February 17th, 2022 | 15:21 CET
Deutsche Bank, Mercedes-Benz, Memiontec: Investors take action
Table of contents:
Memiontec benefits from the water treatment megatrend
Before we come to two high flyers of the past weeks, first, we look at the share with the potential to become one. With water treatment and supply, Memiontec is active in a megatrend industry. Accordingly, the share has held up well in recent months. Between the summer and fall of 2021, it initially rose sharply from EUR 0.15 to EUR 0.60. Subsequently, a healthy consolidation set in with a bottom above the EUR 0.40 mark. This opens up an interesting entry opportunity. After all, there is much to be said for Memiontec in the long term: population growth, economic upswing and changing consumer habits are driving global water consumption. At the same time, water is a finite resource, and up to 90% of all wastewater worldwide is discharged untreated, polluting the environment and reducing natural drinking water supplies.
This mix makes water treatment a megatrend, and Memiontec is benefiting from it. The Singapore-based company has been developing complete water and wastewater management solutions for 20 years. It has a patented treatment process based on membrane ion exchange technology. The unique return kickers are the "Build-Own-Operate-Transfer" (BOOT) and "Transfer-Own-Operate-Transfer" (TOOT) segments. In these two segments, Memiontec invests in water treatment infrastructure together with public and private partners, becoming a water utility. In Indonesia, Memiontec has secured three asset ownership projects. The latest success story is the start of fresh water sales after completion of the first expansion stage of the BOOT project in the Indonesian megacity of Pekanbaru. Currently, the plant has a capacity of 200 LPS (liters per second). In the next stage, the capacity will be increased to 500 LPS by refurbishing and upgrading the existing water treatment plant. Another plant will add another 250 LPS by 2026 at the latest. The contract with the national water authority PDAM has a term of 25 years and ensures Memiontec well predictable cash inflows. The second BOOT project in the Indonesian capital Jakarta ("Hutan Kota") has already reached the second expansion stage with 450 LPS. In addition, Memiontec is working on further projects in China. In total, the order backlog for this year is around SGD 84 million. Memiontec's market capitalization - the shares are traded on the Singapore Exchange (SGX) and the Frankfurt Stock Exchange - is around SGD 152 million, the equivalent of EUR 100 million.
Mercedes-Benz: Greens rebuff, Goldman sees potential
Following convincing figures for 2021, the Mercedes-Benz share price continued to rise. And with that, the share price potential does not seem to be exhausted yet. After the buy recommendations from Goldman Sachs and DZ Bank, Warburg has now raised its price target. The Warburg analysts assess the final quarter of 2021 as surprisingly strong. As a result, the prospects for 2022 also look very positive. The price target for the Mercedes share has been raised from EUR 86 to EUR 104. In addition, the entire automotive sector has received a tailwind from the German government. Federal Economics Minister Lemke (Greens) had a proposal for German carmakers to reduce fleet emissions by 75% by 2030. That would mean that practically only fully electric vehicles would be allowed to be sold from 2030. This proposal went well beyond what was agreed in the coalition agreement. Accordingly, the proposal was rejected by the German government. The EU's previous requirement stipulates that new vehicle fleets may emit an average of 55% less CO2 than in 2021.
Deutsche Bank: Rally not yet over
Only a few sectors are happy about rising interest rates. Financial institutions are among them. As a result, the sector is one of the winners in 2022. With inflation remaining high beyond 7%, more and more market participants expect the US Federal Reserve to turn the interest rate screw even more aggressively this year. The European Central Bank will not escape this trend for long. Deutsche Bank is benefiting from this. CEO Christian Sewing said at the financial institution's New Year's reception, "After the euro zone has de facto lived interest-free for more than a decade, I would call this a historic turning point." Perhaps also a historic turning point for the stock. A 1% increase in key interest rates means additional annual earnings of EUR 400 million for Germany's leading financial institution. Thus, UBS recommends the Deutsche Bank share as a buy. UBS economists expect the ECB to end its loose gold policy in August. Initial interest rate hikes are expected to come in September and December. Therefore, UBS analysts believe that the rally in the banking sector is not over yet.
In the current environment, conservative stocks remain in demand. Mercedes-Benz, Deutsche Bank and also Memiontec belong to this group.
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.
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