TUI, Saturn Oil + Gas, Bayer - Find the 2024 doubler before the end of the year

TUI - Good figures and a positive outlook

The tough coronavirus years are still lingering at TUI. On December 6, the Group presented its figures for the 2023 financial year. A significant increase in underlying EBIT to EUR 977 million was recorded, which corresponds to an increase of 139% compared to the previous year. The result was driven by strong business results in all segments in the Holiday Experiences segment. Bookings in Q4 recorded an increase of 0.2 million guests compared to the same period last year, achieving an occupancy rate of 92% and leading to an 11% increase in revenue to EUR 8.5 billion in Q4.

Net debt was reduced to EUR 2.1 billion, and leverage ratios improved significantly. The booking development for the winter program 2023/24 shows positive trends. The Company expects a revenue increase of at least 10% and an increase in underlying EBIT of at least 25% for the financial year 2024. TUI is also planning a possible simplification of the stock exchange listing structure and inclusion in the MDAX. At the same time, the Company intends to withdraw from the London Stock Exchange in order to better reflect the shareholder structure.

Operationally, things are clearly on the up, which is also reflected in the number of guests. In the financial year 2023, 13% more people travelled with TUI than in 2022. The CEO expressed his satisfaction with the growth of the tour operators and the results of the Company's hotels and resorts. Further growth is to be generated by 3 new cruise ships. The share has gained more than 50% since the beginning of November and is consolidating slightly. One share currently costs EUR 7.09. Before entering, one should wait for a significant setback, such as the gap close at EUR 5.98.

Saturn Oil & Gas - Still growing

It was another exciting year for Saturn Oil & Gas. The Ridgeback acquisition was completed at the end of February, doubling its oil production. Ridgeback's net production at closing was 17,000 barrels of oil equivalent per day. The Company paid CAD 525 million for this and took on CAD 375 million in debt. This was followed by forest fires in Alberta and a falling oil price, meaning that the Company ultimately had to revise its targets. At the end of the year, EBITDA of CAD 375 million and daily production of around 27,000 barrels are now expected.

Debt is expected to be around CAD 455 million at the year's end, roughly 1.2 times EBITDA. Total repayment is scheduled for the 2nd quarter of 2026. A major drilling program is currently underway. At the last update on December 6, 13 wells had been drilled in all four core operating areas and delivered very good results. The oil production, in some cases, exceeded expectations significantly. This is partly due to the new Frobisher wells. In addition, the first developments of Cardium and Bakken light oil targets were successfully completed. The production results of the 16 outstanding holes are expected to be announced in January.

On December 20, when most investors were already in the Christmas spirit, the Company announced that its executives had acquired 891,898 Saturn shares from a former Ridgeback shareholder. The purchase price was not disclosed. But when a company's executives spend around CAD 2 million, you can assume they know what they are doing. It is a strong signal for shareholders. Compared to other oil companies in Canada, the share, which is currently trading at CAD 2.30, has significant catch-up potential. Analysts see price targets of between CAD 4.75 and CAD 6.30.

Bayer - A challenging year

For Bayer shareholders, 2023 was a year to forget. The constant legal disputes surrounding glyphosate continued to weigh on the share price. When the hopeful Asundexian, a blood thinner, failed in Phase III, the stock went on a downward spiral and marked a multi-year low of EUR 30.22. Just because a drug from the pipeline flops does not mean that the Bayer Group is worth 27% less. Investors have lost confidence, and the new CEO wants to mend the broken relationship. The details of how this will be achieved will likely be presented on March 5 during Bayer's Capital Markets Day, along with the financial figures for the fourth quarter.

Most recently, there were also defeats in court in the PCB legal disputes. The Group has not yet formed any major provisions in this area. No real progress has been made in reducing debt either. Nevertheless, the Company has substantial assets and a strong brand. For the new CEO, the next step must be right. Splitting up the Group could be a solution. Experts believe that just a single drug could lead to a market capitalization for the pharmaceutical division that currently matches the entire conglomerate.

This would mean that the individual divisions would no longer be mixed, and each division could play to its own strengths. At the same time, it would reassure activist shareholders who are calling for a split. According to Bloomberg, analysts expect slight growth in turnover and EBITDA. Instead of an adjusted profit of EUR 6.03 in 2023, around EUR 5.80 should be achieved in 2024. While the Company earns slightly less, it does not justify the current share price of EUR 32.68. The announcement of a demerger alone could give the share a significant boost.

Every single share has the potential to double. TUI has already performed well, but if the guest numbers continue to rise and the new ships are well booked, the share has further potential. Saturn Oil & Gas will certainly exceed its EBITDA of CAD 375 million in the coming year. At the end of next year, debt should be significantly reduced again, and then the share could quickly be revalued. A lot depends on the next move of the new CEO of the Bayer Group. If he can convince investors of his strategy, the share price could rise again quickly.