13. January 2021 | 09:35 CET
Deutsche Lufthansa, TUI, Upco International: Sustainable business models generate returns
In today's world, we often associate sustainability with environmental protection and social standards. These factors rightly deserve more attention and are increasingly being included in the analysis of companies. But sustainability in the sense of continuity means first and foremost that a company is capable of survival. To ensure this, a company must continuously adapt to new circumstances. Sometimes this works to the companies’ advantage, and sometimes not, and sometimes, it creates excellent opportunities for shareholders.
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ISIN: CA9152971052 , DE0008232125 , DE000TUAG000
Is Lufthansa on the rise again?
The Lufthansa share has lost around 35% of its value in the past twelve months. The reason is the lower flight activity. As the German Air Traffic Control reported some time ago, aviation in 2020 sank to the level of the 1980s. Back then, flying was still a luxury and those who had once boarded a plane to Mallorca proudly showed off the airline's promotional gifts in the months after. Nowadays, flying is routine - and you often have to pay even for dull sandwiches and soft drinks. The slump in 2020 was all the more severe.
Although Lufthansa is under pressure and has had to be rescued by the state, the crane airline remains an essential European player in the air. Since vaccines are now available and the spook surrounding the pandemic could end in the second half of the year, shares from the tourism sector are slowly becoming attractive. Beyond the EUR 10.30 mark, Lufthansa could start climbing again.
TUI: Good mood despite capital increase
The situation is somewhat more dramatic at tour operator TUI, which recently had to be rescued by the German government. These days, existing shareholders are feeling the full force of the conditions of the rescue package. For 29 old shares, there are 25 new ones at EUR 1.07. Although the subscription rights have recently been in high demand and the share price has remained surprisingly stable, there are also market observers who warn of further price losses. Reason enough to take a look at the real situation at TUI.
Sales at the Lower Saxony-based tour operator fell by around 58% in the 2020 financial year - that's a disaster for a company. But there is also positive news. The Company already managed to significantly reduce its fixed costs in the first lockdown. For the summer of 2021, the Company expects to operate at 80% of normal capacity again. The bankruptcy repeatedly anticipated by the market in recent months would thus be off the table. It can also be assumed that there will also be catch-up effects on travel as many people are looking for freedom and normality. Also, given the travel restrictions and the lockdown, many people's coffers are likely to be full rather than empty. Even if the capital increase distorts the share price: Speculative investors can add TUI to their watchlist.
Upco International: blockchain fantasy attracts speculators
Hard-core speculators have gotten their money's worth at Upco International in recent days. Within just five trading days, the stock went up 180%. The small Company has made it its business providing smaller telecommunications providers with access to Talktime minutes and SMS quotas. These are significantly cheaper in large volumes. To do this, Upco acquires small telecommunications providers and lets the management continue to operate as usual.
In addition to the telecommunications services business, Upco is also involved in fintech. With the app Upco Pay, the Company wants to offer payments in addition to messaging and telephony. The blockchain-based software is expected to provide advantages over traditional payment service providers. The two business models complement each other. It is primarily the customers of smaller telecommunications companies in emerging economies who have relatives in Europe or the USA and receive payments from them.
The stock has also undergone a revaluation in the wake of the blockchain fantasy. This situation could mean good conditions for raising new capital and making it possible in the long term for Upco to continue its growth strategy.