Winners in the tariff quake: Renk, Nel ASA, Almonty – China attacks US defense industry

Almonty Industries: Massive upside potential, no tariffs, and soon on NASDAQ

"Tariffs are essentially an act of war," investor legend Warren Buffett said a few days ago. If that is the case, China is now declaring war on the Western defense industry. On Friday, China tightened export restrictions on rare earths. Tungsten is not yet included, but it shows the direction China is taking. Almonty should benefit from this, as it is set to become the largest Western tungsten producer with its new mine in South Korea this year. The significance of tungsten is also being realized in the White House, as the essential raw material for defense and aerospace is exempt from US tariffs. This was also confirmed by Almonty yesterday.

Lewis Black, President and CEO of Almonty, commented: "The explicit exclusion of our products from the new tariff measures highlights the strategic importance of tungsten in supporting the national security, industrial independence, and resilient supply chains of American industry. As we advance our fully integrated mine-to-processing operations, Almonty is on track to become one of the most important vertically integrated tungsten producers in the Western world, positioned to supply a significant portion of non-China sourced tungsten." Similar optimism about Almonty's prospects is also shared by Deutsche Rohstoff AG, one of its first shareholders. Recently, Dr. Thomas Gutschlag, founder and chairman of the supervisory board of Deutsche Rohstoff AG, expressed his views in an interview with Stockhouse Media. (Link to the interview)

Incidentally, Lewis Black has now also announced the examination of a NASDAQ listing after the successful relocation of the Company's headquarters to the US. This should attract more attention to the stock and increase its volume.

This brings Sphene Capital's price target back into focus. The analysts recently confirmed their "Buy" recommendation for Almonty and raised their price target for the stock, which is also actively traded in Germany, to CAD 5.20. Currently, the stock is trading below CAD 2. The reason for the analysts' optimism: with the ramp-up of the Sangdong mine, earnings per share are expected to reach CAD 0.19 as early as next year – and continue to rise. As a result, Almonty is currently trading at only a single-digit P/E ratio. Given the global importance of tungsten, this seems far too low.

RENK: Rock solid?

Even the shareholders of defense stocks, who have been spoiled by success this year, seem to be losing their nerve at the moment. At the start of trading yesterday, for example, Rheinmetall lost around 20% of its value. In the case of RENK, it was only "10%", but even this is a painful drop. However, both stocks are still well in the black since January 1, 2025. RENK shareholders are still sitting on profits of more than 100%.

The outlook published with the 2024 figures was positive: RENK expects 2025 revenue to exceed EUR 1.3 billion and adjusted EBIT to reach EUR 210-235 million. In addition, the medium-term targets of EUR 2 billion in revenue in 2028 and an adjusted EBIT of EUR 300 million were confirmed. RENK CFO Anja Mänz-Siebje comments: "In the past fiscal year, we met our targets at the upper end of the guidance and are well on track to achieve our medium-term financial targets."

Jefferies analysts see the fair value of RENK shares at EUR 44 and recommend buying them. Although the defense spending of the new German government and NATO in the coming years has not yet been specified, RENK should be able to increase its revenues and earnings significantly.

Nel ASA: Study calls for more investment in electrolysis capacities

Hydrogen is considered a key technology for the European energy transition towards climate neutrality. However, there is a risk that the targets will be missed. This is the conclusion of a study by the universities of Bonn and Cologne. Hydrogen is supposed to store surplus electricity from renewable energy sources and provide an alternative for sectors that are difficult to electrify, such as industry. However, investments on both the supply and demand sides are insufficient. In addition, political uncertainties are slowing down progress.

The EU has set itself the goal of creating 40 gigawatts of electrolysis capacity by 2030, producing 10 million tons of green hydrogen in the EU and importing a further 10 million tons. Many member states have launched national strategies and funding programs, but implementation is faltering.

Energy expert and project manager Dr. Frank Umbach commented: "The development of a hydrogen economy with large electrolysis production capacities requires a further increase in the mining, refining, and processing of strategic minerals. However, their supply chains are, in many cases, dominated and controlled by China. Furthermore, the EU is currently becoming increasingly dependent on imports of electrolysis technologies and production capacities from the People's Republic – if no action is taken."

This should actually benefit a company like Nel ASA. However, the price jump triggered by Samsung's entry has since been completely sold off. Yesterday, the share of the former hydrogen darling slipped below the EUR 0.20 mark.

A purchase of the Nel share is not currently advisable. In contrast, there are good reasons to consider the Almonty share. Here, too, the price has fallen back in recent days. The tariff shock makes the tungsten produced by Almonty in Portugal and in the future in South Korea even more valuable. The defense stocks are highly volatile. For Rheinmetall, Renk, and Hensoldt, US business plays a subordinate role. However, supply chains in production could be affected here, too.