International Stock Exchange

Published 15-OCT-2015 00:00 A.M.

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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.



General Information Only

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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S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

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