December 3rd, 2021 | 12:22 CET
BYD, Kleos Space, Airbus, Boeing - This could go wrong again!
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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.
BYD - Suddenly, nothing goes up!
BYD "Build Your Dreams" from China is known as an upward guarantor on the stock exchange. The industrial conglomerate mainly specializes in battery and energy technology and electrically powered cars and buses. Investors of the Company are spoiled with solid price increases; in 2021, it was a whole 83% plus. Management now went to the capital market, issued new shares, and did so twice in November.
In the first step, 50 million new shares were placed on HSX. Through the new H shares issuance, the Company raised HKD 13.74 billion, the equivalent of EUR 1.76 billion. The shares were placed on the market for HKD 276, or around EUR 35.4. BYD intends to use the money from the capital increase to increase its working capital and repay interest-bearing debt. A few days later, BYD announced another capital increase, but it concerned its in-house automotive division this time. BYD plans to increase the automotive division's capital by USD 1.7 billion, bringing the segment's total capital from USD 2.05 billion to USD 3.75 billion - that is a big gulp from the bottle. Now BYD can continue to work on its forward-looking products.
On the stock market, the stock seems to be slowly banging its head. No wonder, given the ongoing dilution. From a technical point of view, the first divergences are emerging, and the trend is wobbling. Our tip: Take profits at around EUR 35 and re-enter after a 30% correction.
Kleos Space SA - The flying eye
Kleos Space SA (KSS) is a private Luxembourg-based high-tech company in the segment of satellite-based Earth Observation (Data as a Service or DaaS for short). The global EO (Earth Observation) market can attract revenues of approximately EUR 4 billion, growing at between 5 and 7% per year, depending on the availability of public budgets.
According to a study by GBC, key cornerstones of the business model are declining costs for satellite manufacturing and launch, coupled with increasing demand for faster and more accurate geolocation data. Kleos launched its first 4-satellite cluster in November 2020 to provide high-frequency data to end-users and is now scheduled to send its fourth cluster into orbit in June 2022. The DaaS model is highly scalable in its design, as data is collected and processed only once but resold many times. Several potential revenue streams include the maritime industry, law enforcement, civil aviation and investigative contracts from insurance companies, among others.
Kleos has a strong technology pipeline and already has more than 220 customers on its wish list, 100 of which are in detailed contract discussions. With a recent capital increase, Kleos is well funded to implement customer connectivity in a big way. According to the GBC experts, the data specialist could be profitable and generate positive free cash flow in 2022, three years earlier than expected. After all, EBITDA margins are hovering around 70%, and with multiple sales of data, this can quickly become highly interesting.
The current market capitalization of Kleos shares of a good AUD 128 million is now large enough to be noticed by the relevant clients. The KSS share price on the Australian domestic stock exchange stands at around AUD 0.77, the equivalent of EUR 0.44. For 2021, a gain of 19.5% has been achieved so far. The DCF supported GBC price target is AUD 5 or EUR 3.12. Access selectively!
Airbus SE versus Boeing - Head-to-head race in the air
This year, those who invested in the tourism or aviation sector had chosen a challenging sector. European aircraft manufacturer Airbus SE is still struggling with the aftermath of the Corona pandemic but can again report an increase in order intake. Recently, ITA Airways ordered 28 aircraft from Airbus, and other airlines are ordering again.
From July to September, however, sales declined by 6% to EUR 10.52 billion, while adjusted earnings before interest and taxes (adjusted EBIT) fell by 19% to EUR 666 million. At least the Company returned to positive territory, as the bottom line was earnings after taxes of EUR 404 million, compared with a loss of EUR 767 million in the same period last year.
US aircraft manufacturer Boeing handed over 85 passenger and cargo jets to its customers in the third quarter. Year-to-date deliveries total 241 aircraft, putting the US group well behind its European rival Airbus. In the first nine months of the year, Airbus completed 424 aircraft and delivered 40 in September alone. Thanks to official requirements, the former Boeing problem plane 737 Max is now a step closer to a return to the Chinese skies. The directive from the Civil Aviation Administration of China (CAAC) will regulate what software may be installed in the future. The US authorities allowed the aircraft back into air traffic about a year ago.
Airbus' share price gained around 10% by the beginning of December. However, it has corrected sharply from its high for the year of over EUR 120. The Boeing share has only moved sideways this year. If you look far ahead and trust the experts, you will find a 2024 P/E ratio of an estimated 15 for Airbus, while the same is more likely to be 22 for Boeing. However, both stocks would still have a long, lean period ahead of them if airlines had to reduce their seat quotas again due to the pandemic. Consequently, not so many aircraft would be reordered. There is certainly a lot of optimism built into the analysts' estimates.
The values considered here come from different technology sectors. BYD and Kleos continue to float on top of the wave, but aviation technology as a whole is still waiting for the Corona end and the real new beginning.
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