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February 8th, 2022 | 12:43 CET

Deutsche Telekom, Memiontec, BASF: Substance for discerning investors

  • Technology
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Investment depends on a healthy mix of growth and substance. Particularly in times of rising inflation and increasing distortions in the economy, more investors are once again opting for conservative investments. The advantages: Quite often, regular dividends and robust figures. Above all, the economic moat much cited by value investors can pay off in these times. We present three shares and discuss their advantages and disadvantages.

time to read: 2 minutes | Author: Nico Popp
ISIN: DEUTSCHE TELEKOM ADR 1 | US2515661054 , Memiontec Holdings Limited | SGXE56008290 , BASF SE NA O.N. | DE000BASF111

Table of contents:

    Deutsche Telekom: Why the business is so secure

    The principle of the economic moat is simple: It is about the extent to which a company and its business model can withstand changes in the economy and the market. The best way to explain how the economic moat works is to take Deutsche Telekom as an example. Even if the economy were to go downhill and people were once again more afraid of unemployment, Deutsche Telekom's business would probably be secure. The reason: telephone and Internet are basic needs. Very few customers would cancel their contract with Deutsche Telekom just because their own economic prospects are less promising. These conditions make the share attractive even for conservative investors. But what is the current situation of the "pink giant"?

    In recent quarters, Deutsche Telekom has succeeded in increasing its revenue. The Company is doing particularly well in the broadband and fiber-optic areas. In mobile communications, more and more customers are turning to mobile data services, which is reflected in higher data consumption. Last year, a figure of more than 6 gigabytes of data per Telekom mobile customer was reported. This figure suggests that users are primarily booking the somewhat more expensive rates and are not deterred by the pricing policy of the top dog - economic moat, after all. The share offers a dividend of around 3% and is just about to climb back towards EUR 20. However, investors should not expect big leaps from Deutsche Telekom.

    Memiontec: Bread-and-butter business with a lot of fantasy

    The situation is quite different for Memiontec. The water supplier from Singapore, which is also firmly positioned in Indonesia, among other places, was quickly considered an insider tip last summer. The reasons: Memiontec concludes long-term contracts and at the same time benefits from the growing demands of the population and increasing urbanization, especially in Asia. Between the summer and fall of 2021, the share price jumped from EUR 0.15 to EUR 0.60. After that, a consolidation set in but is now stable above the EUR 0.40 mark.

    Similar to Deutsche Telekom, Memiontec is also a flawless utility. Especially in Asia, water is still a critical issue. The demand for clean water is increasing, and Memiontec offers comprehensive solutions for drinking water, industrial water and wastewater. The Company currently has orders worth around SGD 84 million on its books. On the stock market, Memiontec is valued at around twice that amount. Since new projects are gradually coming online, and Memiontec often earns money on maintenance for decades, the share must be considered an attractive niche investment among the substance stocks.

    BASF: From the Palatinate to the whole world

    BASF, the Ludwigshafen-based chemical company, is anything but a niche player. With subsidiaries worldwide, the Palatinate-based Company is particularly strong in the field of surfaces. But basic and agricultural chemicals also play an important role, along with nutrition and care. BASF's figures have recently been good. In the first nine months, sales climbed by a whopping 36% to EUR 58.5 billion. As margins have grown despite rising raw material prices and ongoing logistics problems, more investors are now looking at BASF again. Even before, the Company was the first choice of conservative investors. Its recent successes despite a problematic environment prove investors right. The dividend yield of well over 5% is also a good argument.

    While companies such as Deutsche Telekom or BASF are solid and play to their strengths, especially in the crisis, Memiontec shines with a good portion of growth fantasy and an extremely sound business around the water industry in China. Given this regional focus, the share can be considered opportunity-oriented despite the Company's solid orientation.

    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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    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author

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