July 24th, 2023 | 08:00 CEST
SAP, Altech Advanced Materials, Varta AG - Positive surprises
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"[...] Boron is one of the most versatile elements in the whole world! Everyone reading this text regularly uses hundreds of products that depend on boron. [...]" Tim Daniels, CEO, Erin Ventures
Varta AG - From Zero to hero
The tide can turn so quickly on the stock exchange. After being shunned by the stock market community in May and facing the possibility of a steep decline, the Varta stock has made an impressive comeback since the beginning of June, surging approximately 63% to EUR 22.32. Of course, the badly shaken producer of microbatteries, household batteries, energy storage systems and customer-specific battery solutions is not yet out of the woods, but the market is rewarding the first restructuring successes.
The Ellwangen-based company signed a comprehensive restructuring agreement with its financing banks and majority shareholder and an amendment to the existing credit terms while maintaining the existing financing until the end of 2026, which creates the basis for further implementation of the restructuring program.
In addition, further steps were taken at the recently held virtual annual general meeting. Shareholders voted to cancel the existing authorized and conditional capital measures from 2022 and replace them with the creation of new authorized and conditional capital measures, each amounting to 20% of the capital stock. In addition, Günther Apfalter was elected as a new member of the Supervisory Board. He replaces Werner Tillmetz, who resigned as of October 30, 2022.
Despite the recent successes, an investment in Varta remains a risky venture. Analysts surveyed on Refinitiv see an average price target of EUR 18.00 for the stock.
Altech Advanced Materials - Too well developed
Due to its innovative product portfolio in the field of coating technology for new types of batteries as well as grid battery storage, the shares of Altech Advanced Materials have been among the absolute high flyers on the market in recent months. At the beginning of the year, the Altech share, which has also been tradable on Xetra since recently, was quoted at EUR 3.60. In the meantime, the value exploded by around 400% to over EUR 18.
Due to the powerful jump in the share price, the management team around CEO Uwe Ahrens had to form a "provision for impending losses" of around EUR 518,000 in the preliminary half-year results, resulting in a higher-than-expected loss of EUR 992,000. This is because the option conditions for the convertible bond issued in March and the associated warrants provide for a cash settlement in addition to a share delivery, with the conversion price set at EUR 1.00 at the time.
Operationally, everything appears to be moving in the right direction at the Heidelberg-based holding company. At least, during the press day scheduled for mid-September at the Schwarze Pumpe Industrial Park, news about the development of highly innovative technologies is expected to be announced.
Altech Advanced Materials has two aces up its sleeve. Silumina Anodes, a special nanocoating of high-purity aluminum oxide in combination with silicon, significantly reduces the capacity loss in batteries that occurs in conventional lithium-ion batteries. No less promising is the partnership between Altech Advanced Materials, Altech Batteries Ltd. and the renowned Fraunhofer Institute for Ceramic Technologies and Systems IKTS. This cooperation focuses on developing CERENERGY batteries, a solid-state sodium-alumina battery that is to be produced industrially and sold commercially.
The CERENERGY storage system will eliminate the use of lithium, cobalt, graphite and copper and replace them with common salt and small amounts of nickel. The technology is to be used in stationary energy storage systems for renewable energy sources such as wind, solar and water. Planned production is at Altech's Schwarze Pumpe site in Saxony.
SAP - Dent in the cloud
The share of the largest European software group came under powerful pressure at the end of the week. With a minus of more than 6% compared to the previous week, the SAP share went out of the market but regained the strong support area at EUR 120.54 in the trading session.
The reason for the sell-off was the correction of annual targets after the promising cloud business fell well short of expectations in the second quarter. In the latest estimates, the Walldorf-based company expects cloud revenues to grow between 23% and 24% on a constant currency basis. Earlier estimates predicted growth of between 23% and 26%.
Compared to the same period last year, they recorded a 19% increase to EUR 3.3 billion in continuing operations. However, analysts' expectations were higher on average. Overall, revenues increased by 5% to EUR 7.6 billion. Adjusted earnings before interest and taxes amounted to EUR 2.06 billion, an increase of 23% compared with the corresponding prior-year quarter. In addition, the Company exceeded analysts' forecasts.
Following the figures, DZ Bank reiterated its price target of EUR 115 with a "hold" vote. For the US bank JPMorgan, the German software company is considered an "outperformer", but the price target was lowered from EUR 140 to EUR 138.
After horrendous share price losses, Varta AG continues to tinker with restructuring. SAP suffered a setback in the cloud business. As a result of the sharp rise in the share price, the loss at Altech Advanced Materials was higher due to the formation of a provision for impending losses.
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