Rheinmetall: Quo vadis Rheinmetall?

Research evidence excerpt

Rheinmetall: Quo vadis Rheinmetall?

sable for Rheinmetall. The draft will outline the commitment to main

UBS Cons.

conventional items such as ammunition, armoured vehicles (including Boxer) and Navy 12/26E 39.67 37.06

vessels but also to digital spending. The market has yet to respond to the NATO summit, 12/27E 54.73 54.55

but supportive rhetoric and greater pressure on Europe to increase investment are likely. 12/28E 71.58 75.87

We expect Q2 to be in line with guidance, which could calm some execution fears.

Sven Weier

Confidence needs more than just a conservative guidance approach Analyst

sven.weier@ubs.com

While the catalysts mentioned above are all important, there may be more fundamental +49-69-1369 8278

issues to solve. We think a conservative approach to FY and project guidance approach

Andre Kukhninwould be prudent. 1-year forward guidance should better reflect client delay risk, and

Analyst

we think a wider upside/downside range in medium-term guidance would make sense, andre.kukhnin@ubs.com

vs the current fixed value. We would expect the F-126 setback to lead to a +44-20-7567 2162

reconsideration of conventional M&A, and less long-term 155mm visibility should lead

Ed Hussey

to a re-evaluation of capex. Based on past company commentary, the market might be

concerned about the company's level of new tech alertness (link). We think it has a lot to edward.hussey@ubs.com

offer, not just in drones (link) but doubling down on capital allocation into such a unit +44-20-7568 3946

could address a perceived open flank.

Valuation: Rating and PT unchanged until there is more evidence on change

We cut our PT to €1,600 in May (link). We believe it would be premature to change our

stance and prefer to wait for greater clarity on the company's response to these

challenges.