March 26th, 2021 | 09:30 CET
Klöckner+Co, Silver Viper Minerals, MBB - Silvering profits?
Table of contents:
KLÖCKNER & CO SE - Still far too cheaply valued
On March 10, Klöckner & Co published its annual report and reported a loss for the second year in a row. Given the now clearly brightening future prospects, the chapter of the red figures should now finally be closed. The share has certainly already priced in some of the prospects. Since the Corona low, the share price has almost quadrupled. The Group is one of the largest producer-independent steel and metal distributors globally and one of the leading steel service center companies. Through a distribution and service network of around 160 locations in 13 countries, the Group reaches over 100,000 customers - a very impressive figure.
Even more impressive is the outlook the Company gave 2 weeks ago. For the first quarter, for which the Group will publish data on April 29, Klöckner & Co held out the prospect of an operating profit (EBITDA) before special items of EUR 110 million to EUR 130 million. In the previous year, the Group generated only EUR 21 million at EBITDA level. Certainly, Q1 2020 was poor, so the bar was relatively low. The unusually stout expected Q1 2021 result is buoyed by the high inventory the Group built up at favorable prices. Central to the valuation of the stock is the topic of digitalization. The Group aims to digitize its supply and service chain end-to-end and develop its independent industry platform XOM Materials into the leading vertical platform for the steel and metals industry. Business is growing strongly. In the final quarter of the past fiscal year, around 45% was already generated via digital channels, increasing almost 50%. The offering has recently also been made available in the USA. In 2022, 60% of sales are already to be generated digitally, with additional annual savings of EUR 100 million.
Characteristically, the steel and metal distribution industry is characterized by strong price fluctuations and intense competition. Digital solutions can make supply chains more transparent and flexible, resulting in lower transaction and distribution costs. Given the growth prospects and the specific EBITDA target for the first quarter, we consider the analysts' estimates far too low overall. We expect significant increases in the price targets in the coming months. The experts still expect EBITDA of around EUR 170 million for the full year. In our opinion, the Group's successively increasing earnings power has not been sufficiently reflected in the market. Investors still have an excellent chance to buy the share at a favorable price.
SILVER VIPER MINERALS CORP - Two good reasons to get in
Silver Viper Minerals Corp. is a Canadian explorer focused on precious metals exploration in the state of Sonora in northwestern Mexico. The Company wholly owns the La Virginia gold-silver project. The previous owner, Pan American Silver, has already done a lot of work with quite a few meters of drilling. In addition, Silver Viper has an option to acquire all the shares of the Rubi-Esperanza Claims.
In mid-March, the Company reported excellent drill results within the La Virginia project in the so-called El Rubi zone. The best intercept from drill hole LV21-290 showed an average grade of 88 g/t silver and 2.43 g/t gold over a length of approximately 20 meters. CEO Steve Cope was excited given the results and saw this as an indication of the high-grade El Rubi zone's great potential.
Further increases in the silver price and project progress will provide significant momentum for the stock, in our opinion. For the long-term oriented investors, the share is a clear buy. The consequence of the current monetary policy must be inflation and the price increase of crisis currencies like gold and silver. The Company will likely continue to deliver good results from drilling activities and has a realistic chance of developing a valuable asset. The current valuation is CAD 54 million and does not adequately reflect the Company's opportunities.
MBB SE - Simply impressive
MBB SE is a medium-sized family-owned Company that has shown impressive growth since its foundation in 1995. MBB stands for Messerschmitt-Bölkow-Blohm and is today the only independent Company to have emerged directly from the original MBB Group. In post-war Germany, MBB stood for the art of engineering. The Holding Company's success is linked to its major shareholders Gert-Maria Freimuth (Chairman of the Board of Directors) and Dr. Christof Nesemeier (CEO). The founders will continue to hold the majority of the Group's shares in the long term. Both have shaped the DNA of the medium-sized Holding Company and are committed to MBB's long-standing tradition.
In May 2006, the Company took its first step onto the trading floor at a share price of EUR 9.50. Since then it has grown by more than 20% per year in terms of sales and profits. In the past fiscal year, the Group generated sales of around EUR 685 million. The sales mark of EUR 1 billion is to be reached by 2025 through organic growth and acquisitions. MBB has ventured into a new dimension in recent years, particularly concerning acquisitions. With the IPO of Aumann in 2017, the Holding Company demonstrated a good feel for the topic of electromobility and also good timing.
Yesterday, MBB announced another success with the IPO of its subsidiary Friedrich Vorwerk Group SE. MBB had acquired a 66% stake in the Group in 2019. The newcomer to the stock market, whose share certificates were placed at EUR 45, exited trading at EUR 47.88, up +6.4% on the issue price. The Company is currently valued at around EUR 950 million. The Company intends to use the gross issue proceeds of around EUR 90 million to expand its hydrogen and electricity business.
Friedrich Vorwerk is a leading supplier in pipeline and plant construction for gas, electricity and hydrogen applications and is seen as profiting from an increasing need for investment in the German energy infrastructure. But what does this mean for the valuation of the MBB share? MBB brought it to a stock market valuation of EUR 725 million yesterday. Friedrich Vorwerk is now the Company's most important asset. This raises another question: How will the stock market newcomer develop? The debutant's supervisory board is sure that the share is still relatively cheap, as shown by the multiple insider purchases reported last night. MBB is a good hold.
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