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March 10th, 2022 | 11:28 CET

Adidas, mm2 Asia, Deutsche Post - Easing after the debacle

  • entertainment
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Russia's invasion of Ukraine caused panic on the stock exchanges, and the leading German index, the DAX, plummeted by around 3,000 points over the past 2 weeks to its all-time low. At the moment, a countermovement is underway. Various papers are already tempting investors to enter the market. Backed by strong annual figures, some stocks may have already seen their lows.

time to read: 4 minutes | Author: Carsten Mainitz
ISIN: ADIDAS AG NA O.N. | DE000A1EWWW0 , mm2 Asia LTD | SG1DC0000006 , DEUTSCHE POST AG NA O.N. | DE0005552004

Table of contents:

    Adidas - Optimistic outlook despite pullback

    The sporting goods manufacturer Adidas posted a significant share price increase on the back of strong annual figures and an optimistic outlook for the current fiscal year. After the slide of the last few days, in which the share fell from EUR 248.34 to a low of EUR 170.08, the technical chart situation was also clearly oversold. With the break of the short-term downtrend, the share has the potential to counteract at least up to a level around EUR 240.

    In 2021, Adidas showed sales growth of 16% to EUR 21.2 billion. Despite a weaker fourth quarter, operating profit more than doubled from EUR 746 million previously to EUR 1.986 billion. Earnings per share were EUR 7.47. CEO Kasper Rorsted expressed optimism: "Overall, 2021 was a successful year in our new strategy cycle. In 2022, we will build on this momentum." The DAX-listed Group also plans to increase its dividend by 10% to EUR 3.30.

    In 2022, sales are expected to grow by 11% to 13% in constant currency, already taking into account a possible charge of up to EUR 250 million from business in Russia in connection with the war in Ukraine. After-tax profit from continuing operations is expected to be in the range of EUR 1.8 billion to EUR 1.9 billion. Baader Bank left its rating on Adidas at "Add" with a target of EUR 265 after the figures. Both the sporting goods manufacturer's 2021 balance sheet and the forecast for the new year are as expected, analyst Volker Bosse wrote.

    mm2 Asia - After opening before revaluation

    Since the invasion of Russia, the still-existing Corona pandemic has almost completely disappeared from society's consciousness. Despite the still high number of cases, there is more and more relaxation and a return to a normal social life. Cinemas are reopening, and outdoor concerts and large-scale events are once again permitted. The culture and festival industry is breathing a sigh of relief, having been very hard hit in the last two years. The situation in the city-state of Singapore is similar to that in Germany. Although the number of infections due to the Omicron variant is still at a level of around 14,000, the curve is clearly pointing downwards.

    Before the pandemic, mm2 Asia's business was doing brilliantly, with sales of the equivalent of EUR 174.66 million and a gross profit of EUR 81.49 million. But then came the closures and lockdowns, causing both the metrics and mm2 Asia's stock to plummet, which has lost about 75% of its value since the Corona outbreak. Currently, the share price has been forming a bottom at EUR 0.06 for more than 6 months. Despite the loss of its operating business, trading in Singapore and Frankfurt, the Company emerges strategically stronger from the crisis.

    Its core business is post-production and content creation, distribution and sponsorship. The acquisition of a majority stake in the award-winning virtual reality, visual effects and computer-generated imagery studio, Vividthree Holdings and an event production and concert promotion company, UnUsUaL Limited, gives it a clear competitive advantage over its peer group in this area. With the establishment of mmCineplexes and the acquisition of Cathay Cineplexes Pte. Ltd., mm2 Asia is also one of the most important cinema operators in Malaysia and Singapore. The event production and concert promotion segment should also receive a big boost. The market capitalization is the equivalent of just under EUR 93 million.

    Deutsche Post - Significant dividend increase

    A similar chart picture to Adidas can be seen at Deutsche Post. After a sell-off from EUR 55 to EUR 38.50 at the low, the share price was able to gain almost 9% to EUR 43.60 and has further potential, at least in the short term, to reach the next resistance at EUR 47.80.

    Here, too, in addition to general market relaxation, positive annual figures were the decisive factor for disproportionate price gains. After the figures, Bernstein Research reiterated its "Outperform" rating with an unchanged price target of EUR 65. Analyst Alexander Irving praised the record volume of the announced share buyback. In addition, the end of the profit growth has apparently not yet been reached. In the past year, all of the Group's business units performed as expected by the market. According to Irving, the forecast for operating profit in 2022, which was also in line with expectations, could still be exceeded.

    The parcel boom in the Corona Crisis and rising global trade had carried Deutsche Post to record results in 2021. "Never before has Deutsche Post DHL Group transported so much freight, express shipments and parcels worldwide", CEO Frank Appel said.

    For 2022, however, the CEO put the brakes on euphoria and, after a jump in profits, expects only a stagnating operating profit of EUR 8 billion with a possible upward or downward deviation of 5%. The economic consequences of the Russian invasion of Ukraine were not yet included in the forecast. In the medium term, the Group aims to increase its profit further. EBIT is expected to grow to around EUR 8.5 billion by 2024.

    After the heavy share price losses due to the war in Europe, the markets are setting out on a recovery rally. Both Adidas and Deutsche Post have further potential. mm2 Asia is on the verge of reviving its business operations and should significantly increase its sales and earnings.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Carsten Mainitz

    The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.

    About the author

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