11. October 2021 | 10:26 CET
Deutsche Post, Memiontec, Bayer - Here is where the action is
After heavy losses in recent weeks - the DAX losing more than 1,200 points at its peak and briefly slipping below the 15,000-point mark - the mood is brightening again. The German benchmark index, now made up of 40 members, is back on track for a year-end rally despite concerns about stagflation. The 16,000 peak beckons once again. Individual stocks are likely to outperform in the final weeks of the stock market year based on the recently reported fundamental data.
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ISIN: DEUTSCHE POST AG NA O.N. | DE0005552004 , Memiontec Holdings Limited | SGXE56008290 , BAYER AG NA O.N. | DE000BAY0017
The signs are favorable for the shareholders of DAX-listed Bayer, who have been suffering for years. As a result of the interminable glyphosate legal disputes that have swallowed up billions, the stock lost more than 60% of its value. It is currently struggling to find a bottom in the zone around EUR 47, close to the 10-year low. Breaking above the EUR 50 mark could breathe new life into the share price. A dynamic move to the EUR 75 area, i.e. a 50% chance, would not be unrealistic in this case.
The Leverkusen-based Company was able to achieve at least a first partial success in the glyphosate dispute. After losing three lawsuits, Bayer was able to win a case for the first time. A court in Los Angeles ruled that the weed killer glyphosate did not cause a boy's cancer.
The news that the agrochemicals and pharmaceuticals group was seeking to sell its "Environmental Science Professional" (ESP) division also had a positive effect. As reported by the Bloomberg news agency, a trade sale is likely to bring around EUR 2 billion into the Company's coffers. There are enough interested parties, such as Blackrock and CVC. However, neither Bayer nor various financial investors commented on the news.
The share of Memiontec, the holding Company from Singapore, showed an unparalleled development on the stock exchange floor. The share has gained around 200% in the last 8 weeks alone - we drew your attention to the stock at the time - and is quoted at EUR 0.46 in Frankfurt. The reasons are obvious. Memiontec has been a leader in developing complete water and wastewater management solutions in Singapore, China, and Indonesia for 20 years. It can cover the entire value chain through its 4-pillar model, leading to high scaling effects in the long term.
In addition to providing total solutions, including maintenance contracts and selling modular and customized systems and equipment, the build-own-operate-transfer (BOOT) and transfer-own-operate-transfer (TOOT) segments are the cash cows. Through long-term partnerships with public and private partners, investments are made here in the maintenance of water treatment infrastructures. By selling purified water, Memiontec benefits here in two ways. In addition to revenue from operations, maintenance and services, the Singapore company generates revenue by selling purified water. As the concession contracts have an average term of 25 years, recurring income is thus secured in the long term.
Most recently, Memiontec won two tenders worth a total of EUR 8.09 million from Singapore's Public Utilities Board. By the end of July, the order backlog had already reached the record level of EUR 58.38 million. In addition to expanding its joint ventures, Memiontec also plans to grow further through mergers and acquisitions. The topic of water and water scarcity is expected to become more mainstream in the coming years. Memiontec is playing in the premier league in this respect.
Outstanding business year
Deutsche Post, in particular the DHL segment, is, without doubt, one of the winners of the Corona pandemic and the resulting online boom. Profit forecasts are being raised for the fourth time this year. On Nov. 4, when third-quarter figures are released, management plans to announce new 2021 operating profit figures "against the backdrop of excellent business development." So far, the benchmark is EUR 7 billion.
"Global trade has accelerated significantly compared to the previous year," explained Post CEO Frank Appel. In addition, e-commerce shipment volumes remain high. "That is why we are optimistic about the upcoming Christmas business." The Company is preparing for possible record volumes in the coming weeks and has built up additional capacity.
Despite the extremely positive reports, the share is currently in correction mode after a high of EUR 61.29 in mid-September. There is still a gap to be closed at EUR 52.30. At this level, there is also stronger support. In the long term, this could be a good entry opportunity.
Both Bayer and Deutsche Post offer good long-term entry opportunities at current levels. Although Memiontec has run strongly in recent weeks, the current high level of incoming orders shows a continued positive outlook for the future. The share has enormous long-term potential due to the global water shortage but may be prone to higher volatility in the short term.