December 23rd, 2021 | 13:57 CET
Lufthansa, TUI, Tembo Gold - Full speed ahead to faraway places!
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"[...] We have a clear strategy for neutralizing sovereign risk in Papua New Guinea. [...]" Matthew Salthouse, CEO, Kainantu Resources
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.
Lufthansa - Can the crane line fly higher again?
Due to the pandemic, the year 2021 will probably go down as another minus marker in Lufthansa's recent corporate history, with a loss in the billions. Because currently, Lufthansa is still struggling heavily with operational problems and a potential strike. In the summer, capacities increased in anticipation of an improvement, but now aircraft utilization is falling sharply, and trips are being canceled or postponed.
But hopes for a good tourism year in 2022 remain. In anticipation of strong catch-up effects, Lufthansa subsidiary Eurowings will fly to more destinations next summer than ever before. Overall, the German Airports Association (ADV) expects 180 million passengers and renewed significant growth in freight and logistics for the coming year. However, this will fall short of the pre-crisis level of 248 million passengers from 2019 by a good 28%. Lufthansa should probably get used to the new level for the time being.
With 2,500 flights a week, the Group's offering in 2022 should nevertheless almost reach the level of before the Corona pandemic. There will be 380 flights a week from 20 different airports to Palma de Mallorca alone. Within the Lufthansa Group, Eurowings primarily covers vacation flights in Europe and the extended Mediterranean region. With a fleet of 100 aircraft, it sees itself as Germany's largest vacation airline. Lufthansa can only hope that this plan will be crowned with success.
It remains undisputed that the pandemic situation will still severely restrict demand for flight services in the coming winter and spring months. In purely balance sheet terms, Lufthansa has been able to repay a large part of the government aid, and cash has also been restored to a robust level. The chart of the LHA share is currently building a promising saucer formation, which would have its completion with a rise above EUR 7. Speculative investors should add the MDAX stock to their portfolios, even if an investment in tourism does not seem opportune at the moment.
Tembo Gold takes Barrick Gold on board
From Europe, we turn our attention to the African Tanzania-based company Tembo Gold. The Canadian-listed explorer owns an eponymous 100% interest in the local gold project. As with all young precious metals companies, the focus is on discovering and developing precious metals in East Africa. Tanzania itself is now looking to get back into the mining business after years of political abstinence. That suits Tembo in all negotiation steps.
Tembo Gold has now sold some assets to major Barrick Gold to secure a more manageable structure. The agreement includes the transfer of licenses in the neighborhood of Barrick's world-class Bulyanhulu mine. Barrick will pay USD 6 million in exchange for a 5.5% interest in Tembo Gold. Barrick's CEO, Mark Bristow himself, described the acquisition as a significant step in the Company's strategy to increase its growth opportunities in Tanzania. Barrick is also committed to investing at least USD 9 million in the newly acquired license area over the course of four years following the closing of the transaction. This is a sound basis for funding future ventures. The six licenses divested are in areas where Tembo has not previously focused its exploration activities. Tembo is now prioritizing its remaining core properties and on the untested zones of its claim. Some positive surprises are likely to follow here in 2022.
Due to the news in connection with Barrick, there was premature takeover speculation, and the price of Tembo Gold already rose 100%. Then it came to first profit-taking, which pushed the note back into the zone of CAD 0.23 to 0.26. Here the market capitalization reaches low values around CAD 23 million, a good set-up for growth in the next year. At this level, the share has the potential to multiply.
TUI - How to survive as a tourism company?
Once again, back to the tourism sector. The share price of TUI, the largest tour operator in Europe, reached a new all-time low of EUR 2.25 at the end of November. The whole thing can be traced back to a life-saving capital increase, as a large volume of new shares first had to be digested by the market. In return, TUI received a cash injection of EUR 1.1 billion into its coffers and was able to repay EUR 375 million in borrowed funds due to KfW. Russian investor Alexei Mordashov, who retained his 32% stake even after the measure, is entirely on board with the restructuring of the Group. Overall, this is a good sign for TUI and secures its existence.
However, Omicron is leading to further restrictions in international travel. Due to the rapid spread of this variant, the Robert Koch Institute has declared both the UK and several overseas regions as virus variant areas. The associated hurdles are unacceptable for many travelers, especially regarding 10-day quarantine obligations. Terrible news for TUI as the continuous operational pressure just won't let up.
Under these circumstances, looking at the chart of the popular trading stock, it is somewhat surprising that the price started a small counterattack at EUR 2.40 at the beginning of the week. The mood is permanently too bad for the stock market players, and they buy according to the motto: "Get in when the cannons are thundering!" The chances for the success of this strategy are not bad, because as is well known, the stock exchange thinks a good 6 months ahead. Then, Germany is back in summer mode and, of course, the cold virus as well. TUI remains attractive from a speculative point of view because operating profits are already beckoning again from 2022.
The travel industry is again under pressure, but the Lufthansa and TUI groups have replenished their equity this time. Those who hoard their liquidity a bit now can easily get through the winter, and next year a new game begins. For Tembo Gold, all signs are already pointing to a storm, because in Tanzania, it is hot all year round.
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