January 25th, 2023 | 14:07 CET
Last generation upswing 2023? TUI, Lufthansa, Alerio Gold, Aurelius - opportunities upon opportunities!
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"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
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.
TUI and Lufthansa - Up from the cellar
According to ACR, the spending mood in Germany has yet to return to the level before the Corona Crisis. Worse than expected, the expectations of private households are currently far below the index values from 2017 to 2019. Two stocks from the tourism sector appear very interesting from the perspective of "travel and luxury spending" because, in the post-COVID year 2022, new travel habits of the population have become apparent. For example, people are flying less and vacationing more in their own country. The trend is toward "sustainability" - apart from catch-up effects due to the pandemic.
In Sweden, the travel group TUI has launched an attack on Booking.com. Customers can book hotels and other accommodations there directly via a portal. But that is not all: the sale of such individual offers is to be extended to other countries. Because of the debacle surrounding its major shareholder and oligarch Mordashov, the group is dependent on new financial backers. TUI plans to have its shareholders approve another capital increase in February in order to repay the remaining state aid from the Corona Crisis. The travel group has already raised a total of EUR 2 billion through capital increases in the last 2 years. Before that, however, there will be a 10:1 reverse stock split. The German state supported TUI in 2020 with a total of EUR 4.3 billion due to the collapse of the travel business in order to prevent bankruptcy. The capital increase is intended to repay around EUR 730 million in remaining silent capital contributions from the German government, an option bond and accrued interest. For the time being, the share has returned from the trough of tears and has even gained 70% since October. However, the long-term investor is still neatly behind.
Lufthansa has shaken off all the Corona issues and is now building its flight operations to be more crisis-proof. After a 50% rally, the announced strikes by Verdi are currently weighing on the stock. The weighted price target of 5 analyst firms is EUR 9.04. Currently, the crane airline is not really expected to achieve a turnaround. With a 2024 P/E ratio of 9.4, the share is fairly valued again after the recent price increase. If the travel industry picks up again, the stock has a further 50% potential in the medium term. However, this will first have to happen across the board.
Alerio Gold Corp. - Searching for gold in Guyana
The commodity market surprised in 2022. First, it went massively upwards, and towards autumn, it came to a strong correction. While the industrial metals corrected to 40%, gold and silver lost about 25%. In the meantime, both precious metals had launched an upward attack, reaching highs of USD 2,050 and USD 26, respectively. In the current environment, there is much to suggest that 2023 could again be a year for precious metals. On the one hand, gold is being bought by many asset managers as a hedge against inflation, and on the other hand, physical demand has been rising noticeably again since the middle of 2022.
In the northeast of South America lies the country of Guyana, which until now was mainly characterized by agriculture and mining. Recently, however, huge oil fields with an estimated total volume of 8 to 13 billion barrels of oil were discovered off the coast of Guyana. This is attracting more commodity companies to the country as investors. With a GDP increase of over 20% in 2022, the state will top the world table in prosperity growth. The emerging country is rich in mineral resources such as bauxite, diamonds and gold. The yellow metal has accounted for a significant 35% of exports in the recent past, and production should land above 650,000 ounces again in 2022 after a record in 2021.
Alerio Gold Corp (ALE) is a Canadian exploration company that has secured a number of licenses in Guyana for gold projects called Tassawini, Harpy and Puruini. The Tassawini gold project stands out, with over CAD 30 million already invested in mine-related infrastructure. A good 47,500 meters of drilling have already been completed historically, and all mining permits are also on board. About 500,000 ounces of gold are suspected in the ground, which could be brought to the surface on an area of 1,381 hectares.
New CEO Allan Fabbro is now focusing on upcoming remote sensing work that will provide subsurface features. This will include using the new digitized surface exploration (DEM) methods to revamp the existing resource estimate. Alerio Gold will ramp up exploration in 2023 following financing. With currently 73.2 million shares and a share price of CAD 0.07, the Company can currently be had at a bargain value of around CAD 5 million. It would not be surprising if majors had not long since taken a look at the stock.
Aurelius Equity Opportunities - Downgrade to the over-the-counter market brings trouble
The Aurelius Group is a pan-European investor specializing in "lucky buys". The aim is to make acquisitions below the price of equity in order to profit from them after a successful restructuring. Since its founding in 2006, Aurelius has evolved from a local turnaround investor into an international multi-asset manager. The investment strategy's core element is the portfolio companies' operational support with a team of around 100 in-house operating taskforce experts.
The Munich-based holding company has surprisingly announced that it will carry out a segment change from the qualified Open Market (m:access) in Munich to the general Open Market. That is because it was noted that the financial and regulatory burden had increased significantly in recent years. Even though the management will continue to consider the more pronounced shareholder rights and transparency measures, this step is surprising. After all, many companies don't even make it into the qualified market. The shareholders were not enthusiastic and sent the value down by minus 40%.
If write-downs were not also lurking in the portfolio, prices between EUR 13 and 16 would be long-term entry levels. In 2021, the Company achieved the silver award as "Best European Turnaround Investor". Put the stock on your watchlist. A first position makes sense at the current level.
Consumers are spooked by high inflation. This burdens consumer-related industries and also the travel business. In this mixed situation, the focus of investors could be directed to precious metals because they offer long-term value preservation. Alerio Gold owns a great property in Guyana and is currently a rare bargain.
Conflict of interest
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