January 16th, 2024 | 07:30 CET
Commerzbank, Globex Mining, Vonovia - Interest Rates, Commodities, Real Estate - Where is the most potential?
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"[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.
Commerzbank - Takeover rumors
Since interest rates have risen, putting your money in a call money account has become more worthwhile. Currently, Commerzbank offers an interest rate of 3.25%, down from 3.5% at the beginning of the year. Since the interest rate turnaround, Commerzbank's business has picked up considerably. This has not gone unnoticed by Deutsche Bank. According to a report by Bloomberg, Deutsche Bank is sounding out potential takeover candidates. These are said to include Commerzbank. If this acquisition were to happen after the takeover of Postbank, it would mark the second German bank absorbed by Deutsche Bank, creating a major German banking institution.
Commerzbank is expected to have generated a profit of around EUR 2 billion in 2023. The annual report for the past year is expected on March 19. Meanwhile, the Group is continuing to fine-tune its transformation for the future. According to the announcement on January 11, Commerzbank has founded a joint venture called Commerz Globalpay GmbH with the US company Global Payments to offer digital payment products for corporate customers. Commerzbank holds 49% of the shares, while Global Payments owns 51%. Commerzbank's primary aim is to offer a payment function via cell phone for its corporate customers.
Whether the federal government will remain a shareholder of Commerzbank for much longer is at least questionable. According to rumors, the federal government is looking for options to plug the budget holes. A sale of shareholdings could help. Commerzbank no longer has to fill any financial holes. On the contrary, the bank has received approval for a new share buyback program of EUR 600 million, which was launched on January 10. The takeover rumors caused the share price to rise to EUR 11.63 on Monday, January 15. Since then, selling pressure has pushed the share price down to EUR 11.51.
Globex Mining - Offers an extensive commodities portfolio
There are numerous commodities available for investment. While gold and oil immediately come to mind when considering commodity investments, the range is diverse. Which commodity should you invest in? Enter Globex Mining (Globex), a Canadian company that owns 232 different projects with precious, base, poly, and specialty metals as well as minerals. Since 2015, over 100 projects have been acquired without incurring debt. These properties are optioned or, in rare cases, sold outright. In return, the Company receives cash, shares, options and retains royalties. There is currently an option to receive royalties on 90 properties as soon as they are in production.
On January 8, Infini Resources of Australia acquired the rights to the Des Herbiers uranium project. In exchange Globex received CAD 200,000 and 1,672,427 shares in Infini Resources. In addition, Globex retains a 3% gross metal royalty, which may decrease to 2% if Infini pays an additional CAD 1 million. On January 9, it was announced that Globex had further sold the former Labyrinth project. The license fees remain unchanged. Globex retains a 5% gross metal royalty on the first 25,000 ounces of all metals produced on the property, including gold and silver, and a 3% net metal royalty thereafter.
Due to the large number of projects, there is a steady stream of new news. Emperor Metals recently tested an open pit concept on Globex's Duquesne West gold property. The drill results show a potential open pit mine with a depth of 400 meters and an area of 1.8 km by 0.8 km. Gold values in the drilling ranged from 0.4 to 12.17 g/t gold. A notable aspect of the Company is that it is growing organically without incurring debt. The share was able to break out of its sideways phase in November and is currently trading at CAD 0.88, giving it a market capitalization of just CAD 50.8 million. That translates to approximately CAD 219,000 per property.
Vonovia - Prospects are rosy
Germany's largest residential real estate company, Vonovia, provides an opportunity for those looking to invest in real estate. In contrast to Commerzbank, rising interest rates were poison for the share price, which has been on a rollercoaster ride since January 2023. It fell from EUR 28.72 to EUR 15.27. Investors feared it would be challenging to refinance the debt due to the rise in interest rates. Added to this were inflation fears that tenants might be unable to pay their service charges. After the downward exaggeration, the share price started to rise again. A new annual high of EUR 29.09 was reached in Xetra trading in mid-December.
On January 11, the Group further strengthened its financial position by issuing a GBP 400 million bond on the UK financial market for the first time in order to attract new investors. The bond was more than 8 times oversubscribed. The money is to be used to repay financing due from 2025. The prospects for the next few years are good, as rents are still rising sharply. The German Tenants' Association has already warned of this, but there is no end in sight. There is a shortage of hundreds of thousands of apartments, and with the current building regulations and high interest rates, new construction is hardly worthwhile at present.
Rising interest rates should also lead to a further increase in Vonovia's profits. The Bochum-based company plans to present its figures for 2023 on March 15. Even now, it can be observed that the stock, currently trading at EUR 27.69 and still significantly below the net asset value of EUR 50 per share, appears to be undervalued. Since December, there have been 3 "Buy" recommendations with price targets of between EUR 34.00 and EUR 36.40. Only Jeffries set the stock to "Sell" with a price target of EUR 22. Should there be an interest rate cut, as the majority of market participants anticipate, real estate stocks will be sought after again.
All three companies presented are doing well. Commerzbank significantly increased its profit last year and is also investing in digital payment systems to be prepared for the future. Globex Mining has a broad portfolio and should benefit from rising gold and commodity prices in the long term. The Company is growing and is debt-free. Vonovia still carries some debt, but recently, the Company was able to secure GBP 400 million. Additionally, the rising rents in Germany are working in favor of the corporation.
Conflict of interest
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