International Stock Exchange
Published 15-OCT-2015 00:00 A.M.
1 minute read
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Overview: Deutsche Bank AG (ETR:DBK) is a German global banking and financial services company, headquartered in Frankfurt, Germany. Deutsche Bank is listed in Germany and the U.S. It is publicly traded on XETRA, the electronic trading system for securities-based in Frankfurt, Germany, under the ticker code DBK. The ticker code for the NYSE is NYSE:DB.
Catalysts: Recent management changes, as well as an improved corporate activity during the first half of 2015, have brightened the outlook. Deutsche Bank recently announced a write-off of €5.8 billion of goodwill, which will result in a loss of more than €6bn for Q3. The impairment charges along with job cuts are part of management’s strategy to lower capital expenditure and boost earnings. Historically when balance sheets are cleared up, return on equity tends to improve. A falling EUR currency should benefit its international operations.
Hurdles: Deutsche Bank has underperformed its peer's post GFC due to poor balance sheet management, high spending, and lower profit margins. The company has failed to establish a common identity and needs to control capital expenditure, but there is no guarantee that Deutsche Bank’s strategic review will yield economic benefits. Dividend payments are expected to be cut for FY15.
Investment View: Deutsche Bank AG is trading at a historically low valuation and offers speculative exposure to a turnaround in one of the world’s leading investment banks. Whilst impairment charges will weigh on FY15 results, lower spending and a simpler balance sheet are expected to boost its return on equity. With a new management team in place, we initiate coverage with a ‘speculative buy’ recommendation. Our 12-month price target is € 31.50.
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S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
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