July 21st, 2022 | 11:17 CEST
Turnaround stocks: BASF, Aspermont, TUI, Deutsche Bank - Breakout with significant momentum?
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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.
BASF - The chemical giant is worried about gas
Currently, the information situation resembles an interesting potpourri of different broadcasting stations. First, it is said that Russian gas supplies will be restored without restrictions, and then comes the denial that important release papers have not yet been sent. All this shadow-boxing drives the investor crazy because the BASF share jumps by 5% at one point, then drops again by 3.5%. However, it seems that a sustainable sell-off level has now been reached. Of course, the sword of Damocles of continued warfare remains a permanent burden.
The Ludwigshafen-based Company is not commenting at all on the current situation because management has long known that losing gas, an important energy source, would lead to considerable burdens on production. Alternative energy procurement measures are currently being examined, but they will take several years to implement. For example, MAN is presently discussing whether part of the waste heat and heating requirements can be met by installing a gigantic heat pump. The economic feasibility study will continue until the end of 2022.
From an analytical point of view, BASF shares are currently valued at a P/E ratio of 7.5 and are trading below their book value of around EUR 45. In a long-term comparison, the book values were often the lowest points of any corrections. But that doesn't have to hold this time, especially since Germany's largest energy consumer relies on a lot of gas for its production. Around 50,000 products are made from gas, many of them from BASF. We wait and see!
You can also read our detailed report on BASF SE at: researchanalyst.com.
Aspermont Ltd. - Information around the globe
Aspermont Ltd. from Perth is all about the recipient-oriented distribution of information. The Company is a media and fintech company in one. In addition to relevant information from the commodities sector in print or online, Aspermont has also had a capital markets department for a good year, which deals with bringing together companies seeking capital and suitable investors. With the help of a variable platform, it matches different interests and arranges financing on a commission basis.
The gradual digitization of the business has led to increasing revenues and user numbers at Aspermont. As the business raises a certain fixed cost block, the operating margin increases with each new customer. Also, the many events, which are very important as a network extension, are now taking place again after the removal of the Corona barriers. It creates good secondary revenue for the organizer, but in the medium term, it is the basis for many new relationships.
On the operational side, Aspermont has made good gains again in recent quarters. In May, the latest figures were available. The network now consists of 8 million addresses and 3.7 million active online users. By establishing an end-to-end DaaS system, the Company succeeds in combining content and services at the highest level of aggregation. The revenue related to content has thus increased by an average of 20% (CAGR) in the last 5 years. The internal return on investment increased by 200% in the same period. The share leads a quiet existence and can be bought in Germany at EUR 0.014. The low share price is due to the usual high number of shares issued in Australia.
TUI and Deutsche Bank - First signs of life after the sell-off
When discussing turnaround stocks, Deutsche Bank and TUI appear on the radar. Both stocks have been through a sell-off that has taken between 20% and 50% of their share price value over the last 12 months. We look at the fundamentals and current market technicals for both.
Deutsche Bank is currently undergoing a turnaround. However, the war in Ukraine with all its consequences calls important financial targets into question. Whether the Group can still achieve them is uncertain. In addition to increasing earnings, an important centerpiece of the restructuring is to become much more efficient. But to achieve this, costs would first have to fall significantly. After the integration of Postbank, it seemed logical to simplify the IT systems in the entire Group, but this is probably not so trivial and will lead to considerable delays and additional costs of EUR 70 million. The stock market was perhaps hoping for a quick implementation, especially since interest margins are now flowing back into the Company operationally. Technically, the share price must first rise above EUR 9.40, and then the way to EUR 12 is clear for the time being. Collect at the lows!
We are somewhat more skeptical about TUI. The most recent capital increase at EUR 2.65 was very negatively received by the market. The share initially fell to EUR 1.43. Despite repayments to the German government, the debt ratio is still immense. In the 2021 balance sheet, borrowed funds exceeded total assets for the first time in history, sending equity into negative territory. One can only hope that with the hot summer, there will be enough of a surplus to bring this ratio back into balance. Given a return of Corona in the fall, however, there seems to be only a small window of opportunity for rising prices. Even if the visually low price is tempting, technically, the situation only improves from EUR 2.50 upwards. Very speculative!
The NASDAQ seems to have ended its sell-off for the time being, which allows the DAX to make some important recovery moves to the upside. BASF is one of the scolded standard stocks, which could make up 30% if the gas supply issue is positively decided. Deutsche Bank and TUI are still very speculative. With Aspermont, the good operating performance should soon be reflected in the price.
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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
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