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May 3rd, 2022 | 13:18 CEST

Adler Group, Amazon, Almonty - Free fall and strong growth

  • Tungsten
  • RealEstate
  • Defense
Photo credits: pixabay.com

Investing in real estate is becoming increasingly volatile, whether as a landlord due to higher energy prices or as an investor in the Adler Group. In the latter case, auditor KPMG did not put an audit certificate on the 2021 annual financial statements because it remains unclear how the loss of around EUR 1 billion came about. The share slid into the basement, and four board members resigned. A look across the pond at Amazon, and Amazon Web Services, in particular, shows what can help a balanced portfolio mix. Boeing, the Seattle-based company, has gained a significant customer in the aviation industry. In this industry, the rare earth metal tungsten is in great demand. Thanks to its high density, it protects against radiation and is used for this purpose in the sheathing of aircraft. We take a look at what investors should watch out for now.

time to read: 4 minutes | Author: Juliane Zielonka
ISIN: ADLER GROUP S.A. NPV | LU1250154413 , AMAZON.COM INC. DL-_01 | US0231351067 , ALMONTY INDUSTRIES INC. | CA0203981034

Table of contents:


    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview

     

    Adler Group - Four board members resign

    Real estate is considered a solid investment. For the shareholders of the Adler Group (WKN: A14U78), an investment in its concrete gold is anything but safe. The Adler Group is a merger of the real estate groups Ado Properties, Adler Real Estate and Consus. With around 70,000 apartments, mainly in Berlin, and properties worth around EUR 13 billion, the Adler Group is one of the largest landlords in the country. However, the auditor, KPMG, refused to give the listed company an audit certificate for its annual financial statements. An audit certificate proves that both accounting and the annual financial statements comply with the applicable legal requirements. **About EUR 1 billion is missing from Consus' coffers.

    The 2021 annual financial statements show a loss of EUR -1,023 million in profit before tax (2020: plus EUR 383 million). The reason is the impact of an impairment of goodwill in connection with the acquisition of Consus Real Estate AG in the amount of EUR 1,083 million. According to the Financial Times, KPMG pointed out that it was not in a position to assess "whether the accounting treatment of at least some of these transactions is appropriate and consistent with their substance." They also cautioned that it could not evaluate "whether management's judgment regarding the valuation of certain account balances is reasonable." A week earlier, KPMG had already come across compliance and governance deficiencies at the German real estate group.

    Like a landslide, the Adler Group share price plummeted. The entire board of directors from 2021 collectively offered their resignations - four resignations were accepted. Anyone who fancies a new job in an exciting working atmosphere: A new CFO is being sought externally with immediate effect.

    Shopped out at Amazon - Q1 disappoints investors

    The markets on the stock exchange are experiencing high volatility. After announcing the earnings for Q1 2021, Amazon shares fell by 14%. That is the steepest one-day drop for the stock since July 2006, and revenue growth was the worst since the dot-com bubble in 2001.

    "We are seeing major impacts from inflation in ocean supply chains, fuel, shipping materials and salaries," said Dave Fildes, Director of Investor Relations, during the quarterly earnings conference call.

    Only Amazon Web Services AWS recorded an increase in operating profit of 56% compared to the same period last year. AWS also reported a YOY revenue increase of about 37% to more than USD 18 billion. That brings the annual revenue run rate to just under USD 74 billion.

    That increased costs and disruptions in the logistics chain are dampening retail is understandable. AWS is becoming all the more important as a growth driver for the Group. There is always room for improvement in the cloud - for example, AWS has two new contractual partners in its customer portfolio. Telefónica and Boeing. With Telefónica, AWS is entering into a new global agreement in which Telefónica Tech will become an AWS Premier Consulting Partner. In addition, Telefónica Tech and AWS will train and certify hundreds of professionals in using AWS services to provide support to Telefónica's business customers. With Boeing as a global aerospace company, AWS will become the strategic cloud provider to strengthen its digital foundations for aviation design and manufacturing. In addition, Amazon Air is using Boeing aircraft to speed up package delivery for customers. It sounds like two successful joint ventures, with further growth in the pipeline for both sides.

    Almonty - Rare earths continue to grow strongly

    Tungsten is a metal from the rare earth series. Thanks to its high density, it is used in the aircraft industry to shield against radiation. In medical technology, it is used in MRI equipment, which helps us as patients to provide doctors with the correct image for diagnosis. And tungsten is also heavily used in the defense industry, for example, in munitions production. Experts predict that tungsten will be in increasing demand. The expected price increase of this raw material makes investors' hearts beat faster. Just by the distortions caused by the pandemic, some smaller companies got into financial difficulties.

    With an investment in Almonty (WKN: A1JSSD), investors benefit from their excellent industry experience and support the small companies to get back on their feet. Almonty specializes in acquiring distressed and underperforming businesses and assets in tungsten markets. These then gain from the Company's in-house operational experience and unmatched expertise in the tungsten market. To date, the Canadian company's acquisitions have resulted in rapid and highly profitable sales. Almonty is actively pursuing additional growth opportunities through acquisitions where it can leverage its tungsten expertise to create additional value for all stakeholders. Looking at the expansion of Amazon Web Services in the aerospace business and telecommunications, it is clear how high growth Tungsten will be in the coming years. Tungsten is also being built into smartphones.


    There is high volatility in the markets and a big disappointment for investors in the Adler Group share. Real estate is not always a solid business, and the Adler Group has now had four board members resign. Amazon is still slightly overvalued as a stock, and analysts advise holding rather than buying based on Q1 results. With new contractors in the Amazon Web Services business, particularly in aviation, Tungsten is again on the radar. Here, experts expect a price increase due to rising demand. With Almonty, the portfolio can be supplemented in this respect, and small companies that have run into difficulties in the tungsten business can benefit from the deep industry expertise of the Canadians.


    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

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author



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