24. September 2021 | 13:34 CET
Tencent, Memiontec, Gazprom - Buy when the cannons are firing!
The last few trading days have been dominated by the scandal surrounding China Evergrande. To take pressure off the markets, the management and China's central bank have reacted accordingly and presented measures. The highly indebted real estate company has probably reached an agreement with domestic creditors regarding the outstanding interest payments. No mention was made of offshore liabilities. The People's Bank of China has reportedly injected 90 to 110 billion yuan, the equivalent of just under 14 billion euros, into the banking system in an attempt to calm investors' nerves. Nightingale, "we" hear you galumph!
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ISIN: TENCENT HLDGS HD-_00002 | KYG875721634 , Memiontec Holdings Limited | SGXE56008290 , GAZPROM ADR SP./2 RL 5L 5 | US3682872078
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.
China Evergrande - The beginning of a market shakeout
The soft handling of China Evergrande illustrates China's regulators' respect for greatness. There is much more lying dormant in the current handling of this USD 300 billion imbalance than the markets are currently willing to work through. After all, the Chinese stock index has already lost 30% since the beginning of the year, and other real estate companies are starting to wobble now too.
The reason is certainly also due to the pandemic because China's major cities have been experiencing for several months now again strong de-hiring of people who had previously hoped for a secure job. However, the labor supply of Chinese companies decreased drastically during the pandemic, so why wait locally in expensive apartments for the next job. In the countryside, the air is clean, and people live with their families under one roof, as they always have. Perhaps China Evergrande is just the beginning of a prolonged shakeout in the real estate sector because ghost towns have been around for many years. Only, who pays the bill?
Tencent - WeChat for all
Technology giant Tencent is one of the largest IT conglomerates in Asia. The strict hand of the regulator has made it difficult for the IT incubator to roll out its growth in e-learning and communication services as planned. Consequently, the stock fell back a full 50% from its February peak and is now even cheap again analytically.
Under scrutiny from domestic regulators, Tencent Holdings is opening its popular chat and messenger service WeChat to other competitors. It was announced that in the future, it would be easier to share links to other offers and websites on WeChat. That means that Alibaba listings will soon be integrated or shared in the chat and messaging app. Tencent also admits that it will gradually remove more barriers to competition from its WeChat service. Perhaps this is the starting gun for a rally in the stock. The 2022 P/E ratio has come down from 40 to 22 in the correction. The only question that remains is whether the regulator will allow the innovative Tencent to breathe again.
Memiontec - At home in the water business
Regardless of the fluctuations in neighboring China, everything is fine at Memiontec Holdings Ltd. from Singapore. On the contrary, the share price has been high for weeks, doubling since early August to over SGD 0.50.
For more than 20 years, the Company's focus has included all water treatment and purification areas in Indonesia, Singapore, and the People's Republic of China. With the entire value chain in the water segment, the Indonesia-based Company is one of the first contacts for local disposal concepts. At the end of August, Memiontec won two new tenders worth a total of SGD 12.7 million from Singapore's water authority, the Public Utilities Board. The order book is filling up!
Memiontec is one of the green investments at the forefront of investors' minds, especially in the current climate debate. In addition, the topic of "clean water" is certainly a trend of the century, especially in Asia, where only one-third of the population has local access to corresponding public supply networks. The Memiontec story should therefore continue to provide pleasure in the medium term, even after the increase.
Gazprom - The gas price rises and rises
The Russian gas giant is a typical example of mispricing. After all, with global demand for gas rising and prices rushing away, Gazprom is ideally positioned to leave its industry rivals in the energy sector entirely behind. Over the course of the year, the stock has already gained 104%. What makes Gazprom so attractive?
The Group has completed major infrastructure projects in recent years, such as Nord Stream 2, and can now deliver a much higher volume of Russian natural gas to its customers. These customers are primarily located in Europe and use the gas in heaters and for cooking. The gas price ran as high as USD 5.46 until mid-September, when a minor correction to USD 4.78 set in. However, the commodity is still at a ten-year high. Some headwind is still threatening from the EU Parliament; here some deputies want to have identified a market price manipulation through artificially created scarcity. Gazprom, for its part, presents the situation differently because the commissioning of the new pipeline will drastically increase the supply of gas in Europe. In the medium term, this should have a calming effect on the price of gas. An investigative committee is still to clarify the facts.
It will probably not stop the rapid rise in the Gazprom share price because the Russian standard stock is trading at a P/E ratio of 4 and a dividend yield of 5%. The share is still far from its all-time highs. Stay tuned!
Buy when the cannons are firing! A saying that has often brought good returns for those who have kept their nerve in crises. Tencent or Gazprom are typical standard stocks, which are currently analytically undervalued. Memiontec is a "green investment" with relevance for the next decades.