The Scale Index continues to fall - the stock market and economic environment is too bad. However, some shares are successfully bucking the trend, such as Daldrup & Söhne and Formycon. Three questions this time go to Ulrich Weitz, CEO of IBU-tec.
18 July 2022. FRANKFURT (Börse Frankfurt). Even the scale segment cannot escape the general market weakness with recession, inflation and interest rate worries. Even high flyers such as Deutsche Rohstoff AG (DE000A0XYG76) and Reederei Ernst Russ (DE000A161077) recently suffered losses. But there are also exceptions: The shares of Daldrup & Söhne (DE0007830572) and Formycon (DE000A1EWVY8) performed extremely well.
Daldrup and Formycon with share price gains
The drilling technology and geothermal specialist Daldrup & Söhne had reported at the beginning of June that it had returned to profitability in 2021. It has also been able to almost triple its sales in 2021. The background was said to be the continuing brisk demand for drilling services as well as some major orders. The share price jumped from 5 to over 8 euros in a short time.
The share of biotech company Formycon is also doing well. After 58 euros at the beginning of the year, the share price briefly climbed to 82.70 euros. Now it is still 73.50 euros. The company from Martinsried near Munich develops biosimilars, i.e. low-cost biopharmaceutical follow-on products. The first product, FYB201, is to be approved in the USA and Europe shortly. The British regulatory authority has already granted approval.
Segment as a whole suffers
Daldrup & Söhne is now also the best performer in terms of share price performance over a twelve-month period. It is followed by Deutsche Rohstoff AG, the commercial real estate investor Publity (DE0006972508), Beta Systems Software (DE000A2BPP88), the media group Edel SE (DE0005649503), Ernst Russ and Formycon.
The Scale All Share, which tracks all Scale members, has once again lost ground compared to the previous month. On Friday morning, the index stands at 1,464 points, compared with 1,594 points a month ago. The Scale 30 selection index is currently at 1,215 points after 1,297 points in mid-June.
Setback after rally: Deutsche Rohstoff and 2G
Deutsche Rohstoff AG is still one of this year's winners, despite the recent price setback. Since the beginning of January, the share price has risen from 20 to 33 euros, and is currently 26.30 euros again. The company is benefiting from high raw material prices. The Mannheim-based company was therefore able to present very good preliminary figures for the first half of the year: Sales and profits increased significantly.
According to the analysts at First Berlin Equity Research, Deutsche Rohstoff shares are far too cheap. They confirm their buy recommendation, but have reduced their target price from 43 to 36 euros due to the recent drop in the oil price. The shares of cogeneration plant builder 2G Energy (DE000A0HL8N9) have been weakening for some time. It currently costs 22 euros after 32.65 euros at its all-time high in April. The company recently confirmed its sales and earnings forecasts and reported a strong increase in demand for combined heat and power plants (CHP) using alternative gases. It also said that orders for natural gas CHP units remain at a high level, as a transitional solution and hedge.
After the strong price correction, the analyst firm SMC now sees significant upside potential for 2G and has reiterated its "Buy" rating. The price target is 35 euros. Due to the gas worries, the natural gas CHP business in Germany could suffer, it says. On a global level, however, the efficiency advantages of CHP units could outweigh the disadvantages. 2G's natural gas-fueled plants operate efficiently and can be converted to hydrogen and biogas. By the way, 2G has now implemented the announced stock split.
Ökoworld share price halved
The ÖkoWorld share, another "green" scale share along with 2G, saw a steep upward trend last year in particular. Business for the provider of eco-funds went like clockwork due to the good stock market development and the strong increase in demand for sustainable investments. In June, the company reported strong growth in sales and net income for fiscal 2021. This year, however, the capital market environment is much harsher. After peaking at 119 euros in 2021, the share is now crossing the table at just 54.80 euros. BankM sees a clear undervaluation, advises a buy and names a price target of 90.76 euros.
Greentech pioneer IBU-tec: Too badly punished?
The difficult environment is also affecting IBU-tec advanced materials (DE000A0XYHT5). The Weimar-based specialty chemicals company (see "Three questions") went public in March 2017 at an issue price of 16.50 euros. The price rose to 55.20 euros in June 2021, but the share currently costs only 22.70 euros. The reason is the energy-intensive business. However, the LFP battery material offered by IBU-tec, an important component of batteries for electromobility and stationary energy storage, is seen as having great potential.
Analysis house/bank | Scale company | Recommendation | Target price in euros | current exchange rate in euro |
GBC | Vectron Systems | Buy | 11.00 | 3.51 |
SMC Research | Beta Systems Software | Buy | 55.00 | 22.30 |
SMC Research | Delignit | Buy | 10.50 | 7.45 |
Montega | Helma Eigenheimbau | Buy | 86.00 | 39.80 |
GBC | Helma Eigenheimbau | Buy | 87.80 | 39.80 |
Montega | Cliq Digital | Buy | 70.00 | 26.10 |
GBC | MagForce | Buy | 9.15 | 1.58 |
GBC | Edel SE | Buy | 9.10 | 4.40 |
The IBU-tec share performed extremely well between the end of 2020 and the end of 2021, but this year it is weakening. Is this only due to the general market development, and what role does the high gas price play?
On the one hand, as a growth stock, we are more subject to general market developments than other stocks. Interest rate developments also have an impact. Secondly, like all chemical companies, we are very dependent on gas due to our energy-intensive business. However, our performance remains strong: we are very optimistic that we will achieve our targets for the half-year.
You describe yourself as a greentech pioneer and are the only European manufacturer of LFP battery materials to date. When will that be reflected in the figures?
We have been producing our own LFP battery material since October 2021, which is used in batteries for energy storage and in electromobility, among other applications. Since then, we have been talking to customers about requirements and sending out sample material. Qualification times of six months to three years are common. Accordingly, we are increasing production over the next few years and plan to double our sales to 100 to over 130 million euros from 2025.
From an investor's point of view: What speaks in favor of your share?
Clearly the growth perspective: we are a European pioneer in a growing market with a foreseeable enormous demand for batteries. We have the know-how and experience in processing demanding materials. And we have a high-quality product with a lot of potential. In our view, these are all arguments that make our stock attractive in the current market environment.
Ulrich Weitz, CEO ibu-tec
The IBU-tec Group develops and produces innovative materials for industry. It combines thermal process engineering technology, some of which is patented, with the process and materials expertise of around 250 employees. The company's own products include LFP battery material as well as solutions for air purification, resource conservation or the reduction of plastic packaging. IBU-tec thus sees itself well positioned in the long term for global megatrends - especially in climate and environmental protection.
from: Anna-Maria Borse
© 17 July 2022, Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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