04. January 2021 | 08:50 CET
Alphabet, AdTiger, Allgeier - Buy AAA in 2021!
According to statistics, today's people use the Internet 17 times every day. Whether with their smartphone, at the supermarket checkout or on their PC. The most frequent use is search processes, social media, work access or shopping transactions. The number of Internet users worldwide has risen continuously and amounted to around 4.1 billion in 2020, which means that online users have increased by approximately 125% percent within ten years. According to one estimate, Asia will have been the region with the most Internet users in mid-2020, with 2.5 billion users. EMEA followed by a wide margin with around 730 million online users. However, North America represents the region with the highest proportion of Internet users. The estimated penetration rate was about 90%, Europe was at 78%, and Asia at around 59%, was still below the global average.
time to read: 4 minutes by André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Alphabet - The benchmark on the Internet
Alphabet Inc. is a listed US holding Company of the former Google LLC, based in Mountain View in Silicon Valley. The Company employs around 127,000 people worldwide and is led by Sundar Pichai as CEO. With revenues of more than USD 165 billion and profits of USD 39 billion, Alphabet Inc. is ranked the 14th largest Company in the world, according to Forbes Global 2000. The Company came to a market capitalization of USD 1.19 trillion at the end of 2020. The Alphabet Inc. umbrella Company's creation came as part of Google's restructuring, which was first announced on Aug. 10, 2015.
If the CSU has its way, Internet corporations like Google will be forced to pay taxes. "We want to tax the Internet giants," it says in a document on digital policy. The "Frankfurter Allgemeine Zeitung" reported on this at the turn of the year. The paper will be decided at the closed meeting of the CSU parliamentary group in the Bundestag on January 6 and 7 in Berlin. If Google and Facebook earn money with personalized advertising and data from Germany, then they "would also have to give something of this profit back to our community," the document says. "The time is therefore ripe for the Google and Amazon tax."
Whether Google, as a global player and benchmark on the Internet, will even take the threats from Berlin seriously is another matter. For decades, international corporate tax law has allowed companies to relocate their profits to a low-tax country. It would be nice if, out of an annual net profit of USD 39.6 billion, at least the share generated in Europe would also lead to a certain minimum tax here. After all, Europe is likely to be one of the top international markets for Alphabet in revenue generation. Let's see what becomes of the CSU initiative. In any case, the Alphabet share is at an all-time high and should continue to rise in 2021.
AdTiger - Making the most of the Internet!
The optimal use of the Internet means the maximum exploitation of information for one's own purpose, mostly for advertising or reach generation. AdTiger is such an online specialist. The Company places advertisements on well-known websites, such as Facebook, Google, Twitter, Snapchat or even TikTok. In doing so, AdTiger uses its technology to achieve high hit accuracy concerning the target group. The activities are managed from Beijing, where it is already a relevant player and partner of Facebook and other platforms with global relevance.
AdTiger can draw on a bulging cash reserve of almost EUR 23 million at the end of the year for its extensive expansion plans in 2021. With this, smaller and highly specialized agencies with special market access can be connected. For the owners of smaller competitors, the international stock market presence with listings in Europe offers a lot of charm to push business activities outside China.
AdTiger is currently valued at about EUR 65 million, and we expect a gross profit of about EUR 7 million in the second half of the year. Therefore, the 2020 full-year results should be exciting, as 70% of all shopping activity shifted to the Internet in light of the Covid-19 pandemic. The stock is attracting a lot of attention on its home market in Hong Kong, and trading is also picking up in Frankfurt. AdTiger is one of our top picks in the online advertising sector for 2021.
Allgeier - Further up after the spin-off!
Allgeier SE divested from its investment Nagarro via spin-off in December 2020. Each Allgeier SE shareholder received Nagarro shares at a ratio of 1:1, meaning that Allgeier successfully spun off the international software development and digitalization business bundled in the Nagarro Group. With Nagarro and Allgeier, there are now two listed Companies, which in total are even more highly valued than the previous Allgeier. Reason enough for Supervisory Board Chairman Detlef Dinsel to substantially increase his position in Allgeier before Christmas 2020.
Both Companies in themselves have exciting prospects. Allgeier guides its customers through the challenges of digital transformation with a complete range of IT services. These include customized software and technology services, complete IT solutions, the SAP integration business and flexible IT solutions for human resource service providers. The spin-off was announced some time ago and enables each division to continue independent, dynamic development according to its specialization.
After the spin-off, Nagarro will be comparable to its peer groups such as Epam Systems or Globant. With the separate listing, the undervaluation should become clear and level out over time. To this end, Nagarro aims to return to dynamic growth from next year onwards, achieving an EBITDA margin in the region of around 15 percent. For Allgeier, the new forecast is EUR 360-400 million in sales with EBITDA of EUR 31-35 million. That is a margin of a good 8%. One should put the Allgeier and Nagarro shares on the watchlist. For Allgeier, only about half the revenue is paid on the stock market.