23. September 2020 | 14:13 CET
Deutsche Bank, Daimler, Triumph Gold: What about these fallen angels?
When investigative journalists immerse themselves in the world of business, the name of Deutsche Bank is mentioned more and more often. Despite countless legal disputes and fines in recent years, the news flow does not end, the latest accusations being activities that observers call money laundering. The documentation surrounding the business relationship between Donald Trump and Deutsche Bank has cast what was once the world's largest financial institution, in a bad light. Although Trump had owed money to one department of the bank for a long time, another department of the bank lent money to the then dazzling real estate mogul to pay off his debts. Many investors would certainly not have thought that such a transaction, based on the principle of right pocket to left pocket would be possible at all. Deutsche Bank rejected a comment on the above-mentioned incident concerning banking secrecy.
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ISIN: DE0005140008 , DE0007100000 , CA8968121043
The long case of Deutsche Bank
However, the recent history of Deutsche Bank is not well received on the stock market. In the last five days alone, the share price has lost more than 9%. On a one-year horizon, the loss is 2%. That does not sound much, but over the last five years the share price has already fallen by almost 70%.
Apart from legal disputes, low-interest rates are the main burden on the banking business. After the aweful year 2019, the bank wanted to return to profitability for the first time in 2020. But the pandemic is likely to thwart these plans. Given the weak starting position for the banking sector in general and the many construction sites for Deutsche Bank in particular, the share is currently of little interest.
Lawsuits against Daimler
Daimler is also regarded as rather uninteresting for investors. The drive revolution in the automotive sector is particularly affecting German premium brands. On a one-year horizon, the share lost about 8%. High costs are still a burden on the group. Nevertheless, after the slump in March, the share price was able to increase significantly and still generate a return of 18.3% on a three-month horizon.
But dark clouds have recently been gathering over Sindelfingen as well: In connection with the diesel affair, investors have filed a million-euro lawsuit against Daimler and are demanding EUR 250 million in damages. Other lawsuits involve smaller amounts. Although Daimler has a substantial financial cushion, lawsuits always create a bad mood. But investors have every reason to look ahead. The company recently announced the truck division is set to take off, climate-neutrally, thanks to electric and hydrogen.
Newmont Mining as a shareholder
The shareholders of Triumph Gold also have a plan in mind. On a one-year horizon, however, the share price is expected to post losses of 34%. The company is searching for gold in the Canadian Yukon region and was able to secure fresh capital in the summer. In the coming months, the flagship project, Freegold Mountain, will be further explored. To date, 39,000 metres have been drilled and approximately two million ounces of gold-equivalent 43-101 mining grade rock have been identified as resources. Thanks to the recent capital injection, the company is now funded through 2021.
While companies such as Deutsche Bank and Daimler are suffering from the general weakness of their industry in addition to their own misconduct, Triumph Gold sees itself supported by the emerging gold boom. The company is considered a promising gold explorer and already has some prominent shareholders. Amongst others, raw material producer Newmont Mining holds a 12.8% stake in Triumph. Newmont operates in the neighbourhood and could be a potential buyer if the upcoming drill results turn out successfully.
The Market ignores ambitious plans
With a market capitalization of around EUR 25 million, a takeover would be easy to achieve, both for Newmont and for many other medium and large gold producers. But this is not yet the case. Triumph initially plans to evaluate existing data to be able to search for new deposits in an even more targeted manner. In the long term, the company is talking about developing a mine itself.
However, there is still a long way to go until then. So far, the market has hardly priced fantasy into Triumph's share price. Given the upcoming drilling and the positive environment for gold in general, Triumph Gold's share could be more promising than that of the other fallen angels.