December 16th, 2020 | 10:08 CET
Freenet, Upco International, Ceconomy - clever moves are rewarded
There are many examples of smart strategic moves that give companies new growth potential. The various facets and their leverage on the share price development are considerable. Let us surprise you!
time to read: 2 minutes
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Author:
Carsten Mainitz
ISIN:
CA9152971052 , DE0007257503 , DE000A0Z2ZZ5
Table of contents:
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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FREENET AG - significantly deleveraged
Freenet is much more than telecommunications. Its mobile communications business characterizes the Group. In addition, the North Germans have built up the second pillar of TV and media since 2016, home entertainment (music and video offers) and smart home applications are some of the keywords. The combination of the two business areas shapes Freenet as a "digital lifestyle provider". A multi-brand strategy (discount to premium) enables it to meet the needs of virtually all customer groups. Around 13 million customers reflect the success.
Based on the latest figures, it can be said that the Group is holding its own with slight year-on-year revenue and profit growth after nine months. Only the weaker development in TV customers was disappointing. The outlook for the current financial year was confirmed.
Wisely and with foresight, Freenet refrained from paying a dividend in the summer and generated around EUR 1.1 billion through the sale of a stake. As a result, debt reduction has been significantly improved. In recent months, Freenet also bought back its shares. If the business picks up again, shareholders will benefit in several ways - with rising profits as the number of shares falls and a dividend.
UPCO INTERNATIONAL INC - UpcoPay as a share price driver?
Upco International has achieved a lot in 2020 and laid the foundation for further growth. Founded in 2014 and headquartered in Vancouver and New York City, the Company operates in two business segments: telecommunications and digital services. In doing so, Upco operates in niche markets worldwide.
Its core business is international wholesale voice over IP (VOIP) products. Here, the Company announced in November the acquisition of the Equinox Group, a telecommunications company from the Dominican Republic with wholesale operations in the US and the Caribbean.
In our opinion, great fantasy lies dormant in solutions for payment services, which can be assigned to the digital services area. At the beginning of the fourth quarter, the Company announced it was launching the beta phase for UpcoPay. UpcoPay is an innovative, secure and convenient direct payment solution between individuals and between individuals and merchants. The goal is to implement an e-wallet after the start-up phase, starting in 2021, to recharge funds or enable payments via an app, among other things. This service will first be available in Europe.
If Upco succeeds in turning telecommunications customers into additional users for payment services, the Company's growth will accelerate significantly. However, many providers with different solutions are competing in the market. But given the low market capitalization of around CAD 4 million, success should quickly translate into rising sales and share prices.
CECONOMY AG - Bang for the buck
The operator of the electronics stores MediaMarkt and Saturn reported a critical step, which the share price honoured with a big jump yesterday. For many years, disputes between the shareholders of the Media-Saturn Holding Company have been a burden. Now Ceconomy announced that it would acquire all of the remaining shares (21.62%) from the existing shareholders. In return, the existing shareholders will receive up to 29.99% of Ceconomy, making them the largest shareholder.
In the future, Ceconomy will focus on new store concepts and the expansion of eCommerce. The Group's vision is to "build the largest omnichannel platform in Europe." The complete takeover of Media-Saturn-Holding marked an important milestone on this path.
Ceconomy's stock market value currently stands at EUR 1.8 billion and, in terms of valuation, still leaves room for rising prices. Investors also participate in the Company's success through the high dividend payout ratio of 45 to 55 percent of earnings per share.
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