Almonty Industries: Share Buyback Program Well-Received by Investors
NATO members have committed to spending 5% of their economic output annually on defense and security-related activities by 2035. In addition, through the SAFE initiative, the European Union is providing up to EUR 150 billion in loans for joint procurement projects. This is driving growth not only in demand for tanks, ammunition, and air defense systems, but also for propulsion systems, sensors, and drones. Not to mention the key strategic raw materials required for these applications.
Tungsten still leads a rather obscure existence among critical raw materials. Yet this metal has the highest melting point of any metal and is extremely hard and heat-resistant. It is primarily used as tungsten carbide in cutting tools and wear-resistant components, but is also essential for semiconductors, electronics, turbines, aerospace, and various defense applications. Without tungsten, therefore, not only military but also numerous industrial high-tech supply chains would come under pressure.
The tungsten market has undergone significant structural and lasting changes since 2025, and the concentration of supply has intensified further. China accounted for nearly 80% of global mine production, then reduced output and tightened export controls. Reflecting rising demand amid limited supply, the price surged to more than USD 3,000 per MTU.
Starting this year, Almonty, together with Sangdong, is providing a counterbalance. The South Korean tungsten mine has commenced its first phase of production. A second phase, already approved, is expected to nearly double processing capacity to 1.2 million metric tons of ore and annual output to approximately 4,600 metric tons of tungsten oxide (WO₃) by 2027. Once fully expanded, Sangdong could meet approximately 40% of tungsten demand outside of China, according to the company’s estimates.
A significant long-term offtake agreement is in place with Global Tungsten & Powders, a subsidiary of the Austrian Plansee Group and a major supplier to the US industrial and defense supply chains. Most recently, the agreement for the first Sangdong expansion phase was extended from 15 to 21 years.
The significantly oversubscribed convertible senior notes offering most recently raised a gross total of USD 800 million. The unsecured notes mature in 2031, bear interest at 2.25%, and are initially convertible at approximately USD 27.40 per share. This will enable the company to simultaneously advance Phase II of Sangdong, an expansion of the Panasqueira producing mine in Portugal, and the production ramp-up of the Gentung Tungsten project in Montana, which was acquired last year.
The recently approved share buyback program for up to 14.4 million shares, representing approximately 5% of the outstanding share capital, with a maximum volume of USD 300 million, was well received by investors. Currently, the share is trading at around USD 19, valuing the company at approximately USD 7.3 billion. In their latest report, analysts at GBC set a price target of USD 30!
Renk: Acquisitions Will Accelerate Growth
Renk supplies highly specialized gearboxes, drive systems, motors, plain bearings, and test systems for military tracked vehicles, ships, and industrial applications. Over the decades, the German company has established a leading position and is, in many cases, the sole supplier for platforms. This results in high barriers to entry and an attractive spare parts and service business.
In the first six months of the current fiscal year, order intake rose by 29.7% to EUR 1.2 billion, while the order backlog reached a record high of EUR 7.4 billion. Revenue growth was moderate, rising 2.7% to EUR 637.2 million. This results in a book-to-bill ratio of 1.9, indicating that order intake was nearly twice realized revenue.
Adjusted EBIT rose by 10.1% to EUR 98.2 million during the reporting period, accompanied by an expanded margin. For the full year, the Group confirmed its guidance, with revenue exceeding EUR 1.5 billion and adjusted EBIT of EUR 255 to 285 million.
The latest multifaceted news flow broadens the outlook. Renk and Rheinmetall have increased the framework agreement for propulsion systems for the KF41 Lynx infantry fighting vehicle to a volume of more than EUR 270 million, including options. Of strategic importance is the planned acquisition of the British company David Brown Defence, which is expected to close in Q4. This gives Renk access to the Five Eyes program, low-noise submarine transmissions, and a larger pipeline. The Five Eyes program refers to the close intelligence and security alliance consisting of the US, the UK, Canada, Australia, and New Zealand.
At a current price of EUR 47, the stock has roughly halved from its high. The EUR 4.6 billion market capitalization is roughly three times this year’s expected revenue. The P/E ratio for the upcoming 2027 fiscal year stands at 24, a moderate level. At EUR 65, the average analyst price target signals significant upside potential for the stock.
Rheinmetall: A Heavyweight with Some Flaws?
The heavyweight of the European rearmament cycle increased revenue by 39% to EUR 5.23 billion in the first half of the year. Operating profit rose disproportionately by 74% to EUR 786 million, and the order backlog grew to EUR 80.5 billion.
This momentum was broadly based. Vehicle Systems increased revenue by 28%, Weapon and Ammunition by 33%, and Air Defense by 62%. In addition, the group is expanding into other areas, particularly through acquisitions and partnerships. The outlook for the drone, digitalization, and satellite-based reconnaissance sectors is positive; only naval shipbuilding is disappointing, as it lost out to TKMS in a tender worth billions.
As a result, the defense contractor had to lower its guidance for the current year. Since then, market participants have reacted sensitively to speculation about delays in orders and their fulfillment. Since its high of around EUR 2,000, the stock has corrected significantly, falling 28% since the start of the year alone. Most experts view the current price level of EUR 1,120 as promising and expect the stock to have upside potential of 50% over the next 12 months.
Renk stands out as a specialized supplier with strong barriers to entry, a significant service component, and additional potential from internationalizing its naval business. Rheinmetall is broadly positioned as a systems provider and (still) exhibits the highest operational momentum. The order book is massive, though the execution risk should not be underestimated. Analysts are issuing “Buy” recommendations for both defense stocks. Almonty Industries is a play on tungsten prices, supply security, a successful Sangdong ramp-up, and a compelling capital allocation strategy. The recently approved share buyback program has been well received by the market. Analysts are equally bullish and attribute upside potential of over 50% to the stock.
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