January 28th, 2021 | 10:39 CET
Fresenius - Q&M Dental Group - IBU-tec: New price explosions every day!
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Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Q&M Dental Group - An asset deal and new COVID test center
Q&M Dental Group announces an asset deal. With the Singapore Stock Exchange's approval, they are reducing their stake in the group's subsidiary Aidite Qinhuandao Technology by approximately 12.25%. The total price of the transaction is RMB 122.5. Aidite is looking to buy back 6.1 million ordinary shares, and Q&M Dental Group's gain from the transaction is reported to be about SGD 5 million. Q&M is a Singapore-based dental service provider with Invisalign as its main product, which is also successfully used in Europe to correct misaligned teeth. In addition to general and specialized dental and medical care, the group has also invested in post-graduate education with the establishment of the Q&M School.
With dental offices closed during the lockdown in the COVID pandemic, several COVID rapid testing centers have been added to its portfolio of services. Clinical laboratory testing for the SARS CoV-2 RNA family of viruses is offered through 51%-owned subsidiary Acumen Diagnostics Pte. Q&M expects 1,000-2,000 visitors per day once fully operational. A rapid test costs about SGD 150-200 in Singapore and offers very high margins; for Q&M, SGD 50 should be retained per test. But that's not all: In principle, Q&M is also thinking about several export cooperations. Malaysia and Indonesia have already been addressed, but other ASEAN countries and South America are also on the cards.
The sheer fantasy of the COVID test center business and the export opportunities is something to be savoured. With just 1000 tests per day and that calculated on 300 days per year, depending on how long we assume the necessity of these tests, an additional turnover of SGD 15 million per year will be added to the books. Also, we calculated conservatively based on only 1000 tests a day, so this can still really fly! At a share price of SGD 0.48, the market capitalization is currently approx. SGD 360 million. These numbers put Q&M at an estimated pre-tax profit of SGD 20 million, plus COVID earnings at a P/E ratio of 7. That invites you to buy!
Fresenius SE - Still not entirely on track
The market is still struggling with Fresenius SE. Growth is expected to be lower than in previous years. While the stock has recovered around 60% from its March lows, it still lags behind its international peer group. Through fiscal 2017, the Company grew revenue and earnings per share at an impressive pace; between 1984 and 2017, revenue growth averaged 17.2% (CAGR) per year. In the decade before 2017, the CAGR was just 11.6%, but since 2017, growth has slowed even more to low single digits.
Over the last four quarters, we've seen revenue growth rates mostly in the mid-to-high single digits (with the exception of Q2/2020), and it appears that Fresenius will achieve its 2020 revenue guidance of between 4% and 7% growth despite COVID-19. Management estimates that the negative impact on sales in the first three quarters was between 2% and 3%, and on the earnings side, this will cost between 6% and 10%. Who would have expected the former growth pearl Fresenius to be so out of step?
All of this brings us to a second problem Fresenius is currently facing - the COVID 19 pandemic. It is dramatically impacting Fresenius SE's operating business, especially at Fresenius Helios and Fresenius Vamed. At Fresenius Helios, the clinics in Germany and Spain have recently experienced significant setbacks. During the first lockdown in spring, it took from February to June 2020 for elective treatments to return to the previous year's level.
All in all, COVID-19 will also harm the business in 2021. It is, therefore, questionable whether the share should be touched at around EUR 38. Sometimes it also makes sense to observe a development a little longer. That is certainly what Shorty at GameStop thinks.
IBU-tec - Battery fantasy spills over to Weimar
The small specialty chemicals Company IBU-tec advanced materials AG from Weimar kept a low profile for years. Then the market realized the possibilities of the battery division and there was no stopping it. The IBU-tec Group consists of IBU-tec advanced materials AG and BNT Chemicals GmbH. The group offers its products in the area of battery materials and specialty chemicals and also in development and production services for manufacturers. Its product portfolio includes high-quality battery materials as well as organotin and customized catalysts. In addition, they also offer micro and nanoscale metal oxides in powder or suspension form. IBU-Tec is a broad-based partner for the industry and an expert in handling specific substances.
There have been whispers lately about IBU-tec's long-term forecast. Finally, the time has come, and the specialty chemicals company is putting its cards on the table in the IBU 2025 strategy. According to this strategy, the Company expects average growth of 20 - 25% in the coming years. Specifically, revenues are expected to grow to a range of EUR 80-100 million by 2025, with an impressive 20% EBITDA margin. In absolute terms, this would amount to earnings before interest, taxes, depreciation and amortization (EBITDA) of EUR 16-20 million.
The figures may be even noticeably better in the end. "In setting our target, we have not assumed any best-case scenarios," says CEO Ulrich Weitz. "Battery materials will be our most important growth driver for many years, and with our product, which we will be able to market from the fall, we will grow into a new dimension there." The revenue share of the battery business will soon account for up to 30% of sales. The cooperation with Varta had already provided for fantasy on the stock market here. But also, the name Tesla falls regularly in connection with the small IBU-tec from Thuringia. It is worth adding to the watch list.
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