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March 17th, 2022 | 11:12 CET

TUI, Lufthansa, mm2 Asia: Shares for the opening after Corona

  • Tourism
  • entertainment
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Currently, the news surrounding Russia's war of aggression dominates the capital market. A second event that has a significant impact on share prices: is the COVID-19 pandemic. And even if the daily infection figures are still at record levels, Germany is on the verge of dropping measures. Other countries are even further along. Companies are likely to benefit from this. For example, the tourism group TUI and Deutsche Lufthansa. TUI sees considerable pent-up demand, and Lufthansa is benefiting from the optimism of a competitor. However, analysts are still skeptical about both. The Asian entertainment company mm2 Asia should also benefit from upcoming concerts and cinema openings. In the first half of 2021, sales have already more than doubled.

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: TUI AG NA O.N. | DE000TUAG000 , LUFTHANSA AG VNA O.N. | DE0008232125 , mm2 Asia LTD | SG1DC0000006

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

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author

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