It seems like my post about Europas F-35-Sicherheitsdilemma could not have come at a better time:

Dependence on US armaments is increasingly perceived as a risk factor for Europe's military and security sovereignty and is now being publicly addressed at the highest political level faster than I would have expected.

French President Emmanuel Macron

President of France Emmanuel Macron has made it clear in an interview with Le Parisien that he is critical of Europe's purchase and use of US armaments and proposed replacing them with European alternatives.

Macron was also quite clear: "Those who buy Patriot systems should be offered the next generation of the Franco-Italian SAMP/T. Those who buy F-35s should be offered the Rafale fighter aircraft."

His main concern is greater strategic autonomy for Europe:

• Criticism of US systems: Poland plans to buy American F-35 fighter jets ($LMT (+0,01 %)) and Patriot ($RYTT34). Macron questions these decisions and proposes European solutions.
• European optionsMacron specifically mentions approaches such as joint European development projects to reduce dependence on the USA. Examples include European fighter jets such as Saab Gripen ($SAAB B (+5,9 %)), Eurofighter ($AIR (-1,99 %) - $BA. (+3,9 %) - $MTX (-2,31 %) - $LDO (+3,14 %)) or Dassault
  Rafale ($AM (+2,11 %)) or air defense systems (e.g. SAMP/T from $HO (+2,69 %), $BA. (+3,9 %), $AIR (-1,99 %) and $LDO (+3,14 %) or Oerlikon Skynex from $RHM (+2,85 %)).
• Long-term strategyMacron's proposals aim to strengthen Europe's military independence by pooling technology, production capacities and resources in the EU member states' own economic area in the long term.

Macron is thus sending a clear signal for more European cooperation in the defense sector and against an excessive focus on US technology.

#emmanuelmacron
#usa
#defense
#verteidigung
#rüstungsindustrie
#europa
$R3NK (+3,56 %)
$IE0002Y8CX98 (+0,93 %)
$HAG (+0 %)

$IE0002Y8CX98 (+0,93 %) - WisdomTree Europe Defense UCITS ETF - EUR Acc

TOP 10

$RHM (+2,85 %)

$LDO (+3,14 %)

$SAAB B (+5,9 %)

$BA. (+3,9 %)

$HO (+2,69 %)

$RR. (+0,64 %)

$AIR (-1,99 %)

$SAF (-3,5 %)

$KOG (+2,71 %)

$MRO (-3,48 %)

https://api.fundinfo.com/document/b9034489473e1a780e6657260ca4fb58_248438/MR_DE_de_IE0002Y8CX98_RES_2025-03-07.pdf

"The index was developed by WisdomTree, Inc. ("WT"). The selection of European

companies in the index is based on their share of sales from the defense sector. The Index also seeks to exclude companies associated with weapons that are banned under international law, such as cluster munitions, anti-personnel mines, and biological and chemical weapons. The index also seeks to exclude companies that violate certain generally accepted international norms and standards, such as the principles of the United Nations Global Compact.

At least 20 stocks that meet the revenue share criteria as well as additional minimum requirements regarding market capitalization and liquidity are selected for inclusion. The selected companies in the index are weighted according to free float-adjusted market capitalization - adjusted by the exposure score - while complying with the upper limits and criteria defined in the index methodology.

The index is rebalanced every six months."

#wisdomtree
#europe
#defense
#etf
#defenseetf
#rheinmetall
#leonardo
#saab
#baesystems
#thales

I took part in the Thales conference call ($HO (+2,69 %) ) for the full year 2024 and would like to share the key points and insights with you.

CEO Patrice Caine started with the highlights of 2024 and emphasized the strong commercial momentum of the company in all areas. Thales signed six contracts worth over 500 million euros in 2024, resulting in a new record for order intake and order backlog. At 8.3%, organic sales growth exceeded expectations. The growth in the defense sector is particularly noteworthy. Adjusted EBIT increased by 13% compared to the previous year, and the cash flow was again excellent.

Thales is implementing its strategic roadmap to extend its global technology leadership in defense, aerospace and cyber & digital. In the space business, an adjustment plan was launched to adapt the cost structure to the new market conditions in the civil telecommunications market and to restore profitability.

Order intake increased organically by 6% to EUR 25.3 billion, which corresponds to a book-to-bill ratio of book-to-bill ratio of 1.23 corresponds to a book-to-bill ratio of 1.23. Sales increased by 8.3% to 20.6 billion euros. Adjusted EBIT increased by more than 13% and the EBIT margin improved to 11.8%. Adjusted net profit rose by 7% to 1.9 billion euros, despite higher financial expenses due to increased debt costs in connection with the acquisitions. Free operating cash flow from continuing operations increased by 9% and exceeded EUR 2 billion. The Executive Board proposes a dividend increase of 9% to 3.70 euros .

Pascal Bouchiat, CFO of Thales, explained that the order intake of more than 25 billion euros resulted in a book-to-bill ratio of 1.23. Excluding Cyber & Digital, the book-to-bill ratio even reached 1.28. 35 orders with a value of over 100 million euros were booked in 2024, including six with a value of over 500 million euros. The defense sector accounted for 27 major orders. There was also good momentum in the space sector, particularly in the fourth quarter.

The scope effect amounted to EUR 649 million, mainly due to the acquisitions of Cobham, Imperva and Tesserent. Organic sales growth amounted to 8.3%, with the Defense division recording significant double-digit growth. Avionics recorded mid single-digit growth, while Cyber & Digital achieved low single-digit organic growth.

Gross margin increased by EUR 329 million, mainly due to sales growth in Defense. R&D spending continued to increase and reached 6.2% of total sales. Indirect costs grew organically at half the rate of sales. The Aerospace division recorded a 14% increase in orders. Avionics benefited from strong momentum in the aircraft and aftermarket business, while the aerospace business reported a negative adjusted EBIT due to R&D expenses and restructuring costs. Order intake in the defense business reached a new high of 14.7 billion euros.

Patrice Caine named four strategic priorities for the near future:

• Increasing capacity: Increasing production capacity and securing the right talent.
• Restoring profitability in the space sector: Leveraging Thales Alenia Space's adaptation plan.
• Maintain innovation and R&D leadership: Differentiation through breakthrough products.
• Value creation from acquisitions: Strong operational performance of Imperva and Cobham AeroComms.

Thales targets organic growth of 5% to 6% and an adjusted EBIT margin of 12.2% to 12.4% in 2025.

Following the presentation, analysts had the opportunity to ask questions.

Chloe Lemarie from Jefferies asked about the drivers of the strong defense performance in the fourth quarter Pascal Bouchiat explained that the delivery of equipment that was already on the balance sheet and the resolution of supply chain bottlenecks in radar production had contributed to the strong growth. Patrice Caine added that the recovery in the space sector and the contribution from Cobham AeroComms should improve margins. A further margin increase is expected in the Cyber & Digital segment, while stable profitability is targeted in the Defense segment.

Christophe Menard from Deutsche Bank asked about the sensitivity of the sensitivity of the forecasts in view of increasing defense spending and the time-to-market of various defense products. Pascal Bouchiat emphasized that the forecasts are based on the information known at the time of the Capital Market Days and that a further increase in defence spending has not yet been taken into account. Patrice Caine explained that Thales is able to adapt quickly to demand, but needs additional contracts to further expand capacity.

Ben Heelan from Bank of America asked about the capital allocationpotential acquisitions in the defense sector, the status of talks with Leonardo and Airbus in the space sector and the situation in the supply chain. Patrice Caine emphasized that the priority remains on deleveraging the Group, but did not rule out acquisitions in the defence sector. Talks in the space sector are still at an early stage. Pascal Bouchiat conceded that the situation in the supply chain, particularly for printed circuit boards, has not yet been fully resolved and requires further efforts.

David Perry from JPMorgan asked for an assessment of the political situation in France regarding defense spending and asked about the organic growth of cyber in 2024. Patrice Caine compared the situation in the UK, Germany and France and emphasized that it is important to wait for the concrete measures and budget changes. Pascal Bouchiat explained that Cyber showed good growth, while Digital was impacted by the inventory reduction in the banking sector.

Herve Drouet from CIC Market Solutions asked about the the speed of implementation of capacity increases and the potential impact of an increase in defense spending to 3.5% of GDP. Patrice Caine emphasized that the capacity increases presented have already been achieved and that Thales is able to adapt to market developments but needs concrete contracts. Pascal Bouchiat added that a further increase in production capacity would require investments but should have a positive impact on cash flow.

Ross Law from Morgan Stanley asked about the drivers for the sales forecast of 5 % to 6 % and the absolute and the absolute EBIT level in Space in 2024. Pascal Bouchiat explained that the forecast is based on mid single-digit growth in Avionics and Cyber & Digital and flat to low single-digit growth in Space. The negative EBIT in the Space division amounted to minus EUR 65 million in 2024.

In summary, Thales had a successful year in 2024 and is optimistic about the future. The company's strategic priorities are clearly defined and its financial performance is solid. Increasing defense spending in Europe offers additional growth opportunities, but it is important to wait for concrete actions and contract wins.

The $IWDA (-3,86 %) is now back below its value at the beginning of the year, which is probably due to Trump's announcements on punitive tariffs.

As I have a low US weighting in my portfolio, the return is much better. For the time being, the assumption that the US economy will develop rather negatively in the coming years and that international investor confidence will also decline seems to be confirmed. Europe and Canada are now working together more closely than ever before and I believe it is likely that new trade agreements beyond CETA will be concluded. These could, for example, be agreements on the supply of raw materials or weapons, which would then benefit both partners without using the USA as a mediator (as is currently the case). Public concerns about the potential threat of war are growing, which is of course particularly good for insurance companies and the arms industry. The greater the fear in society, the greater the need to insure against this fear, for example through term life, building protection, household contents or legal expenses insurance. Primary insurers such as Allianz ( $ALV (-0,37 %) ) and reinsurers such as Hannover Re ( $HNR1 (+0,61 %) ) and Munich Re ($MUV2 (+0,75 %) ). I do not $MUV2 (+0,75 %) is not in my portfolio because I don't want to overdiversify and therefore only hold Hannover Re, which has a more stable historical performance.

If there is a fear of war, people also want to protect themselves physically, which is why they are more willing to spend a larger proportion of their economic output on defense.

All of this would benefit my portfolio. With Thales ( $HO (+2,69 %) ) I am up 75% since the beginning of the year. Safran ($SAF (-3,5 %) ) has also gained 25%. However, I am more convinced by Thales, as they offer cyber security products/solutions in addition to military machines. We still have a lot of demand in this area and new security concepts have to be developed all the time as the old ones can suddenly be circumvented at some point. The products are therefore never fully developed, which is why innovation is always possible, enabling higher prices due to higher quality.

So my conclusion is this: I am currently cautious about US equities. The insurance and defense sector will benefit regardless of whether war actually breaks out or not and I therefore expect returns above the market average.

Hello everyone,

I still have until 24.11. to draw 🤷🏻‍♂️

Price is 119,69€ plus 500€ discount. With 100 shares my price would be 114,69€. The Thales share is currently $HO (+2,69 %) at approx. 152€.

I've never filled out the KAP form before, which is actually the main reason that's stopping me (I've been doing my taxes with Taxfix for a few years now).

Do you fill in the KAP annex? Any experience?

Buy company shares?

Hello, I have the opportunity $HO (+2,69 %) to buy shares at the conditions mentioned below.

However, I am not sure, as I also see certain disadvantages:

• There is also a monetary advantage
• Shares are held at Society General in France (later transfer to own securities account in Germany is not possible)
• Tax issues (dividends and subsequent sale are not automatically taxed with capital gains tax)
• Shares are probably blocked for 5 years (was the case in the past)
• Thales $HO (+2,69 %) is a defense company and has therefore done well in recent years (who knows what it will look like in 5 years).

What would you do here?

Yesterday I posted about Thales and Rheinmetall. I found these companies interesting for reasons I mentioned in the post. This morning I got up early to do a DCF valuation.

In this case, I only did the calculations for Thales in this case. $HO (+2,69 %) For anyone who is interested, I will give you an insight into my calculations. First of all, I would like to mention that my calculations were made for the next five years.

The following figures are taken directly from the Thales 2023 financial report.

STEP 1: I used it to calculate the projected free cash flow.

• Free operating cash flow: 2.026 million.

• Expected organic sales growth for 2024: +4% to +6%. We use a conservative growth rate of 5% for our forecasts.

• I assume that a similar growth rate will apply for the next five years.

• For 2028, I have calculated a growth rate of 4% to take into account a possible slowdown in growth. I have done this to minimize the risk of overvaluing the company.

STEP 2Then I calculated the Terminal Value (TV) based on the Gordon Growth model.

STEP 3: For this I needed the WACC.

The following assumptions were made:

• Cost of Equity (Re): 8% (typical for moderate risk companies).
• Cost of Debt (Rd): 4% (taking into account current debt levels and interest rates).
• Equity ratio: 63.5% (equity/total capital).
• Debt ratio: 36.5% (debt/total capital).

I have calculated a WACC of 6.14 %.

STEP 4Discounting the cash flows and the terminal value to the present value (PV)

We know that the terminal value is 62,823.57 million.

The present value can be calculated by dividing the terminal value by (1 + WACC)^5 (five years into the future).

This results in a value of EUR 46,577.52 million.

STEP 5Total present value (TPV) and fair value per share.

By calculating the sum of the present values, we obtain the total present value (TPV): 55,484.52 million.

Now to the climax!

We can finally calculate a fair value per share by dividing the TPV by the number of shares outstanding.

There are about 215 million shares outstanding.

55.484,52 / 215 = 258,04.

This is the share price I calculated for Thales and should also be the fair value per share, using the conservative growth rates of 5% for the next five years.

With a current share price of just under € 147, I think this share is undervalued and have therefore placed a buy order with my broker. I note that a five-year period is also linked to the European elections (every five years) and the points I mentioned in my earlier post about increasing military budgets.

Thank you very much for reading!

Hello folks!

Since I would like to receive many reactions to this topic, I will write my first post in German on this platform.

Yesterday I responded to a post about defense shares reacted. The post was about reducing the percentage of defense stocks in the portfolio. I responded as follows:

"In my opinion, you have to look at the bigger picture. Regardless of who is elected to office, there are already two major conflicts right on Europe's doorstep. Firstly in Ukraine, but also in Israel and the Middle East. The balance of power is shifting worldwide. China and Russia are once again gaining in importance. Terrorism in our regions, but also in Africa, is on the rise again. As a result, state leaders around the world are rearming their organizations. Just look at Mark Rutte's inaugural speech at NATO, full of explicit references to the expansion of military budgets."

After my comment, I did some more research on defense stocks.

I came across a Dutch article titled: "The 2 best defense stocks that keep growing because of the wars" by the Dutch investor Rabi Safi.

He wrote about Europe's willingness to significantly expand its military budgets and why this will benefit these two companies in particular (Thales and Rheinmetall) in particular would benefit. $HO (+2,69 %) and $RHM (+2,85 %)

Other positive reasons for these European companies were that Europe wants to become more militarily independent of the USA and that companies such as Thales and Rheinmetall are reporting record orders.

The author also mentions Mario Draghithe former Prime Minister of Italy and ex-President of the ECB, who is calling on European leaders to drastically increase military budgets.

More on the alarming reality of escalating conflicts near us: Russia recently announced plans to recruit more than 180,000 new soldiers, bringing the activebringing the total active armed forces to around 1.5 million.

In my further research on Rheinmetall I learned that their military exports have increased by 30 %. EBIT is also at its highest level ever. The CEO of Rheinmetall, Armin Papperger, expects the company to grow by over 2 billion annually over the next few years.

Finally, I would like to provide more insight into what the impact might be if Kamala Harris were elected to office.

Should this happen, the analyst of this article expects more turbulence and uncertainty in the world and thus on the markets. Other leaders may see them as too inexperienced and act more aggressively. However, one thing is certain: Europe will have to increase its military spending, especially in this case.

What do you think about this issue? Are you considering investing in defense stocks? If so, which companies do you have in mind?

Thank you very much for reading!