Deutsche Bank, Hong Lai Huat, Heidelberger Druck - Things are stabilizing!

Deutsche Bank - It runs and runs

That is how times change. While investors avoided shares of banks like Commerzbank or Deutsche Bank in the past years, they are currently more than en vogue. The turnaround in interest rates, with the FED planning at least three interest rate hikes as early as this year, has given the Frankfurt-based bank a new lease of life. Since the end of January, the share price has risen by more than 25%, breaking the long-term downward trend that has been in place since 2008. Even negative news could not stop the share from jumping to a new four-year high in recent days.

The US financial investor Cerberus, for example, took advantage of the rising share prices to sell further shares in the financial institution. After the sale of 21 million shares in early January, Cerberus placed another 15 million shares, according to information from the news agency Bloomberg on Tuesday evening. The price per share certificate is reportedly EUR 14.15, which would bring Cerberus more than EUR 200 million in proceeds. Still, the deal was a loss-maker for the financier after it invested in Germany's two largest financial institutions, Deutsche Bank and Commerzbank, in 2017. Overall, the investor's share thus fell from just under 2% to currently around 1%.

There was also a tailwind from Switzerland. The major bank there, UBS, confirmed its "Buy" rating and the price target of EUR 15.30. The in-house economists assumed that the loose monetary policy at the ECB is also likely to come to an end in August. Analyst Jason Napier expects interest rate hikes in September and December and sees the current rally in the banking sector not yet at an end.

Hong Lai Huat - Invests in emerging markets

While the real estate market in Germany appears overpriced, at least in the metropolitan areas, there is still significant upside potential in other regions of the world. But as a German investor, it is generally challenging to get hold of Asian real estate gems. Hong Lai Huat, which has been listed on the main board of the Singapore Exchange (SGX) and in Frankfurt since 1988, offers access to this market. The Company has already successfully developed and built projects in Singapore, ranging from public and private residential complexes to commercial and industrial buildings.

Management sees enormous catch-up potential in the emerging Kingdom of Cambodia. 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, followed by the second project, a mixed-use Royal Platinum in the Toul Kork district of Phnom Penh, the country's capital. It is in a prime location, only about 20 minutes from the airport, and comprises 851 residential and 50 commercial units. In addition, the Group acquired two further 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 total development value is expected to be USD 400 million, with distribution for sale starting soon.

Recently, Hong Lai Huat announced that 10 of 28 floors had already been built at the Royal Platinum project. Around 90% has already been sold to global investors. In addition, a partnership was entered into with HSC Group to explore and extract mineral resources in the Agri Hub construction material zone. With a market capitalization of the equivalent of around EUR 33 million, the share is trading significantly below its intrinsic value.

Interested investors can learn more about Hong Lai Huat's business model from Dylan Ong, Group General Manager and Executive Director, at the 2nd International Investment Forum (IIF) on February 17th. Attendance at the virtual event is free of charge. Registration is possible at www.ii-forum.com.

Heidelberger Druckmaschinen - Strong increase

The share price of Heidelberger Druckmaschinen rose by around 15%. The reason for this was the concretization of the sales forecast for the current financial year 2021/2022. In this financial year, which ends on March 31, 2022, revenues of EUR 2.1 billion are expected. In the run-up to the forecast, only EUR 2.0 billion was envisaged. The operating margin is expected to remain between 7% and 7.5%.

For analysts, the strong results were not enough despite the difficulties with the international supply chains. Although the fair value for Heidelberger Druck was raised from EUR 2.05 to EUR 2.25 after the figures, the rating remained at "sell". The trend in incoming orders at the printing press and charging station manufacturer was also positive in the third quarter, analyst Thorsten Reigber wrote. However, the quality of earnings was relatively poor given high extraordinary income. He continues to see risks due to high-cost inflation, strained supply chains, structural difficulties in the printing press industry and a weak balance sheet. The share is currently trading at just under EUR 3.

Banks are the winners of the upcoming turnaround in monetary policy. Both Commerzbank and Deutsche Bank posted significant gains, and analysts forecast a continued positive environment. Heidelberger Druck, in turn, produced strong sales figures but was unable to convince the experts fully. Hong Lai Huat is an exciting stock to benefit from the growth of the real estate sector in Asia.