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March 28th, 2022 | 12:34 CEST

Deutsche Bank, Hong Lai Huat, Commerzbank - Strong comeback

  • RealEstate
  • Financial
Photo credits: pixabay.com

Following Russia's invasion of Ukraine and the subsequent sanctions, banks, in particular, lost disproportionately in stock market value. Concerns about possible loan defaults in neighboring Eastern European countries caused the major European banks and domestic financial institutions such as Deutsche Bank and Commerzbank to plummet in the short term. In recent days, however, it is precisely these stocks that showed relative strength, driven above all by interest rate fantasies triggered by the US Federal Reserve.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: DEUTSCHE BANK AG NA O.N. | DE0005140008 , HONG LAI HUAT GROUP LIMITED | SG1EE1000009 , COMMERZBANK AG | DE000CBK1001

Table of contents:


    Deutsche Bank remains on track

    Since the Corona low in 2020, the Frankfurt-based financial institution has been on a steep uphill climb. The share price more than tripled from EUR 4.45 to EUR 14.40 by February of the current year. Then, however, came the Ukraine shock, which caused the share price to correct back to EUR 8.16. The fears of a too-large credit facility led to a sharp drop in the share price. Fears of excessive credit exposure prompted investors to put the stock on "sell" at all costs. However, the level of exposure turned out to be relatively low. The financial institution's net credit exposure in Russia was about USD 600 million, and in Ukraine, only about EUR 42 million. For the first quarter, the bank increased loan loss provisions by EUR 100 million, which should leave only about EUR 300 million at risk. Operational risks were said to be "very limited" as well.

    The outlook with the financial targets for 2025 shows the positive path Deutsche Bank has taken. The after-tax return on tangible equity is expected to grow to more than 10%. In the current financial year, Deutsche Bank expects a return of 8% in this regard. "All our business areas have started the year well. The war in Ukraine is causing uncertainty in the markets. However, our exposure to Russia is limited, and we have the risks under control", said Chief Financial Officer James von Moltke.

    For his part, von Moltke has been promoted to deputy CEO and is to take on this role with immediate effect alongside his role as CFO, the DAX-listed Group announced. Von Moltke has been chief financial officer since July 2017 and came from the major US bank Citigroup. James von Moltke has done "outstanding work" over the past 5 years as chief financial officer and has "played an important role in the successful transformation of Deutsche Bank," said Supervisory Board Chairman Paul Achleitner.

    Parallels at Commerzbank

    The chart performance of Commerzbank was similar to that of Deutsche Bank. After the title marked a new high of EUR 9.51 in February, it went down steeply to a low of EUR 5.16 after the Russian invasion. Here, too, there were fears about defaulting loans. However, this was also followed by a statement from the Group management around CEO Bettina Orlopp that the risks that existed at the beginning of the month, which were largely based on pre-financing and commodity exports, had been reduced from EUR 1.9 billion to currently around EUR 600 million. Overall, Commerzbank is optimistic for the current year and is targeting a consolidated profit of more than EUR 1 billion.

    Decades of experience

    For more than 30 years, the Singapore-based Hong Lai Huat Group has been making a name for itself as a real estate developer and builder of everything from public and private residential complexes to commercial and industrial buildings. Some 20 years after its establishment, the Group, also listed in Frankfurt, expanded its presence to the Kingdom of Cambodia in 2008 to establish one of the largest privately-owned plantation farms.

    In 2015, the Group launched its first mixed-use real estate project, D'Seaview, in Sihanoukville, Cambodia, with 737 residential units and 67 commercial units. Following the success of D'Seaview, the Group launched its second mixed-use project, Royal Platinum, in the Toul Kork district of Phnom Penh, the country's capital, in 2019. This project, located just 20 minutes from Phnom Penh International Airport, includes 851 residential and 50 commercial units. In addition, the Group acquired two other plots of land in 2020 and 2021, on which the third and fourth mixed-use projects in the Kingdom are to be built, respectively. The latter projects are expected to achieve a total gross development value of close to USD 400 million.

    The Company is well on schedule with the main construction works at the Royal Platinum project, having reached 10 of the total 28 floors. The commercial units and penthouse apartments have already been 90% sold to local and international buyers.

    Impressive rebound

    After facing challenges in 2020 due to the Corona outbreak, Hong Lai Huat delivered impressive annual figures for fiscal 2021. Net profit from continuing operations rose to EUR 4.09 million from a loss of EUR 5.23 million in the previous year. Sales exploded by 132% from EUR 4.83 million to EUR 11.20 million, with gross margin reaching a substantial 62%. Net liquidity increased to EUR 13.41 million, leaving the Company open to acquiring new projects. In order to reward its loyal investors, it was decided to distribute about one-third of the net profit for the year to the shareholders, which corresponds to a value of EUR 0.013 per share. In total, the current stock market value is around EUR 31.7 million. Hong Lai Huat thus still has considerable development potential in the rapidly expanding Kingdom of Cambodia.


    Company management sounded the all-clear after financial stocks fell sharply in value due to concerns about possible loan defaults in Russia and Ukraine. On the contrary, banks have a new lease of life due to the turnaround in interest rates initiated by the central banks. Fantasy is also held by one of Singapore's leading real estate developers, Hong Lai Huat, who is expanding strongly in the burgeoning Kingdom of Cambodia.


    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.

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    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.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



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