October 6th, 2022 | 10:42 CEST
ProSiebenSat.1 Media, Aspermont, Alibaba - Growth stocks with significant rebound potential
Table of contents:
ProSiebenSat.1 Media - Change in the Executive Board
ProSiebenSat.1 Media (PSM) a growth company? Maybe not at first glance, but the Munich-based Company has a large e-commerce business and is involved in many growth companies. The vision is to merge the TV business with the Internet and its e-commerce offerings to create greater customer loyalty. But October started with a bang. CEO Rainer Beaujean will vacate his chair on November 1, even though his contract had only been extended in December 2021. His successor will be former RTL CEO Bert Habets, who has been on the supervisory board since May.
Reasons for the change were not given, but the separation was said to be amicable. Beaujean's resignation should have pleased Silvio Berlusconi, who holds a significant stake in PSM through MediaForEurope (MFE). According to the Company, the new boss has extensive know-how in managing global media companies and developing video streaming services. It is fitting that on September 13, the group announced the 100% acquisition of streaming platform Joyn. The platform is expected to become the hub of the digital entertainment scene and become the largest free-to-air streaming service in the German-speaking world.
It will be exciting to see how the new boss wants to take Joyn forward, as the platform is still in the red. But there is now also new scope in terms of a possible merger. MFE could dare to make a new advance now that its big opponent, Beaujean, can no longer stand in the way. But perhaps RTL is now also an option. These rumors have come up again and again recently, and Habets will certainly still have enough good contacts with RTL. The fact is, a new wind will blow in Munich. It could give new impetus to the share, which is currently quoted at EUR 7.10.
Aspermont - Growth for 24 quarters
In recent years, Aspermont has developed from a traditional print media publisher into a digitally scalable media service provider for the commodities industry. In the process, its brands, such as Mining Journal, can look back on 187 years of history. Meanwhile, Aspermont has become a growth company. Its subscription numbers have risen steadily for the past 24 quarters, despite the Corona Crisis. That shows how robust the Content-as-a-Service model is. But the Everything-as-a-Service model has two other building blocks. One is the so-called Skywave data platform, which is constantly being expanded and optimizes products and processes. The other is the service area for B2B customers, who are thus relieved of marketing.
In their new update on the Company, the analysts at GBC confirm its rapid growth. Revenues are climbing YOY, and the gross margin is also growing. At the same time, new business areas are being built up, such as the financing platform "Blu Horseshoe", and old business areas, such as live events, are being reactivated after Corona. Blu Horseshoe, in particular, promises to be a success, as the Company has built up an extensive network over decades, which can now be leveraged. Other growth opportunities have already been identified. All content is to be translated using artificial intelligence in order to address new customer groups in Asia and South America. In addition, the old print editions will be digitized to provide additional value for the research platform.
CEO Alex Kent was recently in Germany on a roadshow and is confident that all business areas will grow by about 20% annually. Currently, one share costs AUD 0.024, giving the Company a market capitalization of AUD 58.3 million. This is clearly too low given the well-performing and constantly expanding business areas. However, the share has performed better than the problematic overall market. The analysts of GBC have issued a price target of AUD 0.11. So there is still a lot of upside potential here - the fintech sector has only just taken off and is not really reflected in the figures yet.
Alibaba - It has become quiet around the Company
Alibaba is China's growth company. In e-commerce, the Company says it has achieved full market penetration and its cloud division is growing. The group presented decent figures for the quarter on August 3, considering that the Chinese government's Zero-COVID policy has significantly curtailed consumer spending. Sales remained stable at around USD 21.2 billion. However, operating income slipped 19% to USD 3.7 billion. Free cash flow, however, rose 7% to USD 3.3 billion. CEO Daniel Zhang said the group has been actively adjusting to changes in the macroeconomic environment, meaning costs have been reduced.
Going forward, the Company plans to use Hong Kong as another primary trading hub to expand its investor base further. At the same time, international trading is to be expanded in order to increase the customer base. The move would also make the group less dependent on local conditions in China. Analysts at brokerage house Daiwa and JPMorgan expect Covid politics to loosen up and therefore expect positive trends for the upcoming quarterly figures, which will be presented on November 3.
The share has taken a significant hit over the past year due to Chinese government intervention, such as the planned ANT IPO and the simmering trade war between the US and China. Since mid-October 2021, the stock has lost more than 50% of its value. It is currently trading at USD 84.10. If analysts have their way, the share is consistently a buy. The lowest price target is USD 110.10, and the highest is USD 219.92. On average, a price of USD 141.15 is expected on a 12-month horizon. Compared to Amazon, the Chinese counterpart is clearly undervalued.
The market has punished many growth companies significantly. In some cases, the price reductions are exaggerated. ProSiebenSat.1 Media is considered a takeover candidate and will certainly get fresh impetus from the new CEO. Aspermont has completed its transformation from a print publisher to a digital service provider in the commodities industry and has begun to reap the rewards. Alibaba is significantly undervalued compared to its competitors due to the uncertainties regarding China. China will grow into the largest economy in the coming years, and Alibaba will also benefit from this.
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