15/03/23 10:02:01

Scale market report: "Could not escape peer group decline".

Companies like Exasol, Deutsche Rohstoff, Cliq and 2G are growing strongly, and the stock market is also doing well. Other scale companies are struggling. This time, the three questions go to Remco Westermann from Media and Games Invest.

15 March 2023. FRANKFURT (Börse Frankfurt). The Scale segment has not been spared from the recent stock market slump. The collapse of the Californian start-up financier Silicon Valley Bank has fueled concerns about a new financial crisis and sent stock markets around the world into a tailspin. Yesterday, Tuesday, a recovery began.

The Scale All Share, which tracks all members, is at 1,278 points Wednesday morning, up from 1,324 a month ago. Since the beginning of the year, that still gives a gain of 4 percent. The Scale 30 selection index is currently at 1,139 points, more or less the same level as at the end of 2022.

"German AI hopefuls" with rich price gains

Many Scale members that had performed very well since the beginning of the year also lost ground. For example, the price of the database provider Exasol (DE000A0LR9G9) - occasionally traded as the German AI hope - had risen from 2.87 to 4.65 euros. Now it's back down to just 3.92 euros. 2022 Exasol - according to preliminary figures - increased recurring revenues by 17 percent to 36 million euros. The operating result also improved significantly, but it still remained at a loss. For the current fiscal year, the Management Board expects a continuation of the growth course and a further increase in profitability.

Record year for German raw material

The share price of Deutsche Rohstoff AG (DE000A0XYG76) also crumbled recently. Currently, the share costs 26.20 euros, down from 28.30 euros at the beginning of the month, but is still clearly in the black this year. The oil producer had also presented good figures for 2022: Sales of 165 million euros and Ebitda (earnings before interest, taxes, depreciation and amortization) of 139 million euros were within the forecast range published in December. This had been raised three times in 2022 - partly due to rising oil and gas prices. "Deutsche Rohstoff has reached a new level both operationally and in terms of profitability," CEO Jan-Philipp Weitz said. "For the current year and the years to come, we have created an excellent basis and are confident that we can continue to grow."

Cliq and 2G continue to grow

Düsseldorf-based streaming provider Cliq Digital is hardly suffering from the current stock market environment, with the share price up a good 15 percent since the beginning of the year. In 2022, Cliq increased its sales by 84 percent to 276 million euros and its net income by 63 percent to 29 million euros. Combined heat and power plant manufacturer 2G Energy (DE000A0HL8N9) also continued on its growth course in 2022, increasing its sales revenue - according to preliminary figures - to well over 310 million euros. The company plans to announce details at the end of March.

The analyst firms SMC Research and First Berlin consider the 2G share far too cheap: SMC expects a continuation of the positive development and trusts 2G 30 euros. That would be an increase of 36 percent from the current 22 euros. SMC says that combined heat and power plants will play a key role in the further implementation of the energy transition. 2G is ideally positioned in this market to benefit from an increase in demand. Increasingly important: the hydrogen capability of the plants, and 2G offers that. Based on the new figures, First Berlin has raised its estimates for 2022 and expects double-digit sales growth with higher margins for 2023. The price target is 31 euros.

Formycon top-selling scale stoc

Formycon was once again the highest-turnover scale stock in February, and by a wide margin. In the past month, shares of the company worth 22.9 million euros were traded on Xetra and the Frankfurt floor. Cliq Digital followed in second to fifth place with 10.7 million euros, 2G with 7.4 million euros, Exasol with 7 million euros and IBU-tec advanced materials (DE000A0XYHT5) with 4.4 million euros.

Hard times for many scale stock

On a one-year view, Formycon (DE000A1EWVY8) has performed best - despite recent price losses. The share price has risen from 45 to 72.20 euros since March 2022, but in January it was over 90 euros. The company, based in Martinsried near Munich, Germany, offers biosimilars, which are low-cost biopharmaceutical follow-on products. Also performing very well over a twelve-month period were geothermal specialist Daldrup & Söhne (DE0007830572), Cliq Digital, the investment company SGT German Private Equity (DE000A1MMEV4) and Geratherm Medical (DE0005495626), the manufacturer of clinical thermometers from Thuringia. Bringing up the rear are Advanced Blockchain AG (DE000A0M93V6), Veganz Group (DE000A3E5ED2), Helma Eigenheimbau (DE000A0EQ578), fashionette (DE000A2QEFA1) and mVise (DE0006204589).

Further recommendations for scale shares

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Three questions for... Remco Westermann, CEO of Media and Games Invest (MGI)

The stock markets have recovered strongly in 2023 - until the recent slump - but the Media and Games share continues to record losses. What are the reasons for this

MGI stock was one of the best performing scale stocks in 2021. In 2022, we had to give back some of the gains in the wake of the looming recession and related pressure on tech stocks, even though we raised our forecasts during the year. We were unable to escape the decline in the peer group. However, the share price now seems to have settled at a lower level.

You have just announced strong quarterly figures. What role does the expansion of the business model from a pure games provider to an advertising software platform play?

MGI today operates a rapidly growing and profitable advertising software platform. Last year alone, we won 133 new customers for the platform, each with a budget of more than $100,000. We increased our revenue by 29 percent to 324 million euros in 2022, and adjusted Ebitda by 31 percent to 93 million euros. This shows the attractiveness of our platform.

What speaks for your share?

MGI remains on a growth trajectory. Advertisers are looking for transparent solutions and more direct connections to publishers and their users. That's what we offer. We are also in a good financial position. We are structurally profitable. In addition, we had around 150 million euros in cash at the end of 2022, so we can take advantage of growth opportunities as they arise. Again, but very selectively, this may include an acquisition.

Media and Games Invest operates an advertising software platform that allows advertisers to contact potential customers across all digital devices - mobile apps, web, connected TV and digital out of home. MGI also has its own games portfolio with more than 5,000 casual games and a total of more than 1 billion registered players. MGI operates mainly in North America and Europe.

by: Anna-Maria Borse © 15 March 2023, Deutsche Börse AG


About the author

Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics. 

Feedback and questions to redaktion@deutsche-boerse.com



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