Close menu




May 20th, 2022 | 11:35 CEST

Capital increase? What you need to know! TUI, Triumph Gold, Steinhoff

  • Investments
Photo credits: pixabay.com

To be successful as a company, you need not only motivated employees, functioning machines and brilliant ideas, but also capital. Investments are the cornerstone for growth and success on the stock market. But why are companies that raise "fresh money" on the market regularly punished? Is it possibly related to communication and how the funds are used? We take a closer look at three stocks.

time to read: 3 minutes | Author: Nico Popp
ISIN: TUI AG NA O.N. | DE000TUAG000 , TRIUMPH GOLD CORP. | CA8968121043 , STEINHOFF INT.HLDG.EO-_50 | NL0011375019

Table of contents:


    TUI: Salami tactics displease the market

    TUI's share price has recently taken a significant hit. The reason is a capital increase with the purpose of repaying the state aid provided during the pandemic. Lufthansa took a similar step months ago. At the time, however, the market interpreted the measure as a signal of strength. Finally, being independent again and taking off. Things look different at TUI at the moment. Perhaps this is because the travel group is not entirely paying off its state aid. Also, the capital increase is already the third step of this kind since 2021. At this point, the transaction has a "whiff of scandal" to it.

    If a capital increase does not exceed the 10% mark of the share capital, the Company can waive subscription rights for existing shareholders. These subscription rights ensure that the ownership structure can remain the same after a capital increase or that existing shareholders can at least sell their subscription rights and, in this way, receive compensation for the dilution. TUI has a major Russian investor on board who is now on the EU sanctions list, so a large capital increase with subscription rights was not possible. On the one hand, the current salami tactics mean that a liberating blow for TUI is not forthcoming and that shareholders' stakes are being diluted - after all, new shares are coming onto the market. TUI is heading for below EUR 2.

    Triumph Gold: Step by step to success

    Capital increases are also an issue for investors in the commodity market. The earlier a company is in its development stage, the more likely it is to rely on such measures. Instead, major investors and strategic partners are rewarded with warrants that allow them to buy additional shares in return for a payment that is usually higher than the current share price. That injects capital into companies' coffers on the commodities market twice over, enabling them to continue on their growth path. However, if the market as a whole falters and prices appear to be cemented, there can also be pressure on the share after capital increases. That is what happened with Triumph Gold in recent months.

    The Company was able to provide itself with sufficient capital in 2020 at the peak of the gold bull market - the price of the new shares was CAD 0.20 at that time. A warrant was granted at CAD 0.30 on a three-year view. In the meantime, the share price is more than 50% lower. Many investors from the capital increase are likely to have parted with the value and only hold the warrants. From today's perspective, it seems unlikely that these will run into the money, but investors must consider how quickly things can sometimes move on the capital market. In 2020, the value went from CAD 0.11 to CAD 0.28 within four months. Since Triumph Gold has drilled successfully in recent years and even discovered an entirely new zone of mineralization recently, the stock should be on some investors' minds. If the market turns around like in 2020, the hard work of the past years could be a cornerstone for a positive development of the share. Currently, risk also seems to be priced in because of possible financing rounds. But opportunities can also arise from this. Triumph is a case for the watch list.

    Steinhoff: Saved, but at what price?

    The example of Steinhoff shows that it is sometimes more complicated to have funds than to need them. The ailing furniture group from South Africa argued with creditors for years. During this phase, there was some restructuring. The result: countless bonds under various conditions. Although the measures ensured the Company's survival years ago, the financial situation still weighs on the stock today. Coupled with legal disputes, this is not a convincing investment story.


    When companies need capital, the market takes notice. What weighs on the share price most is uncertainty or capital measures without meaningful investments. TUI's salami tactics, which have the sole purpose of paying off the state, are an example of this. Things are different for emerging mining companies like Triumph Gold. Here, investors know that capital is going into work on a promising property in Canada's Yukon. The Company's steady work over the past few years can pay dividends, especially during challenging market periods. Frugality is not infrequently rewarded.


    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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author



    Related comments:

    Commented by André Will-Laudien on June 24th, 2022 | 11:19 CEST

    TUI, Pathfinder Ventures, Lufthansa - The travel market is back - where are the share prices?

    • travel
    • Investments
    • Camping

    The travel market has changed dramatically since 2019 in light of the Corona pandemic. Due to the most extensive pandemic standstill in 2020, the capacities for flights, rail traffic and accommodation were adjusted downwards dramatically. Major cost reductions occurred primarily through de-occupancy and staff reductions. Travel companies cut their basic capacity utilization with partners to such an extent that many smaller operations had to pull out of the race, and large corporations could only survive with extensive state aid. Now, however, the situation has turned 180 degrees and demand for travel is exploding. However, this time it seems difficult to ramp up the reduced capacities in line with demand. We look at the opportunities of three typical industry players.

    Read

    Commented by Armin Schulz on June 24th, 2022 | 10:15 CEST

    Commerzbank, Triumph Gold, Bitcoin Group - Inflation alert! Which stocks bring returns in this market environment?

    • Gold
    • Crypto
    • Investments

    We have not seen such high inflation for decades. Looking back, it becomes clear that one cannot compare the situation back then with today. Back then, interest rates were at 12%, and as a saver, you could generate an increase in value for your money despite inflation. Today, interest rates are much lower than inflation. Putting money in a savings account will not bring any investor a profit. If you want to protect your money, the first thing that comes to mind is gold because it is considered crisis-proof. But nowadays, it almost seems as if cryptocurrencies could outperform gold. Alternatively, one can bet on stocks that cover these areas. We take a closer look at three companies.

    Read

    Commented by André Will-Laudien on June 23rd, 2022 | 14:06 CEST

    Deutsche Bank, Commerzbank, wallstreet:online, Allianz - High turnover, wild prices - what are brokers and financial stocks doing?

    • Investments
    • Inflation

    In addition to the high price increases and the permanently rising interest rates, the highest volatility has now broken out on the stock exchanges. Investors have to adjust to new scenarios almost every day, especially the timing of the news about the state of the international economy is causing more and more headaches for economists. That is because the increased prices of raw materials are now considered standard and put a strain on the purchase prices of intermediate products and the calculation of the Company's own supply list. In some cases, this leads to dramatic adjustments, as impressively demonstrated by the manufacturer price index with +33.6% in May. How are the financial and broker stocks doing in this swing market?

    Read