25. June 2021 | 11:29 CET
Commerzbank, Theta Gold Mines, Corestate Capital - Watch out: the hunt has begun!
The value and the price paid for a share on the stock exchange can be thought of in very different ways. If there is too big a discrepancy here, the hour strikes for wise investors. Undervaluation or overvaluation is always in the eye of the beholder. Time will tell whether it was a "value" buy or a "value trap." We pick up the trail of three exciting investments. Where are opportunities lurking, and where are the dangers?
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ISIN: COMMERZBANK AG | DE000CBK1001 , THETA GOLD MINES | AU0000035701 , CORESTATE CAPITAL HLDG | LU1296758029
"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
COMMERZBANK AG - Things are happening
From the start of the year to the beginning of June, the Commerzbank share rose by an impressive 30%. However, the recent ruling by the Federal Court of Justice (BGH) on the reimbursement of bank charges then had a negative impact. At a current price of EUR 6.18, investors are still up an impressive 20% this year. The Federal Court of Justice ruling will lead to a provision "in the mid-double-digit million range," which will be booked in the second quarter of 2021, the institute said.
Nevertheless, the Group maintained a positive outlook for 2021. It said it would increase full-year earnings compared with the previous year. The overall situation is brightening for the Company anyway. The US monetary watchdogs signaled the interest rate turnaround as early as 2023 and thus earlier than previously assumed. Commerzbank also appears to be mastering further milestones in the transformation process, and the stock could soon hold even more potential. It is an open secret that the shares are trading well below book value and at significant discounts compared to European and especially US counterparts. The explanation for the discrepancy simply lies in COBA's modest (equity) profitability.
With a series of cost savings, the institute wants to turn the tide. By the end of 2024, the number of full-time positions across the Group will fall from around 39,500 to 32,000. In Germany, the branch network will be almost halved to 450 locations. In addition, the Group is giving up 15 sites abroad. As a result, this should trim costs by around 20% in 2024. If all this succeeds, the share definitely has further potential.
THETA GOLD MINES LIMITED - Very favorably valued
Theta Gold Mines is an Australian-based gold mining company. The Company's goal is to consolidate several South African mining projects and bring historic mines back into production with a very advantageous cost position. The cost of production per ounce is expected to be about half of the current gold price. Theta Gold owns 43 historic mines and will bring 3 underground mines into production in a first cut. From this, 160,000 ounces of gold is expected to be generated as output, starting in 2022.
The Company owns over 62,000 hectares of gold mining rights covering most of the Eastern Transvaal Gold Fields, a highly productive gold belt, about 350 km east of Johannesburg. This trend is comparable to the Carlin Trend in the US state of Nevada, which produces about 16% of global gold production annually. Another focus is on open-pit production at high grade, near-surface deposits such as Pilgrims Rest Gold Fields and Sabie Gold Fields. Here, the annual production of over 350,000 ounces of gold per year is envisaged in the medium term.
In total, the JORC resource of all properties comprises around 6 million ounces of gold. This is a substantial figure which, given the low expected production costs, suggests a high level of economic viability. The US analysts at Zacks Small Cap Research also see it that way and formulate a price target of USD 0.69 for the share certificates. Because of the current price of AUD 0.20, this is a bargain. The stock market value of the Company is AUD 100 million. The stock is traded on the Nasdaq OTCQX Best Market and Frankfurt. Investors really can not go far wrong with the stock.
CORESTATE CAPITAL HOLDING SA - The lowest level since IPO
CORESTATE Capital Holding SA is an investment manager and co-investor for real estate assets under management of EUR 28 billion. The Luxembourg-based Company offers a wide range of services, including investment and fund management and real estate management services from a single source. Its clients are institutional investors and high-net-worth individuals. The Group has 42 additional offices, and the SDAX-listed Company's team totals more than 800 employees.
The Company is currently trading just above EUR 11, its lowest level since the IPO in 2017. More than EUR 50 per share was called on the trading floor in 2017 and early 2018. The current market capitalization of EUR 380 million is significantly below the equity reported as of Q1 of EUR 676 million with total assets of EUR 1.45 billion. What is striking is the high goodwill of EUR 578 million, which is about 40% of total assets and 86% of equity! If you look at the latest quarterly figures, you get more questions than answers. The Company suffered a Q1 loss of EUR 14.5 million after a profit of EUR 8.8 million in the previous year. Adjusted EBITDA barely made it into the black at EUR 0.2 million (previous year: EUR 20.9 million). Nevertheless, the Company is sticking to its annual targets.
The Luxembourg-based company is forecasting total sales of between EUR 235 million and EUR 260 million. Adjusted EBITDA is expected to be between EUR 90 million and EUR 115 million. Unexpectedly, CFO Lars Schnidrig recently left the Company at his request. It is unknown whether there was friction in the course of the change in the shareholder structure or whether it is a matter of strategic orientation. The acquisition of the FÜRST Project reported on June 11 with a financing volume of EUR 1.02 billion, and thus one of the largest real estate transactions of the year, did not help the share. On average, analysts believe the stock has a price potential of EUR 23. As a result, the share is a potential doubler. Given the loss in Q1, achieving the annual targets is quite sporty in our opinion, and the balance sheet simply raises too many questions for our taste. There is nothing wrong with standing on the sidelines.