New strategies, new successes - some long-weakening scale companies have bounced back. Others are always doing well anyway. Overall, however, small shares are still having a hard time. The three questions this time go to Sebastian Grabmaier of JDC Group
18 September 2023. FRANKFURT (Börse Frankfurt). Over the long term, small caps can generate higher returns than large caps, but large caps have been doing better for some time. And micro caps, like scale stocks, are particularly lagging. Higher interest rates, inflation and the weakening economy are hurting companies. And in the stock market, big, familiar names are more popular right now. The Scale All Share is at 1,182 points Monday morning, down 3.7 percent year-to-date. The all-time high from 2021 of 1,969 points is a long way away.
However, the differences within the index are huge. The top group has made substantial gains, while the bottom group has suffered heavy losses. But who belongs to what is not static. Currently, the long-weakening Düsseldorf-based online retailer of luxury accessories Fashionette (DE000A2QEFA1) is ahead on a twelve-month horizon. The price has almost doubled since September 2022 to currently 6.88 euros. After all, the price of Veganz Group (DE000A3E5ED2), a provider of vegan food, rose from 17 euros to 25.20 euros. In both cases, the rise had been preceded by significant setbacks. The same applies to the cash register system provider Vectron Systems (DE000A0KEXC7), known to many from bakeries and the food service industry, and Laiqon, formerly Lloyd Fonds (DE000A12UP29), in third and fourth place on the performance list. Daldrup & Söhne (DE0007830572) is somewhat more stable over time. The geothermal specialist is in fifth place with a price increase from 7.40 to currently 9.40 euros.
Veganz and Fashionette on new paths
The Veganz Group had been hit by the sharp rise in energy and raw material costs in the wake of Corona and the Ukraine war, and by consumer reticence. In the first quarter, Veganz posted deep red figures. However, there is reason for hope: At the beginning of September, Veganz raised fresh money through a capital increase, and the US investment company Vegreat LLC became a new major shareholder. Veganz intends to use the gross proceeds of a good 6 million euros to expand its production capacities and develop its sales and marketing activities. In addition, Veganz and Vegreat have founded a joint venture in the field of indoor farming in Dubai.
Fashionette is also breaking new ground. CEO Dominik Brenners wants to significantly improve profitability. Two unprofitable market segments have already been discontinued. The restructuring process is beginning to bear fruit: Fashionette, with its two platforms fashionette.com and brandfield.com, increased its earnings in the first half of 2023 and also raised its forecast for the full year. The merger with main shareholder The Platform Group, which was approved by the shareholders at the beginning of this month, also provides for share price fantasy. This will be integrated into Fashionette AG, which in turn will be renamed The Platform Group AG.
2G as an evergreen
One of the stars in the segment is 2G Energy (DE000A0HL8N9), a manufacturer of combined heat and power plants, despite a price setback in 2022. 2G benefits from the energy transition anyway and has therefore long been a favorite of "green" investors. Now 2G has also acquired Dutch heat pump manufacturer NRGTEQ.
This is going down well with analysts. First Berlin has upgraded the share from "add" to "buy" and increased the price target from 33 to 34 euros. Currently, the share costs 25.25 euros. "We maintain our estimates for 2023 and continue to issue a clear buy recommendation in view of the improved medium-term growth prospects resulting from the entry into the large heat pump business," the analyst firm says. According to SMC Research, the half-year figures show a "very positive development." Overall, 2G Energy is on a dynamic expansion path. The hydrogen sector still offers great potential, as does the business with large heat pumps. SMC continues to recommend a buy, the price target remains at 31 euros.
German raw material convinces many
The share price of Deutsche Rohstoff (DE000A0XYG76), the Mannheim-based raw materials and mining company, is heading for an all-time high. Currently, the share costs 30.70 euros, in record high in the summer of 2022, it was a good 33 euros. In the first half of the year, Deutsche Rohstoff had increased sales again, but Ebitda declined due to lower commodity prices. Now the oil price has risen again. Following the publication of the half-year figures, First Berlin confirmed its buy recommendation and raised its price target from 40 to 44 euros. Other analysts also recommend buying, such as Kepler Cheuvreux (target price 43 euros), Alster Research (target price 47.10 euros) and Oddo BHF (target price 40 euros).
Cliq with registered shares
There is news from Cliq Digital (<DE000A0HHJR3>). The streaming company will convert its entire share capital from bearer shares to registered shares after the close of the stock market on September 20. As of September 21, the new ISIN DE000A35JS40 will then apply. The Annual General Meeting of Cliq had resolved the conversion on April 6, 2023. RCM Beteiligungs AG also announced that it will leave the Scale segment at the end of November. The listing will continue without interruption in the over-the-counter segment Basic Board.
Bank | Company | Vote | Targer in Euro | Price in Euro today | |
GMC | Vectron Systems | Buy | 10.00 | 5.26 | |
SMC-Research | Laiqon | Buy | 12.60 | 7.98 | |
Warburg Research | Laiqon | Buy | 10.50 | 7.98 | |
SMC-Research | Delignit | Buy | 10.00 | 4.60 | |
SMC-Research | Blue Cap | Buy | 31.30 | 18.60 | |
GSC Research | EQS Group | Buy | 32.50 | 25.10 | |
SMC-Research | mVise | Hold | 2.00 | 0.78 | |
Alster Research | Formycon | Buy | 100.00 | 60.10 | |
First Berlin | Formycon | Buy | 105.00 | 60.10 | |
GBC | Advanced Blockchain | Buy | 11.00 | 3.01 | |
BankM | Ökoworld | Buy | 55.36 | 32.40 | |
Montega | Nynomic | Buy | 56.00 | 31.60 |
In the first half of the year, the JDC Group was able to increase sales and Ebitda despite a difficult market environment and consumer restraint. What is the outlook for the year as a whole?
The multi-crisis environment of high inflation rates, rising interest rates and war in Ukraine remains challenging. However, business is picking up again. In the platform business we are already back on track, as shown by the current new business and portfolio transfer figures. We therefore confirm our positive assessment and expect sales to grow by an average of 17 percent to between 175 and 190 million euros in 2023.
In which business area do you see the most potential?
Our growth driver is the insurance business in the Advisortech segment. We have already reached the important milestone of an insurance portfolio with annual net premiums of over one billion euros here in the second quarter of 2023 - earlier than expected. The high recurring revenues provide a solid basis for the further growth of the JDC Group. In particular, the large contracts in the savings bank and cooperative banking sector will provide a significant boost.
The share price has been weakening since the beginning of 2022. What speaks for an investment?
JDC Group stock has done well in the general tech and small-cap lull and has also outperformed the Scale 30 since spring, showing confidence in our business model. However, starting in the third quarter of 2022, our platform business was significantly impacted by the lack of consumer confidence due to war, inflation and rising interest rates. However, our customers have been back in the market since the second quarter of 2023, and now we can reap the fruits of our labor. Business with more and more major customers, especially from the banking sector, is doing the rest. With good figures, the share price should also get back on track.
The Wiesbaden-based JDC Group (DE000A0B9N37) offers a digital platform for insurance, investment funds and all other financial products and services under the Jung, DMS & Cie, allesmeins and Geld.de brands. With more than 16,000 connected platform users and around 1.6 million customers, it is one of the market leaders in German-speaking countries.
by Anna-Maria Borse © 18 September 2023, 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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