.

Despite the huge increase in recent months, analysts remain positive on the defense group. For example, the US investment bank JPMorgan raised its price target from EUR 265 to EUR 310 with an "overweight" rating. The reason for this is the continued high level of defense investments, with Rheinmetall being the primary beneficiary of the lavish ammunition deliveries to Ukraine.

Despite the strong share price increase, analysts remain positive on Rheinmetall. Varta continues to have downside risks, while the signs at Aspermont point to expansion.