March 17th, 2022 | 11:12 CET
TUI, Lufthansa, mm2 Asia: Shares for the opening after Corona
Table of contents:
mm2 Asia: Bubbling profits again soon?
Despite the still high case numbers, more and more easing of the rules and a return to everyday social life is picking up speed. People want to travel, go to the movies, attend concerts and major events. For those who find the situation in Europe too confusing at the moment, the mm2 Asia share is worth a look. Because of its stable core business, the Singapore-based entertainment company has come through the pandemic relatively well. The core business is post-production and content creation, distribution and sponsorship. It has also strengthened itself through targeted acquisitions. First, it acquired a majority stake in Vividthree Holdings, an award-winning studio for virtual reality, visual effects and computer-generated images. It has also acquired a stake in UnUsUaL Limited for event production and concert promotions. As a result, mm2 considers itself better positioned than its competitors.
The event sector should benefit significantly from an opening in the summer. With the establishment of mmCineplexes and the acquisition of Cathay Cineplexes Pte. Ltd., mm2 Asia is now one of the most important cinema operators in Malaysia and Singapore. In addition to the restart of cinema operations, the event production and concert promotion segment also has enormous rebound potential. The Company, listed on the Singapore and Frankfurt stock exchanges, is currently valued at only around EUR 90 million. Before the pandemic, mm2 Asia continuously increased sales and profits. In 2019, sales were still EUR 174.66 million, resulting in a gross profit of EUR 81.49 million. For the first half of 2022, a jump in revenue of 132.5% to EUR 46.3 million was reported. EBITDA almost doubled to EUR 11.9 million, and the net loss was at least halved. Thus, the Company is on the right track.
Lufthansa: Analysts still cautious
The Lufthansa share has performed well in recent days. It rose from EUR 6.20 to EUR 7.20. On the one hand, the oil price has returned from its highs. On the other hand, there is good news from the industry. The US airline Delta reported a loss for 2021, but the outlook was positive. Already in the first quarter of the current year, they will be at the upper end of the forecast. "We have never seen stronger demand in my career," Delta CEO Ed Bastian said as part of the release of the figures. If travel activity does indeed pick up, Lufthansa should also benefit. Analysts, however, are still cautious. Berenberg has confirmed its "hold" rating with a price target of EUR 6.30. The airline's first quarter continues to be difficult. Last week, UBS reduced its price target for Lufthansa shares from EUR 7.25 to EUR 6.65. Lufthansa's key figures, such as profitability in the cargo business, are quite positive. However, because of the Ukraine war, the uncertainty for 2022 is increasing again. Due to higher fuel prices, the UBS analysts do not expect Lufthansa to leap into the profit zone in the current year.
TUI: Facing a strong travel season?
Analysts are also still cautious about TUI. Jefferies, for example, has confirmed its "Underperform" recommendation for the tourism group, with a price target at EUR 2.10; the current price is around EUR 2.80. Although statistical analyses indicated that the start of the travel year 2022 will be strong, liquidity concerns remain at TUI. The analysts at Bernstein Research also do not see any room for upside for the TUI share. They have a price target of EUR 2.50. The economic effects of the Ukraine war are currently difficult to grasp. However, for long-term investors, the recent price setback in the travel sector offers a good entry point. TUI itself is optimistic about the future. The tourism group currently sees no fundamental change in booking behavior. According to a survey, people in Germany are keen to travel on vacation after two years of the Corona pandemic, which held massive travel restrictions in some cases. The Ukraine war does not seem to be dampening demand so far. TUI Deutschland CEO Stefan Baumert: "There are many indications that we will see summer business approaching, or even reaching, pre-pandemic levels this year. We see a very high backlog." He said the booking curve is currently pointing significantly upward. If this is true, the TUI share probably also has room to rise.
Analysts are currently still skeptical about TUI and Lufthansa. However, if it actually turns out to be a good travel summer, the shares of the two groups could benefit. The same applies to mm2 Asia. In addition, the downside risk for the entertainment company seems to be extremely limited, and the war in Ukraine should have hardly any impact on the business.
Conflict of interest
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