BASF: Billion-euro restructuring and renewed upward momentum
The Ludwigshafen-based chemicals and agricultural group is in the midst of a transformation that has also swept across the entire sector. CEO Markus Kamieth is steering the group with an iron hand and is also achieving notable successes in the process. In the third quarter, revenue climbed 14% to EUR 16.4 billion, while EBITDA before special items rose 15% to EUR 1.6 billion. Thanks to this strong performance, management raised its full-year forecast for adjusted EBITDA to a range of EUR 7.4 to 7.8 billion.
Operations are running smoothly, particularly in the core segments, while the planned portfolio restructuring and international investments for the future, such as the new electronic materials site in Nanjing, China, are being pushed forward consistently. Although a planned takeover bid for Evonik at EUR 24 per share was initially rejected by the other side, it underlines management’s aggressive growth strategy of also gaining scale through acquisitions. With a generous dividend yield of just over 5% and a price-to-earnings (P/E) ratio of 24, the chemicals stock remains attractive for both private and institutional investors.
BASF impresses with its ability to push through price increases and its iron discipline, even though high restructuring costs dampen net profit in the short term. For long-term investors, the stock offers an attractive entry opportunity at the current level with a price target of EUR 60–65. For this to happen, the previous high of just over EUR 56.50 would have to be broken.
TKMS: Stormy seas for defence stocks
The world’s seas are turbulent, and leading submarine specialist thyssenkrupp Marine Systems is also feeling this in the current stock market environment. After profit warnings in the defence sector (most recently at Rheinmetall) and recurring speculation about possible peace talks in Ukraine or Iran recently pushed the share price down to around EUR 79.00, the bulls are fighting for the key technical support level. In the short term, the stock is therefore trading below its interim highs from October at around EUR 90, which is primarily attributable to a sector-wide correction rather than problems of its own making. As recently as August, the share price reached a new all-time high of EUR 108.80, but only briefly, before the wave of consolidation set in. Yet the naval shipbuilder’s core operations are, after all, booming thanks to bulging order books.
To expand their global presence, TKMS and CFF Fluid Control Limited recently launched a pioneering joint venture to establish TKMS CFF Defence Systems Private Limited for the local production of underwater defence systems in India. The Indian partner holds 51% of the joint venture, while TKMS holds a 49% stake, thereby securing lucrative access to the Asian market. While an upcoming US roadshow in New York City is intended to win over new institutional investors, analysts are eagerly awaiting the forthcoming annual report in early December. Fundamental demand for maritime security remains intact.
As the world market leader in conventional submarines, TKMS remains exceptionally well positioned, even if patience is likely to be required in the short term from a technical perspective. Pullbacks towards EUR 72 offer long-term strategists a highly attractive entry window.
RE Royalties: Technical Support in Place, with Upside Potential
Away from the major industrial players, a specialist in climate-friendly financing is demonstrating that an intelligent royalty model should also prove reliable in challenging market phases. Although RE Royalties shares recently came under pressure and fell below the key support level at CAD 0.30, they then held in exemplary fashion at the even more important CAD 0.28 level. This technical floor has held so far, and the stock is currently trading steadily at precisely this CAD 0.28 level. Buyers now need to push the share price back above the CAD 0.30 level to leave the downward trend firmly behind.
Operationally, the portfolio expansion is progressing as planned, as recently demonstrated by a USD 1.5 million investment in solar installations in the Philippines and the full repayment of a loan in the US.
With the current issue of a green bond of up to CAD 5 million (Series 5 Green Bond) carrying 7.5% interest, the company aims to “refuel” with fresh capital for new projects worldwide.
If a sustained breakout from the consolidation phase above CAD 0.30 succeeds, the first technical price target is CAD 0.35, before the technical regions between CAD 0.50 and CAD 0.60 come into focus over the medium term.
The business model, tried and tested over many years, generates stable, recurring revenue from what are now more than 100 projects worldwide.
RE Royalties operates on a fundamentally sound basis, continues to expand its projects and offers investors an exciting investment in a growing market of the future.
Conclusion
BASF, TKMS and RE Royalties cover three different but interesting segments. Diversification is the keyword here! Chemicals giant BASF scores points with its dividend and its current technical picture. Defence specialist TKMS benefits from global naval orders and is expanding into India. RE Royalties, as a small cleantech financier, could now find a technical bottom and turn upwards.
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