Capital News
SAP figures cast shadows ahead
Positive comments from analysts give SAP share some fresh momentum. As one of the favourites in the DAX listing, the paper of Europe's largest software group became more expensive against the weak market trend.
Analyst Gerardus Vos of British investment bank Barclays daringly forecasts the papers to have potential. He raised the price target by 20 to 100 Euros. He sees potential improvement exceeding 30 percent. In his view, the new version of the core software S4 Hana has plenty of potential and feels sure of the continued strength of the cloud business and improved cost control.
The group is likely to benefit from the profit dynamism.
Knut Woller, an analyst at the Baader Bank, also commented favourably about S4 Hana in a study and deems that it will grow in reliability. Indeed, the tailwind provided by database software business, SAP could exceed market growth expectations. Woller raised his price target to 85 Euros and upwards and recommends buying the papers.
Companies: North-Rhine-Westfalia and Bavaria take the lead
Auditing and Consulting company EY (Ernst and Young) recently concluded a survey on the landscape of Germany’s top 100 stock exchange-listed companies, and made some quite surprising discoveries. The first is the location of companies in order of turnover. Indeed, 27 of the top 100 majors are registered in North-Rhine-Westphalia and 26 in Bavaria, thus accounting for more than half of the total. The Land that the public generally associates with mechanical engineering and automobile manufacture, namely Baden-Württemberg, only ranks third with 15 company headquarters. On the other hand, the 13% increase in turnover posted by the companies in the south west indicates a vigour seemingly less present in Bavaria (11%) or North-Rhine-Westfalia (5%). If adjustments are made in this sense, therefore, common perception of the dynamism in the south west is not so far from reality after all.
The study also confirms that companies with the highest turnover are still those of the “old” German manufacturing and engineering economy. 28 of the 100 companies are industrial/ manufacturing and/or engineering with 11 exclusively involved in the automobile sector and only 6 in information technology.
Furthermore, prosperity-fuelled growth seems to be the prerogative of the larger companies. Indeed, according to the survey, the cumulative turnover of the top 100 increased by 8.2 percent in the first three quarters of 2015 to almost 1.2 billion Euros. Four out of five (81 percent) of the companies posted an increase in turnover while fewer than 1 company in 5 had a downturn on the corresponding period of last year. The rankings are dominated by companies in car manufacture. Four of the ten companies with the strongest turnover are automobile companies with Volkswagen and Daimler occupying first and second slots.
The highest profits are made by car manufacturers, Daimler and BMW top the list of profit making companies, Daimler with 10.3 million Euros and BMW with 7.4 million. Similarly the margins earned by Audi, Volkswagen and Continental respectively 4 million, 3.3 million and 3.2 million place them among Germany’s top ten profit earners.
"German companies are currently well placed to benefit from the economic recovery in Europe and the strong demand from the United States," noted Thomas Harms, partner of E&Y.
2015: Highest number of IPOs in Germany since 2007
2015 was a record year for stock-exchange flotations with the highest number of new listings since 2007. The Frankfurt bourse listed 24 newcomers according to “Deutsche Börse” against 19 in 2014. Even more dynamic was the number of IPOs; seven billion Euros worth of shares were placed in 2015 compared to 4 billion’s worth in 2014. According to “Deutsche Börse”, the largest IPO of the year was Covestro, the plastics division of the Bayer Group worth some 1.5 billion Euros, followed by Deutsche Pfand brief bank for 1.16 billion Euros to carry on the core business of the nationalized offshoot Hypo Real Estate (HRE).
Scout 24 came in third with 1. 02 billion Euros.
One of next year’s more eagerly awaited offers is the IPOs for parts of the Eon and RWE generating companies
2015 shares: 53 percent plus - or minus 58 percent
It comes as no surprise that corporations who follow a business model that looks in any way breakaway feel repercussions in the value of their shares. Investors seem to be more willing to back a well-known brand company going through hard times on making a turnaround. Such was the case with Adidas, the sporting goods company that became the big DAX success story of 2015. With an increase of almost 58 percent, the share is referring Fresenius and Infineon clear to the courts. The shareholders of the health care group and the technology company, however, had an exhilarating last twelve months, seeing their shares rise in value by about 53 percent each.
Adidas shareholders believed in a turnaround. Bickering close to home lost them the race against major rival Nike and forced a retreat. Then by tackling local competition head on theyfailed in their attempt to conquer the US market, and then they were caught unprepared by the economic crisis and rouble decline in their third-largest market Russia. Investors stood firm, however, and analysts assess the Adidas share as by and large positive. According to Bloomberg the share was recommended for purchase 16 times in the past three months. 20 times experts advised to keep the paper, six times they advised to sell.
Most recently both Markus Riesselmann of Independent Research and Jörg Philipp Frey of MM Warburg were particularly optimistic with a price target of 110 Euros and 103 Euros respectively.
Reviews of Fresenius were similarly optimistic. 12 experts advised to buy, 13 to hold and only two to sell. Sven Kuerten of DZ Bank and Justin Smith of the Société Générale forecasts the share to rise to 76 Euros. The medical group stays "on course for growth and further improves its fundamental position", Kürten wrote in a study.
In the second Stock Exchange League unsurprisingly MDax achiever Ströer is top dog. The specialist in outdoor advertising gained a remarkable 130 percent and was uncatchable. With a gain of nearly 70 percent Rheinmetall managed won the number two slot in the index for mid-caps, followed by Gerresheimer with 63 percent.
But 2015 was also a year when investors made the biggest profits with smaller side values. In the SDAX, financial services provider Hypoport made it to the top with an astounding increase of more than 530 percent. In second place - also with a similarly sensational performance of nearly 220 percent - machine manufacturer König & Bauer. Third-ranking Patrizia Holding rang up an increase of almost 150 percent with real estate transactions.
Many disappointments
Shareholders of RWE and E.on can only dream about scenarios like this. Once more, they get the wooden spoon. Hard put by the effects of the energy transition, RWE and Eon are the biggest losers in 2015. RWEs stock market value fell by more than a half, while Eon dropped more than a third. With its search for a new business model, the erstwhile flagship company scored few points with investors.
Volkswagen shareholders were in for a nasty surprise in late summer. The name for manipulated exhaust emission data was “Diesel-Gate“. The affair is still very unclear and the consequences cannot be foreseen.
In MDAX, Leoni disappointed with a loss of 25%, followed closely by Hugo Boss. Elringer-Klinger forfeited 18%. In SDax, Gerry Weber and Biotest struggled. The fashion company lost more than 62%, the pharmaceutical company lost half its stock market value. Less bad but not good, was HHLA Hamburg Harbour And Logistic with a loss of “only” 17%.
Heidelberg shares and Heidelberg bonds
Heidelberg shares began a rebound at the beginning of the second quarter to a high of 2.41 Euros on 21 July. They fell in August due to a weakening in the Chinese economy but then rose again in September so in that one quarter, they had risen by some 15 percent to 2.29 Euros on 30 September. The shifts in Heidelberg convertible bonds in that quarter were analogous and they, too, closed higher than at the beginning of the quarter. Heidelberg corporate bonds traded continuously above 100 percent.
Shares 2016: Borussia Dortmund – back to a winning streak
Borussia Dortmund’s draw with FC Porto from Portugal in the second round of the UEFA Europa League was as welcome as it was hard-fought, heralding the only German-listed football club back to its former strength, not only athletically.
Revenue grew in the first quarter of the fiscal year 2015/16 (July to September) by 28.6 percent to 90.0 million Euros over the previous year while operating profit (EBITDA) at 13.9 million remained stable from the previous year. The remaining results were however negatively affected by write-downs on long-term intangible assets and thus were negative. EBIT dropped by 5.2 million Euros (previous year: plus 3.8 million Euros) and net profit to minus 5.6 million Euros (previous year: plus 2.4 million Euros).
The BVB share however made a significant recovery in the second half of 2015, after the SDAX paper fell after a weak performance last season on a multi-year low. This was attributed to the improved athletic prospects concurrent with the arrival of Thomas Tuchel as coach, the same prospects that convinced analysts at GSC Research, to raise the target price for the BVB share of 4.50 to 4.80 Euros and confirm its "Buy" rating.
Ströer posts a strong start in 2016
After an excellent financial year in 2015 Ströer also recorded a very strong start in 2016 - both in the digital segment and in outdoor advertising. The German business benefits from digitization as well as the increased awareness that Ströer is one of Germany's leading marketers .With double-digit growth rates for the first quarter in 2016 it recorded the best start since the IPO. Moreover, foreign outdoor advertising markets are developing more than they did at the outset of last year.
As a means of dealing with the dynamic growth of the new digital-content business stemming from last year’s acquisitions, Ströer as of now will implement the new "Digital Content, e-commerce & Subscription" business unit within the fast-growing "digital" business area.
"By entering the digital business, we have supplemented the primarily investment-driven infrastructure business in outdoor advertising optimally with more service-oriented, digital business models. For the purpose of a further portfolio optimization with sustainable and structurally growing business segments the next step is to diversify our advertising revenue streams dominated towards Subscription and e-commerce focus, "says Udo Müller, CEO of Ströer SE. "The portfolio expansion of our digital business sectors is a milestone in our digital multi-channel strategy and has already had a positive impact on the future development of Ströer. For the first quarter in 2016 we look forward to an excellent start in all business areas with double-digit organic growth rates for the entire group. We confirm our current guidance of 270-280 million euros EBITDA for 2016 - excluding latest acquisitions. At the same time, with an operational EBITDA of about 200 million Euros, we will conclude the financial year of 2015 even better than previously forecasted." The preliminary figures of 2015 will be communicated by Ströer on February 23, 2016.
Wild Bunch: Fresh cash on the way
Wild Bunch, formerly Senator Entertainment, is preparing a capital raising initiative, issuing shares at a price of 2.05 Euros: According to the Berlin-based company some 1.39 million share certificates are expected to be placed within a private transaction involving private investors, to raise 2.85 million Euros net. In a communiqué, Wild Bunch states “the revenue will be used to strengthen the company’s financial structure, reduce indebtedness and foster company growth”..
Rocket Internet: 383 million Euros for the next step forward
Together with a pool of institutional investors, Rocket Internet, the Berlin-based holding company is creating a fund called “Rocket Internet Capital Partners Fund”. Of the fund’s total worth of 386 million Euros, Rocket Internet is putting up 46 million The fund will be used is to invest in promising start-ups in the internet economy. CEO Oliver Samwer has announced that the losses the company has piled up from all its subsidiary companies have reached the limit and from now on, Rocket Internet expects positive results.