𝗘𝗦 𝗜𝗦𝗧 𝗔𝗟𝗟𝗘𝗦 𝗘𝗜𝗡𝗚𝗘𝗣𝗥𝗘𝗜𝗦𝗧

/ Just because Coke tastes good doesn't mean you have to buy the stock

My professor explained something interesting yesterday, I need to briefly capture his words and wrap them up in a meaningful way.

𝙄 ) 𝘽𝙚𝙞𝙨𝙥𝙞𝙚𝙡𝙚 for beginners buying.

𝙄𝙄 ) 𝙒𝙖𝙨 𝙨𝙤𝙡𝙡𝙩𝙚 𝙢𝙖𝙣 𝙨𝙩𝙖𝙩𝙩𝙙𝙚𝙨𝙨𝙚𝙣 𝙈𝙄𝙉𝘿𝙀𝙎𝙏𝙀𝙉𝙎 𝙩𝙪𝙣

𝙄𝙄𝙄) 𝙕𝙞𝙩𝙖𝙩 𝙢𝙚𝙞𝙣𝙚𝙨 𝙋𝙧𝙤𝙛𝙨 (Chair of Strategic Business Management)

tldr: skips to III)

𝗜) 𝗕𝗲𝗶𝘀𝗽𝗶𝗲𝗹𝗲

"𝘐𝘤𝘩 𝘣𝘪𝘯 𝘷𝘰𝘯 𝘊𝘰𝘭𝘢 convinced 𝘶𝘯𝘥 𝘬𝘰𝘯𝘴𝘶𝘮𝘪𝘦𝘳𝘦 𝘴𝘦𝘪𝘵 𝘑𝘢𝘩𝘳𝘦𝘯 𝘢𝘶𝘤𝘩 regular 𝘜𝘯𝘮𝘦𝘯𝘨𝘦𝘯 𝘥𝘦𝘳𝘦𝘳 𝘗𝘳𝘰𝘥𝘶𝘬𝘵𝘦, 𝘥𝘦𝘴𝘸𝘦𝘨𝘦𝘯 𝘩𝘢𝘣𝘦 𝘪𝘤𝘩 𝘮𝘪𝘤𝘩 𝘫𝘦𝘵𝘻𝘵 𝘦𝘯𝘥𝘭𝘪𝘤𝘩 𝘥𝘢𝘻𝘶 𝘦𝘯𝘵𝘴𝘤𝘩𝘭𝘰𝘴𝘴𝘦𝘯 𝘮𝘪𝘳 𝘥𝘪𝘦 𝘈𝘬𝘵𝘪𝘦 𝘪𝘯𝘴 𝘋𝘦𝘱𝘰𝘵 𝘻𝘶 𝘭𝘦𝘨𝘦𝘯 😊"

"𝘐𝘤𝘩 𝘧𝘢𝘩𝘳𝘦 𝘴𝘦𝘪𝘵 3 𝘑𝘢𝘩𝘳𝘦𝘯 𝘛𝘦𝘴𝘭𝘢 𝘶𝘯𝘥 𝘨𝘭𝘢𝘶𝘣𝘦 𝘴𝘦𝘩𝘳 𝘢𝘯 𝘥𝘢𝘴 𝘒𝘰𝘯𝘻𝘦𝘱𝘵 𝘥𝘦𝘳 𝘍𝘪𝘳𝘮𝘢, 𝘥𝘦𝘴𝘸𝘦𝘨𝘦𝘯 𝘩𝘢𝘣𝘦 𝘪𝘤𝘩 𝘮𝘪𝘳 𝘦𝘪𝘯𝘦 𝘦𝘳𝘴𝘵𝘦 𝘗𝘰𝘴𝘪𝘵𝘪𝘰𝘯 𝘢𝘶𝘧𝘨𝘦𝘣𝘢𝘶𝘵."

A year ago, the WAZ even said:

"𝘍𝘈𝘈𝘕𝘎, 𝘥𝘪𝘦 𝘈𝘬𝘵𝘪𝘦𝘯 𝘥𝘦𝘳 𝘡𝘶𝘬𝘶𝘯𝘧𝘵". Sure thing, what could happen with Facebook, Amazon, Netflix, etc.?

Information leading to purchase decisions

(based on statistical bullshit, cf. https://app.getquin.com/activity/GDlzIDdeHe ), there is apparently not only on Instagram, where you can unfortunately often read "buy stocks you know first".

(NO, if you have no idea and no interest in learning, buy ANYTHING rather leads to high losses, diversified funds or ETFs are in the long term more sensible in the case).

The average does not manage to beat the market. So if you buy shares, you want to trade above average.

If you don't have the patience for valuation and market analysis, you underestimate the average market participant, so you should better bet on funds or world ETFs.

To come back to the WAZ example: Yes, FAANG are and were "good" companies.

From custumer point of view.

BUT

𝗘𝗦 𝗜𝗦𝗧 𝗔𝗟𝗟𝗘𝗦 𝗘𝗜𝗡𝗚𝗘𝗣𝗥𝗘𝗜𝗦𝗧

! Everything that has happened, been produced, been achieved in the present, obvious future and past, has already been estimated by institutional providers and thus priced into the price!

Thus, all investment theories as in the above examples are invalid.

Also something like "Amazon has a good market position" is a pseudo argument. This is also known by those who can significantly influence the Amazon price.

𝗜𝗜) How do I know if it is not only a cool company, but also a 𝘀𝗶𝗻𝗻𝘃𝗼𝗹𝗹𝗲𝘀 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁?

[Well, actually everything is priced in, we don't have more informatioen than others and therefore everything is overestimation and rationally you are forced to invest passively, BUT...]

On valuation there was a good post here the other day from @TheAccountant89
https://app.getquin.com/activity/laOUVhfFDI?lang=de&utm_source=sharing

Otherwise one could at least consider the following:

• Macro development, future forecast FED, ECB and difference to the priced in

• Long-term Chart outlook

• Upcoming Annual General Meetings etc.

(In the sense @sharkace how far are you with the projections?)

𝗜𝗜𝗜) 𝗭𝗶𝘁𝗮𝘁 𝗺𝗲𝗶𝗻𝗲𝘀 𝗣𝗿𝗼𝗳𝘀

, "As an investor, you have to keep one thing in mind. A stock value is a number that reflects an entire company. It is not something as easy to understand as profit, sales or loss, which we can easily explain to ourselves logically, many more things have an impact on this number that many do not even know!

So if you think you can play in this game, don't think you will be recognized, don't even think you will be noticed! You are not a player, you are the game! And then such a small part of the game that none of the players care about their existence."

#learn
#learninvesting
#stockanalysis

https://www.commerzbank.de/portal/de/ratgeber/finanzen/aktienbewertung-so-gehen-sie-vor.html

Dino Polska - High Growth Supermarkets?

Reading time: approx. 10min

1) INTRODUCTION

About 2-3 months ago I decided to think outside the box, as they say. My aim was to look for promising companies away from the classic values and countries. I found what I was looking for in a neighboring country: Poland.

This article is about the Polish supermarket operator Dino Polska
$DNP supermarket operator. I will present my analysis and my thoughts on the company. I was surprised by a few things myself. For example, I would not have thought it possible for a Polish supermarket chain to grow highly profitably and quickly at the pace of some tech stocks.

As always with my deep divesI would like to go into more detail about the business model and then turn to the financial situation. Finally, in the style of my article "My method for determining the fair price of a share", I will present my personal fair price for the share today.

Disclaimer: I opened a small position in Dino Polska on March 21 before the quarterly results. As a result, I am already invested in Dino Polska at the time of writing.

2.) BUSINESS MODEL

Dino Polska owns and operates supermarkets under the names "Dino" in Poland. Dino currently (as of 21.03.24) operates 2406 supermarkets [1]. This number has increased enormously in recent years: in 2013, the company operated just 324 locations, which corresponds to an annual growth rate of around 22% since then [1].

The first supermarket was opened in 1999 by founder Tomasz Biernacki opened. By 2010, the number of supermarkets had risen to around 100. In the same year, a Polish private equity company acquired around 49% of the shares to finance further growth [3]. In 2017, the company finally went public at around €8 per share when the private equity company's shares were placed. The founder himself is still the majority shareholder and does not receive a salary or bonuses.

But what distinguishes Dino Polska? Is it just another supermarket chain? Similar to my article about Costco $COST [4], the answer is Nobecause, as always, it's the details that count. So let's take a closer look at what sets Dino Polska apart:

Size and range: As the very first important difference to the competition in Poland, Dino focuses primarily on small supermarkets in smaller towns. The average retail space of a store is only around 400 square meters. An average Lidl store in Germany has around 900 square meters [3]. This is another reason why Dino only stocks around 5000 different products in its stores [1], which means a reduced degree of complexity in logistics and delivery and thus represents a cost advantage for Dino. In 2003, Dino Polska also acquired its own meat producer, which since then has exclusively supplied all stores with fresh and non-sealed meat and sausage products. This is a big difference to competing supermarkets, as they often only offer pre-packaged butcher's products. There is also an increasing focus on inexpensive regional Polish products. There are often no or very few products from well-known brands on the shelves.

Building: The second important difference to other supermarket chains is that Dino Polska has about 95% of its own stores, i.e. it owns both the buildings and the land of the supermarkets [1]. It is also interesting to note that Dino pays great attention to standardization here, so that new stores can be planned and built using quasi-existing blueprints. This also reduces complexity and saves costs, as not every single store has to be planned from scratch. The smaller stores also make it possible to build on smaller areas that are not accessible to competitors. In addition, Dino founder Tomasz Biernacki set up a construction company specifically for the purpose of building new stores. This ensures planning security and lower costs. Finally, it should be mentioned that almost 89% of all Dino stores have their own photovoltaic system, which now generates 66GWh of electricity per year [1]. For comparison: an average 2-person household consumes around 2500kWh of electricity per year, so 66GWh is roughly equivalent to the electricity consumption of 27,000 such households.

Price: Both points presented so far ensure high cost efficiency. This ensures that Dino Polska can offer the products in the supermarkets at very reasonable prices. In most cases, Dino is the cheapest supermarket in the area and its prices are often indexed to the prices of local competitors, so that Dino is guaranteed to be the cheapest supplier.

Focus: Dino deliberately specializes in smaller supermarkets in order to be able to operate profitably in smaller towns. They implement the concept, which has already been found to be good, in a 'hard-hitting' way. In Poland, a comparatively small proportion of the population lives in larger cities, so the focus on small to medium-sized towns offers an advantage over the competition. The food retail market in Poland is generally highly fragmented. As of 2021 [5], the market leader is Biedronka, which belongs to the Portuguese $JMT group. Lidl & Kaufland (Schwarz Group) follow in 2nd place. Dino is in 6th place, but has the highest growth rate among its competitors.

3) GROWTH

As already mentioned, Dino Polska has enjoyed a high growth rate in its stores in recent years. The following overview is taken from the company's 2023 Report in [1]:

As can be seen, there is room for further store openings, especially in the eastern part of the country. In addition, the branch density can be further expanded. Dino Polska itself states in [1] that it currently sees room for around 7,000 of its stores in Poland. This means that only 34% of all potential supermarkets in the country have been developed. The company itself also states that it intends to continue opening supermarkets at a rapid pace. Interestingly, only one supermarket has been closed since 2007 [3].

The high store growth should of course also be reflected in rising sales. In the years 2015 to 2020, sales increased on average by a good 36% annually between 2015 and 2020 [6]. These growth rates are a combination of the higher number of supermarkets and the sales growth of existing stores. In [1], Dino Polska himself calls same-store sales growth Like-for-Like-Sales Growth. In the last 10 years, LFL sales growth rates of over 10% have been the rule. Taking Polish food inflation into account, adjusted LFL growth rates of around 7-10% per annum can be achieved. The combination of store growth and LFL growth is then reflected in growth rates of over 30%.

According to [7], Poland has no longer been considered an emerging market since 2018 but a developed market, Poland still has a lot of prosperity growth ahead of it. Gross domestic product has been growing at stable rates of between 2-7% for 20 years. However, it should not go unmentioned that Poland is currently struggling with a high inflation rate in the region of 10%, which means that price pressure for Dino may intensify somewhat in the coming years.

4.) KEY FINANCIAL FIGURES

Let us now concentrate on the "hard facts". If the business model is working, we should be able to see this in the company figures. All of the following figures are taken from [1]:

Turnover (in PLN million):

2018 | 2019 | 2020 | 2021 | 2022 | 2023

5.838 | 7.647 | 10.126 | 13.362 | 19.802 | 25.666

This corresponds to a compound annual growth rate (CAGR) of over +34%. The gross margin, i.e. the gross profit, fluctuated slightly in the range of 22-24%which is already considered very good for a supermarket operator.

But will Dino Polska also manage to convert the rapidly rising sales into profits? The EBIT for the last few years looks like this:

EBIT (in PLN million):

2018 | 2019 | 2020 | 2021 | 2022 | 2023

429 | 562 | 838 | 1.024 | 1.538 | 1.876

The company has been highly profitable for years. We are seeing growth rates of +34% annually. Profits are therefore increasing at the same rate as sales, which indicates a functioning business model. The EBIT margin is stable at between 7.3% and 8.3%. For comparison: $WMT currently stands at 4.2%, $TGT 5.6% and $COST 3.6%.

Anyone familiar with my contributions knows that I attach great importance to the ROCE - i.e. the return on capital employed - is very important to me. The higher the ROCE, the more efficiently the available capital is used:

ROCE:

2018 | 2019 | 2020 | 2021 | 2022 | 2023

39,9% | 22,6% | 24,0% | 24,6% | 28,9% | 28,9%

Dino's ROCE is excellent. From PLN 1,000 of capital employed, we have consistently generated an operating profit of over PLN 200. We are currently even approaching the PLN 300 mark. In my article about $COST I have already analyzed the ROCE of well-known supermarket chains. This comes $WMT around 16%, $TGT around 19% and $COST around 22%. According to this, Dino Polska highly efficient - especially in comparison to other supermarket operators.

Despite the high growth rate and the speed of store expansion, Dino Polska is not overindebted. The net debt position is currently just 0.4 times of the EBITDA. Dino Polska finances the store expansion largely from operating cash flow, meaning that almost all operating cash flow is invested. As a result, the company currently generates hardly any free cash flow. The capital expenditures (capex) are around 7.3% of sales due to the rapid expansion. This is a comparatively high figure that reflects the rapid expansion of the store network, as $WMT spends around 3.2% of its sales on capex and $COST only 1.8%.

If Dino Polska were to reduce its capex to a value of 2.5%, it would already generate a free cash flow of PLN 1,129m today. This would correspond to a free cash flow yield of 4,7% would correspond. Nevertheless, this is still only a thought experiment to estimate future profitability. Only when Dino Polska decides to open fewer new stores will we approach the figure of 2-3% capex in the long term.

5.) VALUATION AND RISKS

The business model is simple, understandable and highly profitable. The growth rate is excellent and the company finances its growth with virtually no debt. In addition, the company operates with a great return on capital employed (ROCE). So now the big question is: what price am I prepared to pay for Dino Polska?

In my article "My method for determining the fair price of a share" [9], I presented a method that I personally use to get an impression of the fair value of a share. I will use this method here and estimate accordingly:

• future sales growth
• future EBITDA margin
• future capex ratio

Based on the current pace and the fact that at some point in the next few years the growth rate will slow down, I still expect Dino Polska to achieve annual sales growth of 22% over the next 10 years. In a detailed calculation, I have estimated the number of new stores in the coming years and the LFL growth.

The EBITDA margin has remained stable at 8-10% in recent years. I expect further efficiency gains in the coming years and believe that Dino will achieve an EBITDA margin of 11% in 10 years.

As mentioned in the last section, the capex ratio will fall over the next few years. I estimate the capex ratio in 10 years to be around 4%. That would still be higher than comparable supermarkets, but still only about half the size it is today.

Now that I have estimated the most important parameters for pricing, you should always think about possible risks in order to find a suitable margin of safety to determine.

Possible risks are, for example

• Increased or new competition: this would reduce growth and also margins
• geopolitical risks: Dino currently only operates its stores in Poland, which of course borders on Ukraine. A possible expansion of the war in Ukraine would of course have a massive impact on all of the above parameters.
• Currency risks: Dino is traded on the Warsaw Stock Exchange in Polish zloty (PLN). A possible devaluation of the Polish zloty against the euro would reduce the price in euros.
• Rising construction costs: Construction costs are likely to continue to rise, not only in Germany but also in Europe in general. This could result in Dino Polska being able to open fewer stores than currently forecast. This would of course be directly reflected in a lower growth rate.

All in all, an investment is certainly riskier than an investment in comparable supermarket chains in industrialized countries. I will therefore keep my margin of safety at 35% .

Furthermore, it should not go unmentioned that Polish shares are less liquid than shares from industrialized countries. At Lang & Schwarz, only a few shares are traded per day in some cases. This results in a comparatively high spread between the bid and ask price, which can be as high as 4-5% of the price. This also goes hand in hand with a higher volatility.

Based on my assumptions and estimates, I currently arrive at a fair price of around 700 to 1000 PLN per share. The share is currently trading at around PLN 380 per share. I therefore decided to open a small position in Dino Polska on March 21. My buy price - including the spread - at that time was around PLN 415 (approx. 96€) per share and I am therefore already 8% in the red.

The difference to today's price is due to the spread and the fact that the Dino share fell by around 10% after the publication of the annual report for 2023. For me, however, this is just a snapshot and I think the share price will be higher in 2-3 years than it is today. Since the IPO in 2017, the share price has already increased more than tenfold, which corresponds to a CAGR of a good 45%.

6.) SUMMARY AND CONCLUSION

In my opinion, Dino Polska is a model company that combines dynamic growth with good management and a good strategy. The company has been profitable for a long time and is currently investing a large part of its cash flow in expansion. The company will continue to grow and will probably generate more cash flow in future than can be reinvested profitably.

As already mentioned, I have built up a small position in Dino Polska myself. Nevertheless, it is definitely an investment of the riskier riskier type, as the share is not very liquid and has a comparatively high volatility. I will now leave the shares in my portfolio and hopefully look forward to a good share price performance over the next few years.

Stay tuned,

Yours Michael Scott

@Kundenservice please add the logo ;)

#stockanalysis
#analyse
#growth

Sources:

[1] Dino Polsa Investor Relations: https://grupadino.pl/en/wse/

[2] SeekingAlpha: https://seekingalpha.com

[3] Podcast "Companies of this world": https://open.spotify.com/episode/04zVqjLjnrlmz4eHnQD5Zl?si=k5RdmFF7Q3eN9W8Lz7h_jg

[4] Geqtuin post about Costco: https://getqu.in/Ajc51E/

[5] ESM Magazine: https://www.esmmagazine.com/retail/top-10-supermarket-retail-chains-in-poland-237524

[6] Statista: https://de.statista.com/statistik/daten/studie/1224907/umfrage/umsatz-von-dino-polska-in-polen/

[7] Emerging Europe: https://emerging-europe.com/news/poland-switch-emerging-developed-market-september-2018/#:~:text=Emerging%20Europe%20Staff%20Share%20This%21%20By%20September%202018%2C,other%20nations%20including%20Germany%2C%20France%2C%20Japan%20and%20Australia.

[8] The World Bank: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2022&locations=PL&start=1991&view=chart

[9] Getquin contribution: https://getqu.in/rl57Yp/

A plea for the Magnificent 7: Or why big tech is still NOT too expensive

Now that Big Tech and the Magnificent 7 in particular have done incredibly well in 2023, the question naturally arises as to how things will continue in 2024. I have found some very interesting data and information on this:

Who are the Magnificent 7 anyway?

Most people know them, but I would nevertheless like to list them at the beginning and divide them according to whether I have them in my portfolio or not:

In my portfolio:

• Apple $AAPL
  
• Microsoft $MSFT
  
• NVIDIA $NVDA
  
• Alphabet $GOOG / $GOOGL
  
• Meta $META
  

Not in the portfolio:

• Amazon $AMZN
  
• Tesla $TSLA
  

Performance 2023 (see attached chart):

In total, the performance in 2023 was ~80%. Of course, NVIDIA was at the top with over 230%, Meta was also extremely strong with ~200%.

Tesla also doubled. Next came Amazon (+80%), Alphabet (+60%) and Microsoft (+57%). Apple brought up the rear with "only" +48%.

The S&P 500 gained ~25% in the same period and also benefited greatly from the aforementioned heavyweights - excluding these 7 companies, the remaining 493 S&P 500 companies only gained 10% on average.

-> Inevitably, these stocks must have run hot after such a performance - or did they?

Let's take a closer look at this matter and not in isolation for the year 2023, but since the beginning of 2022 (also attached as an image):

Over the last two years (01.01.2022 - 18.01.2024), the performance of the Magnificent 7 is only a measly 5% and was even negative before the 2023 year-end rally. Over the same period, the S&P 500 only posted a slightly lower performance of 3%.

An investment in short-dated US Treasurys (1-3 months) would have generated a performance of 7% would have been achieved.

-> Over the last two years, an investment in short-dated US government bonds would therefore have been more lucrative than in the Magnificent 7

-> In summary, this means one thing above all: Yes, Big Tech performed phenomenally in 2023, but above all it made up for the massive losses from 2022. This does not necessarily mean that they are overvalued, as a lot has changed since the end of 2021. On the one hand, these companies have continued to grow massively and the topic of AI has played an increasingly important role since the end of 2022

What does this mean for 2024 and the current valuation?

I have included a screenshot from today's Deutsche Bank newsletter "Prospects for tomorrow" is attached. It provides some reasons why these companies can continue to perform strongly:

• Magnificent 7's expected P/E ratio is currently ~27, which is well below where it was in 2020-2022, when the expected P/E ratio was over 35
• Compared to the other companies in the S&P 500, this is a premium of 60%! However, the Magnificent 7 sales are expected to grow by 11% p.a. until 2025 - That is almost three times as much as the other companies in the S&P 500
• In addition, the companies have extremely strong margins that could grow even further due to AI
• On average, the companies are virtually debt-free and even have net cash available. While other companies have to worry about interest payments and refinancing and may also be able to invest less money in acquisitions or research/development, the 7 companies are not burdened by this. On the contrary, this even offers opportunities to widen the gap even further and to benefit from the problems and weaknesses of the others (more research, interesting takeovers, etc.)

As mentioned in the newsletter, there will certainly not be another +80% in 2024. However, I still see these stocks outperforming the S&P 500 and the MSCI World.

I have a total of 5 of the 7 companies in my portfolio and continue to buy regularly in 4 of them (Apple, Microsoft, Alphabet & NVIDIA). Meta is a classic hold position for me, as I want to continue to monitor the development of the group (Metaverse), but will not continue to buy here for the time being.

I do not have Tesla and Amazon in my portfolio and will not add them for the time being. Tesla has too many controversies for me personally, between "it's just a car company" and "Tesla will soon control the world" there are too few shades of gray for me. Amazon is too divided a company for me: I wouldn't buy the e-commerce business on my own and I have the cloud business AWS covered with Microsoft and Alphabet as well. For e-commerce, I have a MercadoLibre $MELI in my portfolio, which is growing even faster and covers a completely different region with South America. In addition, with the developments in Argentina and Javier Milei, I see hope that the continent will develop even more towards capitalism and away from socialism.

How do you see the Magnificent 7 performing in the future?

And what do you see as companies that could become the next Magnificent 7 or complement them?

For me, the topic is cybersecurity is one of the key issues for the next few years and I see the threat posed by AI, autonomous driving and geopolitical "opponents" such as Russia and China continuing to grow. With regard to the last point in particular, defense companies such as Lockheed Martin are of course also benefiting $LMT but they are far less able to scale their business.

A software company in the cybersecurity sector, on the other hand, can scale massively and relatively easily. This is why companies such as Palo Alto Networks $PANW or Crowdstrike $CRWD are high up on my list, in the portfolio and candidates for the next Magnificent 7.

#stocks
#etfs
#tech
#stockanalysis
#performance

I think now is the right time $NVDA to buy.

Good company, I have a graphics card from them in my PC.

Justified valuation with 1.6T (all right. WHAT, the friends make 20B turnover )

1000$ incoming

#stockanalysis

Pre-post and outline (to pin)

Hey guys, your @cashwithhead here. Today we start with the topics. The plan is to give you as much theoretical knowledge as possible from different subjects. Of course, this will only happen over time, so we will work our way from one relevant topic to the next. Everyone should understand the basics by the end of the project so that we can read and analyze balance sheets or financial papers together. Preferably here, of course. I know theory is not always easy to read, so I hope I have managed to make it reasonably interesting and short.

The framework is one post one written page.

Here's to a harmonious coexistence.

Finance I

• Legend (explanation of terms)

• Introduction to the topic

https://getqu.in/G9gWn6/

• Discounting money and DCF

https://getqu.in/7X7k7d/

• Annuity-Special present values

https://getqu.in/O4CZOt/

• The best on the topic of bond valuation of bonds with DCF

https://getqu.in/jdTpi5/

• The best on the subject of share valuation

https://getqu.in/Hz1pO7/

Market efficiencies

Accounting

Finance II

#investing
#stockanalysis
#dividends
#etfs

Share valuation

Shares and share trading

Equity shares (stocks, shares) are sold (issued) by companies on the primary market. This enables companies to raise cash and show (new) equity on the liabilities side of the balance sheet. The shares are then traded on the secondary market. This trading on the stock exchange does not affect the (book value of the company's) equity.

In the USA, the NYSE and Nasdaq are the largest trading centers; in Germany, it is Deutsche Börse.

Equity capital

Book value of equity capital: This is the balance sheet value of equity capital and is made up of subscribed capital, retained earnings and capital reserves and the net profit for the year; it is also possible to have a negative book value.

The market value of equity = market capitalization: This is calculated as the share price - number of outstanding (circulating) shares (cannot be negative and usually deviates significantly from the book value).

The dividend is a distribution of (part of) the profit and is determined at the Annual General Meeting based on a proposal by the Executive Board. However, there is no obligation to pay a dividend and it is subject to final withholding tax in Germany.

Share valuation: DCF method

Share prices can also be calculated using the DCF formula, i.e. as the present value of the cash flows received by the shareholders. Cash flows for shareholders are dividends over the holding period and the price gain (or loss) on sale.

If, for example, a share is only held for one period and then sold, Pv0= DIVv1+Pv1/1+r , where r - as always - is determined as the interest rate of a comparable investment (opportunity cost). In order to calculate today's share price, you have to form expectations about the future share price and the future dividend.

As an example, we use the $ALV . We take the r from the$MUV2 (not similar but comparable) and adjust it for what (too complicated to explain here). The result is a one-year r of 27% with div included. We now put the values into the share formula: 11.40+241.85/(1+0.27)=€199.41 should have been the purchase price in Pv0 in order not to be worse off. If you had bought higher, you would be worse off than with the MR.

Addition:Return on equity

r is the (expected) return on equity for the company's shareholders. This means that it must also be the return that another company in the same sector with comparable risk would have to offer the equity providers so that they are prepared to invest their assets in the company instead of choosing an alternative financial investment. Thus, r again results from an opportunity cost consideration, i.e. as the return on an alternative investment with the same risk. All investments with the same degree of risk should therefore have the same expected return on the capital market ((why is this not always the case?). From the company's point of view, it corresponds to the cost of equity.

If you know the current and expected future share price and the dividend, you can calculate the expected return with r= DIVv1+Pv1-Pv0/Pv0 = DIVv1/Pv0 + Pv1-Pv0/Pv0 . Here is an example: What is the expected return on Fledgling Electronics if the share costs €100 today, you can sell it for €110 in a year's time and you assume that the company will pay a dividend of €5 in a year's time? r= 5+110-100/100=0.15=15%

Share valuation DCF continuation

Earlier we again assumed only one payment. Now we are looking at several payments. The question then arises: How is the share price determined if the investment period is two years? It looks like this, Pv0= DIVv1/(1+r) + DIVv2+Pv2/(1+r)^2. If we look at the calculation, the question arises: Is the price of a share with a holding period of two years different from that with one? No, because if the person who buys the share from me after one year wants to hold it for one year, they would pay the following price Pv1=DIVv2+Pv2/1+r. In other words, the second person does not pay your dividend but only his and his selling price. If you now put everything you have learned together, you get the formulas:Pv0= DIVv1+Pv1/1+r = DIVV1/(1+r) + Pv1/(1+r) = DIVv1/(1+r) + DIVv2+Pv2/(1+r)^2 . Since Pv2 and all other prices can also be determined using this formula, the result for an investor with an investment horizon H is Pv0=DIVv1/(1+r) + DIVv2/(1+r)^2 + .... + DIVvH+PvH/(1+r)^H = (summation sign formula is omitted here)

As the investment horizon increases, the sales proceeds move further and further into the future, causing their present value to fall. However, the share price is independent of the investment horizon and therefore H only determines what proportion of the total cash value (= share price) the sales proceeds account for

Share valuation: Investment horizon

What effect does the investment horizon H have? As H increases, the purchase price Pv1 becomes less and less important. At around 20 years after purchase, the purchase price accounts for only 50% of the PV in the model. This means that future dividends and the future selling price are much more important. In slightly more theoretical terms, this means that the share price remains constant, only the composition of PV (future dividends) and PV (future share price) changes. With an infinite investment horizon, this means that the value of a share is determined as the present value of all future dividends that the company will pay out

→ Dividend discount model (dividend discount model)

Share valuation: investment horizon and dividend growth

Often it is not so much the fair (i.e. market equilibrium) share price that is of interest, but the cost of equity, r. So far we have seen that r=DIVv1+Pv1-Pv0/Pv0 , but if we assume a constantly growing dividend (with growth rate g), then the present value from this infinite, growing annuity is: Pv0= DIVv1/r-g or r= DIVv1/Pv0 +g .

Example: Northwest Natural Gas currently has a share price of €49.43. A dividend of €2.00 is expected for the coming year. Analysts expect Northwest's dividend to grow at a constant rate of 7.7%. What is the company's cost of equity? r= 2/49,43 + 0,077= 0,118 =11,8%

However, determining the growth rate g is usually the most difficult part. In most cases, one simply uses the estimate of the security analysts. Alternatively, the growth rate can be determined from the company's investment and dividend policy. The question is asked: What money can the company retain (reinvest, i.e. not distribute as dividends) in order to invest it? How profitable are the company's investment projects? This combination determines the growth rate of profits and therefore the future dividend value.

But growth is not always constant, how do you regulate this? For example, initially high but possibly fluctuating dividends could be paid and only from time H does the company switch to a stable but lower growth path.

The valuation formula would be: PV= DIV/(1+r) + DIV/(1+r)^2 +....+ DIVvH/(1+r)^H + PvH/(1+r)^H with PvH= DIVvH+1/r-g

Example: Phoenix AG pays dividends of EUR 0, EUR 0.31 and EUR 0.65 in three consecutive years. The dividend in the fourth year is estimated at EUR 0.67 and is expected to grow by 4% from then on. What is the share price of Phoenix at a discount rate/cost of equity of 10%? PV= 0/(1+0.1) + 0.31/(1+0.1)^2 + 0.65/(1+0.1)^3 + [1/(1+0.1^3 - 0.67/(0.10-0.04)]

Share valuation: Multiples method

Multiples method: An attempt to derive the value of a company from the observable market prices of comparable companies (comparables). For this purpose, the share price of a comparable company is related to a value from its balance sheet or income statement → multiple

Typical multiples:

Price/earnings ratio (P(rice)/E(earnings) ratio)

Market-to-book ratio (market-to-book ratio)

The multiples are then multiplied by the corresponding balance sheet or income statement value of the company to be analyzed. Dividing by the number

of shares in circulation, an estimate of the share price is obtained.

Problems

Care must be taken when selecting companies, as the choice of peer companies influences the result. Typically, average multiple values are therefore used to balance out the extreme values.

The multiples method assumes that the market value of the equity of the peer companies is correctly priced, but if an entire industry is over/undervalued, the multiples method does not provide a meaningful estimate... .

Quiz

Which statement is true?

a) The value of a share corresponds to the present value of the future dividend.

b) In a stable capital market, all shares in a risk class have the same price.

c) The value of a share corresponds to the present value of the issuer's expected profits.

d) If the capital market functions well, all shares are priced in such a way that they have the same expected return.

Company X will pay a dividend of USD 5 per share at the end of the year. After the dividend payment, the share can be sold at USD 110. What would be the current market price of the share if an investment with a similar risk yielded a return of 8%?

a) USD 106.48

b) USD 102.86

c) USD 108.00

d) 105.00 USD

The most important points from the text

The share price can be determined as the present value of the series of payments associated with the share investment, which results from discounting a (potentially infinite) stream of future dividends.

The discount rate is the cost of equity

The cost of equity can be calculated as the return on an investment with identical risk on the capital market

The higher the company growth (with r > g), the higher the value of the company In addition to the DCF method, multiples are also used to value equity

SourceBrealey, R., S. Myers, F. Allen, A. Edmans (2022): Principles of Corporate Finance, 14th edition, McGraw Hill, ISBN 1260013901 and lecture slides

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A pot with a bite - why it's not the solution to British American Tobacco's $BTI
$BATS
dwindling share of smokers 🌬🍁

Hello everyone,

I've been taking it a bit easy with Getquin over the past few weeks, but today I'm going to highlight one of your apparent favorite stocks: British American Tobacco. For the structure of the analysis, I will divide it into 2 chapters:

Part 1

• Current status of the share based on fundamentals & short interest
• Basics on the effects of cannabis using the main ingredient THC as an example

Part 2

• The importance of cannabis for British American Tobacco

Part 1 - Current status of the share 🕵️

This time, however, the whole thing will be approached from a completely different angle: Can medical cannabis or, after legalization, the German market help BAT to achieve its former greatness?

Important here is the DisclaimerThis is not an investment advice. It is also not an invitation to buy / sell financial products. I describe here only my opinion. You have your own responsibility towards your investments. So I also assume no liability.

You have already read it - I am ranting about "old greatness". If we look at the chart from today (July 17) and compare the 32.96 USD with the price 6 months ago, we see a decline of 14.43%. It becomes worse, as soon as we push the regulator on the year to year comparison. Then we see a loss of -18.46%. A richly lousy performance for a stock with expected revenue growth of USD 0.8 billion from 2023 to 2024 (see (1), (2)).

Where does the share currently stand?

We see that the current P/E ratio is 8.55 of current earnings. The PEG ratio as a fraction of this P/E with the expected growth in earnings per share is:

PEG RATIO = 8.55 / 11.8 = 0.73

So we see that currently just 73% of the expected growth over the next 5 years of earnings per share COULD be priced in.

Why COULD?

As a simple look at past EPS growth shows, year to date EPS growth has been 1.7% year to year comparison. The quarterly performance of -6.31% indicates a significant depreciation in the stock. This would go hand in hand with short sellers (these are so called short sellers) jumping on the stock as well. If we look at the data, however, an exponentially high occurrence of short sellers is not noticeable at all. Specifically, 4,890,000 shares were sold "short" on 6/30. This means that I, as a seller, do not own the stock at all, but I sell it to you.

Why can I do that?

The trick is quite simple and resembles a cash bet on who can drink the most. I bet you that I will sell you a beer in a week and that I will be nice enough to do so at a discounted price! Am I not nice?

The answer is: No. I would not be in this case.

Selling short is something I would have done in the past only if the fundamentals no longer convinced me. So I expect the price to drop further and sell you the beer in a week at a higher price than it's worth right now.

Why would I go for something like that?

If I am wrong as a short seller, it is theoretically possible to make big profits. However, only if the expert or the offering capital market institute judges worse than you. This requires some self-confidence to make such bets. At BAT we see that currently +15.9% of shares have been sold short. But that's just 0.2% of shares in free float. If I wanted to influence the market at this point, I could have made a great YouTube thumbnail with the title (see (2), (3), (4)):

"OH NO! SHORTSELLER RATE DOUBLED! GOES BAT NOW BROKE :O :O"

The statement would even be correct when compared to 4/30/2023, where only 0.1% of the shares were traded short. But now 0.2%!

What I find exciting about this is the valuation of this. While since 15.5.23 the short shares relatively constant in the interval:

K e I(3,590,000, 4,890,000), values beyond the 9 million mark were quite common in the past. So we can see very quickly that the mere number does not say much at first. What is important is the valuation of these shorted shares. While we sold the mentioned 3,590,000 shares short on 5/15/2013, this resulted in a value of 133.48 million USD (cf. ibid.).

So what?

The last known date of short sale of BAT shares included significantly more shares and was valued at USD 162.35. That is (cf. (3), (4)):

4.89 million shares at $162.35 million yields a more significant share price discount than

3.59 million shares at 121.7 million USD

What could this mean?

We must not forget that we are here at a very low percentage of shares sold short. Apparently, there is no pessimism among analysts, because otherwise marks of 10% of shares are also quickly reached. So we are seeing smaller trades to raise capital. Not a definite bet on the imminent demise of BAT as a group on the part of the analysts (see (4)).

The whole thing then lines up when looking at market cap and shares outstanding. In January, the outstanding shares were still at 2.23 billion shares. However, we are now at 2.23 billion shares at the time of this analysis. So, we see that there are currently an average number of shares available for trading in the market. This tends not to be a good or bad sign - but may suggest that there is not a particularly strong interest in BAT stock from investors. Despite the share price losses described (see (1), (3)).

It seems to me that this circumstance is particularly important, since in January the dividend was still 6.88%, but in the meantime we are at 8.19% dividend yield. So: although the dividend is just higher by 8.19/6.88 = 19.04%, the stock still fails to excite investors. At the same time, BAT's total return since the beginning of the year is just -9%, which is not even a double-digit loss. The P/E ratio of 11.6x in January and now 8.7x does not seem to be a reason for many investors to enter BAT (see (1), (3)).

As a result, we have a share whose short interest seems to be within limits, but which now has to bear a disproportionate dividend and now has to find answers to many questions about the CAGR (annual growth rate of replacement products).

Part 2 - Basics on the effect of cannabis using the main ingredient THC as an example 🏥

An essential topic at this point is certainly Germany.

Why?

Simply put, Germany could become the largest legalized market for cannabis. I'll leave it up to you to decide what you think about the legalization of drugs, but we could (unusually) become a pioneer in the economic field.

The traffic light coalition plans the gradual release of cannabis for "pleasure purposes". So don't forget: Whoever does not enjoy it commits a crime! (Joke aside)

It is here often the column picture for the explanation of the proceeding selected that 2 columns provides. In the first step, the possession of 50 grams of cannabis is to be permitted for persons over 21 years. For the intermediate period 18 - 21 years the federal government plans 30 grams (see (5), (6), (7)).

Why this differentiation?

Essentially, it is justified on the basis of brain maturation. One is of the opinion based on studies that cannabis in adolescence can often be accompanied by a lack of drive based on a lack of development. Therefore one would like to restrict the temptation of a dissolute consumption here over the delivery quantity. Whether this really makes sense, I leave to you again.

In another world (in which I would have something to say about it), there would be no cannabis for under 21 year olds. Certain studies even demand to set the limit at 25 years. I link you to an interesting study under (8), which demands exactly that. No cannabis under 25 (see (8)).

Why am I a killjoy here?

The reason is simple - and everyone can understand it if they want to.

What keeps us working every day? What makes us go to the gym, even though we know full well that we'll be sweaty, tired, and barely able to lift 2 cases of Coke with strained muscles afterwards? (Depending on how hard you train and how often).

"Huh - yeah because I want to look good?"

No. Because your head rewards you effort. Because your body is set up to survive. Because you need it, otherwise you risk muscle atrophy and cognitive decline.

What does this have to do with cannabis?

A lot - and I have already made enemies with the following reasoning.

THEN: How does your body manage to get you out of bed every morning? Why doesn't that work with certain sufferers of depression?

CORRECT: Dopamine. This is a neurotransmitter that (in a very simplified way, this is a stock market forum, not a medical forum) causes motivation and stimulation.

Cannabis is unfortunately suspected to hinder exactly this formation of a healthy dopamine system. However, not in adulthood, but rather in the developmental stage (cf. (7), (8)).

How does cannabis do that?

Relatively simple: THC (tetrahydrocannabinol) can bring this dopamine system to its limits relatively quickly with constant use.

Our bodies are not designed for constant reward without effort. A simple example: Your car broke down and you have to push it 300m up the hill, because the towing service can get there better. So you do this with friends and park the car there. The towing service comes and picks up the car. "What an accomplishment!" Thinks the brain and rewards you with a dopamine rush. Nice!

Now a slightly different scenario: You have to push up 5 cars.

Doesn't work?

Correct. Neither the muscles nor the intervertebral discs will play along at some point. So the dopamine surge fails to materialize.

What if I told you that this is exactly the problem with cannabis? So you consume cannabis so frequently that you're sort of simulating a 5-car dopamine surge every day.

I'll leave out my medical vocabulary and say: Our dopamine system is not made for this stimulation.

So what? I know when I've had enough!

That's what many alcoholics think, too, yet we have sad new records year after year. If you are interested in my opinion on alcohol and Anheuser-Busch, for example, write it to me in the comments!

At some point, unfortunately, the time is reached when our dopamine system no longer emits shocks and virtually only a void follows. Suddenly, going to the gym becomes so exhausting that you just stay away from it.

But it doesn't stop there: Suddenly the heavy carrying of the bags is too much and one can shower "also tomorrow sometime".

Exactly these are absolute symptoms, which are described more often by young persons concerned.

Source (8) gives an example of such a case, where a student of the 10th grade got these dopamine surges regularly and at some point, however, would become so erratic that he had to repeat the 10th grade. He is not alone in this, as brain maturation in males does not begin until age 25 in terms of dopamine. Unfortunately, the critical first phase of puberty from 12-16 years often overlaps with the exploration of boundaries in the drug sector as well, so that it is precisely at this highly vulnerable time that cannabis use can occur. A period that is rejected by leading physicians for cannabis use (cf. (6), (8)).

Here the strongly increased THC content of 10% plus did the rest. For comparison: At the time of our parents cannabis was at about 2% and was rather less suspected for the above mentioned symptoms (cf. (8)).

It is up to you to decide whether this development is due to the illegality of cannabis or whether other factors may have played a role. Feel free to write your opinion in the comments, but stay objective.

But why is British American Tobacco still betting on the world's oldest medicinal plant?

How might cannabis help in the substitute market?

What is my opinion on BAT and legalization?

All these are topics of the second part. Feel free to write me if you would like to see it.

If you liked the article and are on fire for more dividend stocks, then check out my brand new AT&T video on the lead scandal!

https://youtu.be/duftWfK24P8

Only 18 more subscribers to the 1,000 mark! Thank you all!

No investment advice

Your Bass-T

#aktie
#aktien
#dividende
#britishamericantobacco
#cannabis
#stockanalysis

Sources

(1) https://de.marketscreener.com/kurs/aktie/BRITISH-AMERICAN-TOBACCO--54264463/

(2) https://seekingalpha.com/article/4617407-british-american-tobacco-value-income-stock

(3) koyfin.com

(4) https://www.marketbeat.com/stocks/NYSE/BTI/short-interest/

(5) https://www.ka-news.de/region/karlsruhe/cannabis-legalisierung-deutschland-eigenbedarf-hanf-19-7-2023-art-2940325

(6) https://www.spiegel.de/politik/deutschland/cannabis-legalisierung-gesetz-soll-bis-august-ins-kabinett-a-e618a79b-9e87-4213-9672-58c2f17f5d5a

(7) https://www.tagesschau.de/inland/gesellschaft/cannabis-clubs-102.html

(8) https://www.medical-tribune.de/medizin-und-forschung/artikel/kiffen-bitte-fruehestens-ab-25

COLOPLAST - A company by people for the people? (Attention, very long, reading time: 25 minutes!)

I have had a position in Coloplast in my portfolio for some time. Whether I will further expand this, currently still small position, in the coming time, I will explain to you with the following full-length essay.

TL;DR: Coloplast is a company from Denmark. It operates in the healthcare sector, specifically ostomy and continence care. This company is relatively little in the focus and offers with its broad commitment to all investors interested in sustainability an interesting investment opportunity + dividend.

As a prelude to this text, I recommend watching Coloplast's image film. The mood allows a first insight on the following lines and my personal opinion on this investment. https://youtu.be/BczJSbplEHo (2 minutes)

Content:

• 1.Coloplast - the company and its history
• 2.medical background knowledge about stoma, continence and wound care
• 3.products from Coloplast and their customers
• 4.key figures
• 5.what makes the company a SRI/ESG company for me?
• 6.conclusion (& epilogue)

Coloplast - The company and its history

Coloplast A/S is a company from Denmark, which develops and offers products and services around the basic medical care of stoma and continence patients and affected persons, as well as wound care and skin care.

In Germany, the company also offers Coloplast Homecare, which focuses on home care services for ostomy and continence care.

The company has its roots in the work of Elise Sörensen, who developed the first plastic ostomy bag with self-adhesive contact surfaces on the skin for her sister Thora Sörensen in 1954.

In 1957 the company was founded in cooperation with the plastic manufacturer Louis-Hansen.

The artificial word Coloplast is derived from the word "colon", technically for intestine, and the "plastic" for the plastic material used in the ostomy bags.

In 1983, the company went public and at the same time established its first sales office in Germany, which currently has over 600 employees. The company as a whole employs over 11,000 people. [Sources 1 & 2]

The CEO of the company is Kristian Villumsen (born: 1970), who has been leading the company since 2018.

2.Medical background knowledge on ostomy, continence and wound care.

(Attention: Readers should be aware that medical details can only be given in layman's terms by me. Furthermore, it should be noted that details of medical problems may be covered here, which may cause anxiety reactions in some people - if you are one of them, skip paragraphs 2-3!)

Stoma:

The ancient Greek word in German stands for mouth, mouth opening or opening in general. In medicine, a distinction is made between the different types of stoma. Concerning this does the pharyngeal stoma, enterostoma (artificial intestinal outlet) and urostoma (artificial urinary outlet), tracheostoma (tracheal incisions), gastrostoma (stomach opening through the abdominal wall), ileostoma and jejunostoma (both opening variants to the part of the small intestine through the abdominal wall).

For the present company I would like to come briefly to the main points of the same. These are the enterostoma and the urostoma, which are covered by Coloplast with various products (see point 3).

The enterostoma is an artificial intestinal outlet. This artificially created anus through the abdominal wall of the patient is used to discharge excretions that cannot be discharged in the "natural" way due to tissue neoplasms, narrowing or obstruction in the lower area of the intestinal outlet, i.e. up to the anus.

A urostomy is an artificially created urinary outlet, which can also occur in the human bladder due to the above-mentioned phenomena. A special feature here is often the cancer diagnosis.

Basically, it can be said that most of the reasons for the creation of a stoma in the medical history of tumor patients (i.e. cancer patients). A good 70% of these patients have this medical history.

According to estimates, in Germany alone there are about 150.000 who live their daily lives with an artificial bowel outlet. [Source 3]

Stomas are generally created by surgery and are made through a so-called abdominal incision. In the case of stomas without major surgery, a minimally invasive surgical technique is also used, e.g. laparoscopy. One of the basic things before such operations is the postoperative marking of the stoma position in order to enable an optimal position of the stoma in all aspects of life, such as sitting, walking, lying and standing. In the course of this, external features such as skin folds are also taken into account in order to prevent poorly adherent stoma care and associated poorer quality of life.

Good to know: There are different types of enterostoma, which differ in surgical technique and permanence of the stoma. They can be made permanent or temporary (for temporary intestinal leakage, etc.).

Risks of stomas and their creation are naturally present in operations, which in rare cases reflect on the injury to the intestine, neighboring organs or vessels. Here it can come to blood poisoning, intestinal paralysis and in rare cases to fistula formation. Due to the constant development in the surgical and medical field, complications during the operation have become rather the rarity.

However, the focus of risks lies more in the postoperative and everyday phase of life with the stoma. Here, on the health side, skin irritations, bacterial inflammation of the discharge site, infections or bleeding can occur. In everyday life, there may also be complications in the durability of the stoma during sports activities.

Stoma patients no longer have control over the timing of bowel activity, or its expulsion, which consequently requires appropriate care and treatment.

Nevertheless: With a stoma itself, life can be continued as normal and unrestricted as possible, provided that the stoma is properly fitted and the patient takes good care of it. Sports, work and even sexual activities are possible normally! [Source 4]

Only when lifting weights one should limit oneself to about 10kg to avoid e.g. abdominal perforations.

Affected persons can make an application to determine the degree of care (especially for older, restricted persons). Furthermore, the degree of disability (GdB) can be applied for, which is usually at least 50% and thus entails a claim to a severe disability card with corresponding legal consequences. [Source 5]

Contact points for stoma patients in Germany are the Fachgesellschaft Stoma, Kontinenz und Wunde e.V. or die Deutsche ILCO e.V..

Continence:

In general, continence is first understood as the ability to retain bodily excretions and to trigger the excretory process in a voluntary, controlled manner. Various diseases such as bladder or kidney diseases, but also diarrhea and various diseases of the nervous system can lead to a (temporary or permanent) loss of this ability. This leads to the well-known urinary or fecal incontinence.

Such incontinence is stressful for those affected insofar as the involuntary and uncontrolled leakage of urine or excrement in everyday life "accidents" make social participation seem almost impossible.

Incontinence is not a marginal social issue! Sources estimate up to 10 million people in Germany alone. alone. Worldwide there are about 200 million people are affected by incontinence. [Source 6] - assuming 11.6 million families in Germany [Source 7], this would correspond to almost 1 affected person per family and thus to one's own environment.

In Germany, about 25% of all women and about 11% of men are affected by incontinence. Important figures on incontinence in men and women can be found at source 8.

Wounds and their care:

A wound is an injury to, and thus defect in, the protective covering tissue of skin or internal mucous membranes of body surfaces. Wounds can occur with or without tissue loss. Wounds are the result of violence but also diseases.

Along with the term wound there are different types of wounds. Mechanically caused wounds such as cuts, puncture wounds or bites; thermal wounds such as burns or frostbite; chemical wounds such as chemical burns on the skin or mucous membranes or radiation-induced wounds such as those caused by X-rays or UV radiation require corresponding forms of treatment and necessities of care.

An overview of different wound types can be found on a subpage of Colopast. HERE AGAIN URGENT WARNING: Under the link you will find real pictures of wound sites, which are NOT recommended for readers with appropriate sensitivity in this topic! [Source 9]

3.products from Coloplast

The above-mentioned clinical pictures, types of health restriction and the resulting problems in the everyday life of the affected persons result in urgently competent and above all sophisticated solutions, which must meet the highest medical and at the same time everyday requirements of the patients.

Coloplast has identified corresponding sub-areas for this purpose. These can be divided into stoma care, continence care, wound care and urology.

In the professional area of hospital and practice care, as well as user practice, Coloplast divides into stoma care, bladder management, bowel management and wound care. [Source 10]

Coloplast's customers include hospitals, medical wholesalers and specialty retailers, pharmacies, and physicians.

In the homecare segment, patients are addressed directly and given direct access to Coloplast's broad product range via the connected online store.

I want to add it here right away: With the best will in the world, I cannot list the entire horizon of Coloplast products here. The range of care, accessories and basic equipment is so broad and deep that this alone would mean another 10 minutes of scrolling in your timeline. Nevertheless, I want to publish briefly on the essential products that are interesting to me and meaningful for the consideration of the company.

What stands out about Coloplast's products is that the company is present in each of its market segments among the leaders, if not as the leader.

The reason for this lies in the development of new products close to the patient. Here, the focus is on cooperation with nurses and doctors. Through personal contact, including with patients, some very significant developments and advances have been made in the area of ostomy and wound care.

I will explain this idea and the actions around it in section 4 (What makes the company an SRI/ESG company for me?).

a. Products for stoma care:

Coloplast offers various systems for ostomy care. The Group distinguishes between one-piece and two-piece stoma bags. In the case of one-piece ostomy care, the pouch is firmly connected to a corresponding skin protection plate and is therefore always changed completely and daily. With the two-piece ostomy supply, the so-called base plate remains attached to the abdomen and the outlet site for 3-5 days, thus reducing the daily time required for changing the ostomy bag.

Since the skin under the supply with the one-piece supply is heavily stressed, patients often opt for the less stressful variant of the two-piece supply, whereas patients also reach for the one-piece supply, since here the daily change of the complete system is perceived as more hygienic. In addition to the two systems of care, Coloplast offers patients a wide range of accessories for a self-determined life. These include skin protection cream, wipes, extension products, but also technical accessories.

The main focus of stoma care are the so-called stoma bags, which are available in different designs, shapes and application techniques. Depending on the daily stress or activity, such as sports, individual solutions are required.

A distinction is made between the three main categories of closed, open and urostomy pouch systems.

Closed pouches are usually used for colostomata (i.e. large intestine openings), where the stool is usually rather solid. When the bag is full, it is completely replaced and disposed of.

Open bags are usually used for ileostomata (openings in the small intestine), where the stool is usually liquid. Nevertheless, sometimes the open bag is also used for colostomata. As the name suggests, the open pouch can be emptied and cleaned accordingly. The advantage here is that the pouch does not have to be changed as frequently as with the closed system pouch.

The third bag is the urostoma bag, which is used for artificial urinary diversion. This bag can also be emptied and changed as needed.

Depending on the type of stoma fitting (one-piece or two-piece), there are so-called base plates for the fitting, which function according to a click-and-connect system. In the case of two-part ostomy care, the corresponding pouch can thus be easily and conveniently removed from the base plate and appropriate disposal and care can be ensured.

In general, all pouches and base plates are available for ALL age groups. Thus, even children as young as 6 months can be supplied with appropriate plates and pouches!

The large selection of products shows that Coloplast operates very close to the reality of life of many of its patients and offers appropriate solutions.

Users and professionals can purchase Coloplast products directly in the respective online stores. For this purpose the Onlineshop (Beutel und Systemzubehör) or the Homecare Shop mit verschiedenen Pflegeprodukten is available.

b. Continence care products

For continence care, Coloplast provides SpeediCath ®, a solution with disposable catheters. Here, special consideration is given to the sensitive urethra and catheterization (i.e. insertion into the urethra) is made easier for both men and women with uniform coatings and ready-to-use designs.

For men, the SpeediCath system is divided into Flex, Compact, Compact Set and SpediCath.

For women, SpeediCath is divided into Compact Eve, Compact Plus, Compact Set and Standard.

All systems have discretion, simplicity of use and safety as features. Here, the options for use are very individual and sometimes go a long way towards meeting the different needs of patients.

The range of catheters and their scope of application is both deep and broad. Especially for the flexibility in everyday life at work, leisure activities and sports, the products are very well adapted.

Further information can be found at: https://www.coloplast.de/Kontinenzversorgung/finden-sie-das-passende-produkt/

c. Wound care products

In the field of wound care, Coloplast offers various solutions ranging from dressings, plasters and gels. Corresponding solutions are available with foam composite solutions, silicones or other fiber composites. Here, too, the range is very broad.

Solutions are offered for both infected and non-infected wound sites.

Further information on wound care products can be found at: https://www.coloplast.de/Wundversorgung/fachkraft/produktloesungen/

4.Key figures

Coloplast always publishes the current annual report and annual report in November due to the postponed fiscal year. Accordingly, the latest annual report is available with the 9 month report (3rd quarter fiscal year 2021/22) until June 2022. I will be happy to submit the latest report on 07.11.2022!

The quarterly report for the third quarter of 2021/2022 shows that a turnover of DKK 5.849 million was reported compared to DKK 4.835 million in the previous year. The net profit amounted to DKK 1.289 million. This corresponds to earnings of DKK 6.06 per share. Sales in the first 9 months of the financial year amounted to DKK 16.52 million, compared with DKK 14.32 million in the same period last year. Net profit is therefore DKK 3.476 million compared to last year's DKK 3.52 million. [Source 11]

The P/E ratio in 2021 was 37.38. The KUV in 2021 was 9.26.

A dividend yield of 2.25% on a 12-month basis, i.e., DKK 19 (EUR 2.55) per share certificate, is planned for the current year. The company has so far paid out dividends twice a year. While a small preliminary dividend flows in May of the fiscal year, the main dividend is then paid in December.

The exchange rate DKK to EURO is: 7.446 (as of 25.10.2022)

The last annual report with a lot of information about the company can be found directly on the pages of the Investor Relations von Coloplast.

Basically, the Investor Relations page of the company can also be praised. All reports and key figures can be found here, and relevant historical events and presentations can be searched for and read.

Various statistics and reports can also be found on the topic of "sustainability".

Further (current) key figures can be found at aktie.traderfox.com read up on.

5 What makes Coloplast an SRI/ESG company for me?

Dealing with customers and those affected by stoma and continence care:

As can be seen from the previous sections, the company's main focus is to provide people with medically necessary products that make everyday life easier in the case of a corresponding clinical picture. Various solutions are offered, which are closely oriented to the users and those affected.

The company's motto is: "By users, for users". Customers and caregivers can constantly suggest improvements and tips for the products and give feedback via special hotlines and channels.

The company then further develops the corresponding solutions and products in response to this feedback and can thus benefit from the experience of its own customers. A true win-win situation for both sides.

And if that is not enough... There is an internal customer council for each of the two core areas of the product range! These advise the company in direct communication on products and services. [Source 12]

In all areas of patients' lives, Coloplast provides assistance and offers solutions in every conceivable scenario.

At Coloplast, concern for those affected begins BEFORE any possible treatment with the company's products. This becomes clear in the area of stoma care, where detailed attention is paid to patients. Thus one can supply oneself with references before the Stomaoperation, after the Stomaoperation and a life with Stoma.

In addition all information is made available free of charge, with examples directly descriptive represented, important and meaningful Tipps for a life organization with Stoma given. Also relatives of stoma patients are directly "picked up" and thus involved.

Hours, if not days, go by just reading the information provided on stoma and continence. I, too, first had to process what I had read and let it take effect. And nevertheless: The entire appearance and the handling of the enterprise with its working in this range hardly leave an open question. The company never gives interested visitors the feeling that it is focused on profit, but rather on people, patients and their relatives.

Posts about the company's topics are shared on the various social media channels. Podcasts provide insights into the lives of people with stomas and incontinence. On Youtube, there are countless instructions for the correct care of ostomies and use of catheters and ostomy supplies.

I recommend here expressly the Youtube Präsenz von Coloplastwhich includes deep and especially worth seeing impressions about the portfolio, the assistance in everyday life and other topics around the care of loved ones. Rarely have I seen such "passion" for one's own clientele!

A big and natural topic for Coloplast is "inclusion". This is about the participation and affiliation of people affected by illness in general, professional and (free-time) sporting life. In life with illness (and especially with regard to Coloplast's special business), affected people often experience stigmatization and social restriction. The company distinguishes itself by breaking down this barrier and putting people at the center. For the second time, the company has conducted a study on the topic of "inclusion" together with the FORSA Institute. The results can be found at Coloplast und Inklusion read about the results.

Ein Podcast and ein Blog report close to the patients and the everyday life of stoma patients.

In addition, there are various regularly published magazines as a FREE SUBSCRIBE on the topics of stoma (Wendepunkt magazine), continence (Perspektiven magazine) and a magazine for relatives and carers (Collegial magazine). The magazines can be ordered FREE by anyone or read online. [Source 13]

With Coloplast products, people with stoma or continence problems regain a great deal of freedom and participation. Favourite occupations and sporting activities can be continued without restriction as far as possible. Due to discreet and simple handling, outsiders sometimes no longer recognize any impairment in your counterpart. As a result, patients' self-confidence and independence can grow and they experience no restrictions in life and their environment.

The health group is also active in the field of education and teaching. Thus, various seminars are offered for professional users in the medical field.

In particular, the service around the home care of patients occupies a large space at Coloplast. Coloplast Homecare is an all-round carefree package for all stoma and continence patients. Within the framework of this package, advice, support for preoperative stoma marking (see section 2!), customization of products, nutritional advice and guidance by trained stoma specialists are provided.

The counseling service offers various contact options, including video chat, postal contact, e-mail or chats, but also on-site visits in the personal living environment of the person seeking help.

The offer is basically available to all stoma and continence patients under https://www.coloplast-homecare.de/ available.

The company's internal handling of guidelines for SRI (Socially Responsible Investing) and SDG (Sustainable Development Goals):

Coloplast has proclaimed internally the goal of the UN's Sustainable Development Goals (SDGs) as a guiding principle for corporate action. The SDG is a political declaration of the "17 Sustainable Development Goals" by the UN, which applies to all countries in the world. According to this, the securing of sustainable development on an economic, social and ecological level is the declared goal for a global future. [Source 14]

Internally, the company acts according to the self-developed goals and the project Strive25. This project includes essential features of corporate culture, sustainable growth and leadership management.

The decisive factor here is sustainability in relation to the environment, but also social commitment. Growth should be characterized by innovation and sustainability. Through leadership management, the company wants to become and be a leader in all aspects of the company and its segments.

The special feature of Strive25 is the fact that the 4 topics - innovation, (incomparable; sic!) efficiency, sustainability, talent and leadership - are equally distributed in their weighting with the three main business areas as a unit and integral component are seen.

All areas of the SRI "standards" [source 15] are addressed by Coloplast. Be it equal rights and the inclusion of women in management levels, the integration of physically handicapped employees or the aspects of environmental protection.

By its very nature, Coloplast is a major producer of plastic. This is mainly due to the nature of the products and their characteristics, namely hygiene and application practice. Here, therefore, the focus is on waste prevention, low-pollutant production and sustainable durability or recycling of the materials used. The Strive25 charter sets out the sustainable goals for the period up to 2025.

These include recycling 90% of the packaging produced, ensuring that 80% of the packaging is made of recycled or renewable material and that 50% of the production waste can be recycled.

Among the social responsibilities, in addition to the reduction and prevention of accidents at work, there is also the equality between the different life plan models and genders (diversity), the elimination of the gender gap (different remuneration for the same work and skills for men and women) and the Decent Work and related economic growth of the company. In addition, Coloplast is committed to promoting and appointing more women to management positions. The goal is to reach at least 30% by 2025. [Source 16]

6.Conclusion (& Epilogue):

Market Leader + Social Responsibility = BULLISH. 🚀

What more is there to say now? In this detailed excursion into the company and its business area, I probably haven't even compiled all the topics and information for you that the websites, social media channels, and numerous brochures have to offer.

The company offers affected people an all-round carefree package of information, care and products that make life easier, more inclusive and, above all, more carefree.

Due to the progressive aging of our society, but also the constant medical advancements, a large customer base can be expected in the future. The advantage of leadership, i.e. the leading position in the market segments of the company compared to its competitor is great. Market competitors (rivals) include the following companies Hollister and ConvaTec.

The company leads a strict policy of sustainable development and implements these goals in an overall business perspective. Of course, this process and all the "trappings" cost a lot of money, but in my opinion there can hardly be a better way than the one Coloplast has chosen, especially when dealing with people.

For me, this is clearly a reason why I will continue to hold the company in my savings plan in the coming year or build it up in my portfolio with individual purchases.

Epilog:

I have felt steadily growing admiration and respect for all involved and employed in the health and care field during the course of my extensive research on disease patterns and their treatment as well as care. Thank you for being there for people, whether they are caregivers, nurses, doctors or physicians, family members or friends of patients on this spectrum! What I gained there in terms of insight and pictorial representation is definitely not for everyone. It shows me how much we should be grateful that there are people like. @Koenigmidas , @Servus_Lea@Anna11 , @FrauManu , @Greenery and others, who spend their health, nerves and time every day to care for patients and make a full life possible.

NO INVESTMENT ADVICE, BUT WITH A LOT OF LOVE.

Greetings also to the boyz of #tldr . @DonkeyInvestor
@BASS-T and the Prosepect @Koenigmidas !

For statistics: words - 4,013, characters without spaces 28,123 + ♥️

Sources:

[1] The history of our brand (https://www.coloplast.de/ueber_uns/unternehmen/coloplast-geschichte/)

[2] Wikipedia about Coloplast (https://de.wikipedia.org/wiki/Coloplast)

[3] Cancer Society on ostomy indicators (https://www.krebsgesellschaft.de/onko-internetportal/basis-informationen-krebs/krebsarten/darmkrebs/anus-praeter-der-kuenstliche-darmausgang.html#:~:text=Stomas%20helfen%20Darmkrebspatienten&text=Leben%20mit%20Darmkrebs%20bedeutet%20f%C3%BCr,150.000%20Menschen%20mit%20einem%20Stoma.)

[4] Wikipedia on enterostoma (https://de.wikipedia.org/wiki/Enterostoma)

[5] Living with CED on "My rights with stoma" (https://www.leben-mit-ced.de/informieren/leben-mit-ced/stoma-hilfsmittel/morbus-crohn-und-colitis-ulcerosa-meine-rechte-mit-stoma.html#:~:text=Als%20Stomatr%C3%A4ger%20erh%C3%A4ltst%20Du%20vermutlich,viele%20der%20gesetzlich%20vorgesehenen%20Nachteilsausgleiche.)

[6] Incontinence facts and figures incl. infographics (https://www.insenio.de/ratgeber/inkontinenz-zahlen-und-fakten/#:~:text=Inkontinenz%20betrifft%20allein%20in%20Deutschland,M%C3%A4nner%20in%20Deutschland%20sind%20inkontinent.)

[7] Federal Agency for Civic Education on family households in Germany (https://www.bpb.de/kurz-knapp/zahlen-und-fakten/soziale-situation-in-deutschland/61597/familienhaushalte-nach-zahl-der-kinder/#:~:text=Werden%20unter%20dem%20Begriff%20%22Familie,Deutschland%2011%2C6%20Millionen%20Familien.)

[8] Statistics on female and male incontinence (https://frauengesundheit.life/tabuthema-inkontinenz-zahlen-daten-fakten)

[9] Wound knowledge overview on the pages of Coloplast [ATTENTION! Graphic content on wounds!] (https://www.coloplastprofessional.de/wundversorgung/wundwissen/)

[10] Coloplast Professional (https://www.coloplastprofessional.de/wundversorgung?utm_content=coloplast-professional&gclid=EAIaIQobChMIzqXYzIL7-gIVUKHVCh3gvQm_EAAYASAAEgKm-PD_BwE)

[11] 9 Monthly Report (3rd Quarter) 2021/2022 from August 2022 ( https://investor.coloplast.com/contentassets/fcd65edf83ab483484ad81d63f284fad/07_2022_9m_earnings_release.pdf)

[12] The customer council and customer dialogue at Coloplast (https://www.coloplast.de/ueber_uns/servicewelt/kundendialog/)

[13] Coloplast magazines on the topics of stoma, continence and care (https://www.coloplast.de/ueber_uns/servicewelt/magazine/)

[14] The 17 SDG goals of the UN (https://sdgs.un.org/goals)

[15] SRI investing at Wikipedia (https://de.wikipedia.org/wiki/Ethisches_Investment)

[16] Strive25 Charter of Coloplast (https://www.coloplastprofessional.de/globalassets/content-blocks/multisite-pages/sustainability/cp_sustainability_brochure_a4_final_single-pages_09082021.pdf)

#aktien
#stockanalysis
#lesrn
#coloplast
#tldr
#stocks

𝑺𝒕𝒂𝒕𝒊𝒔𝒕𝒊𝒔𝒄𝒉𝒆 𝑴𝒂𝒏𝒊𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 (𝒖𝒏𝒅 𝒆𝒎𝒐𝒕𝒊𝒐𝒏𝒂𝒍𝒆𝒔 𝑯𝒂𝒏𝒅𝒆𝒍𝒏)

https://docs.google.com/document/d/1Mx7AynRV4MzgPdW3vD-hl09duInzZgk3hFJPvxdEZv8/edit?usp=sharing

𝐅ü𝐫 𝐚𝐥𝐥𝐞 𝐦𝐞𝐢𝐧𝐞 𝐭𝐥𝐝𝐫'𝐬: Read Part III and Conclusion only.

Since relatively random emotional questions pop up on getquin every now and then (X has fallen, sell now?) and rational statistics is somehow hardly mentioned, I am compiling here some of the content relevant to the stock market, among others from both business psychology and statistics as well as some books, studies and websites.

Actually, I also wanted to go into posts of Finfluencern in the context, but that comes again independently of this.

𝐈 𝐔𝐧𝐭𝐞𝐫𝐬𝐜𝐡. 𝐒𝐭𝐚𝐭𝐢𝐬𝐭𝐢𝐤𝐞𝐧 𝐮𝐧𝐝 𝐝𝐢𝐞 𝐣𝐞𝐰𝐞𝐢𝐥𝐢𝐠𝐞𝐧 𝐌𝐚𝐧𝐢𝐩𝐮𝐥𝐚𝐭𝐢𝐨𝐧𝐬𝐦ö𝐠𝐥𝐢𝐜𝐡𝐤𝐞𝐢𝐭𝐞𝐧

𝐈𝐈 𝐖𝐢𝐞 𝐦𝐚𝐧 𝐯𝐞𝐫𝐬𝐮𝐜𝐡𝐞𝐧 𝐤𝐚𝐧𝐧 "𝐟𝐚𝐥𝐬𝐜𝐡𝐞 𝐒𝐭𝐚𝐭𝐢𝐬𝐭𝐢𝐤𝐞𝐧" 𝐳𝐮 𝐯𝐞𝐫𝐦𝐞𝐢𝐝𝐞𝐧

𝐈𝐈𝐈 𝐩𝐬𝐲𝐜𝐡𝐨𝐥𝐨𝐠𝐢𝐬𝐜𝐡𝐞𝐫 𝐄𝐱𝐤𝐮𝐫𝐬 (𝐧𝐚𝐜𝐡𝐤𝐚𝐮𝐟𝐞𝐧/𝐯𝐞𝐫𝐤𝐚𝐮𝐟𝐞𝐧)

𝐈𝐕 𝐅𝐚𝐳𝐢𝐭

I)

𝐒𝐭𝐚𝐭𝐢𝐬𝐭𝐢𝐤𝐛𝐞𝐫𝐞𝐢𝐜𝐡𝐞 𝐮𝐧𝐝 𝐢𝐡𝐫𝐞 𝐁𝐞𝐞𝐢𝐧𝐟𝐥𝐮𝐬𝐬𝐮𝐧𝐠

Basically, statistics can be broken down quite easily:

Have data clearly presented (descriptive statistics).

Looking for specifics and correlations (exploratory statistics)

And then draw conclusions (inductive statistics)

One could attribute "false", influenced statistics to the 3 levels of statistics

1)

The simplest fraud method, but also the quickest to disprove, works by simply falsifying numbers or incorrectly compiling/ omitting relevant information.

Example a) Donald Trump:

For Donald Trump, it sounds better, of course, to present it as if 1.5 million people were present at his inauguration . The fact that those present were estimated to be around 250k according to TV images does not matter to him.

Example b) Ancel Keys:

Carry out and document an experiment correctly, but then only mention the numbers that please the client. Still not enough for the next level, but at least it is smarter than simply making up numbers.

Ancel Keys was a doctor who studied the relationship between animal fats and cardiovascular disease. Thesis: animal fats are to blame for heart attacks.

He collected figures for 21 countries (https://gerritkeferstein.com/wp-content/uploads/2021/01/Bildschirmfoto-2021-01-14-um-08.44.48-1024x399.jpg) but since these alone did not prove much, he simply omitted all countries that did not fit the curve. (See images below)

The study happened to be commissioned by the margarine industry. 🤡

2)

Use all data, but do not look for specifics, i.e., the "forget" exploratory statistics.

Example Heilbronn:

Heilbronn has one of the highest per capita incomes in Germany. Why? Because Dieter Schwarz pays taxes there. When calculating the income, a social product size is divided by the population size, the income of the Schwarz family alone pulls the average higher. Of course, this does not make the inhabitants of Heilbronn any richer.

3)

Errors in inductive Statistics can often only be recognized if one really deals with the subject oneself (checked up to the last footnote). To use the right numbers, to recognize correct deviations, but still come to a questionable conclusion, usually requires an emotional bias or conformity drive (peer pressure and the need to agree with other people).

Example Covid19 infection:

I come home from a vacation from a country where Covid19 has broken out, so I have to get tested here. Out of 100 healthy people tested, 99 are found to be actually healthy. In contrast, in the case of an actual disease, the test result is always exact.

After research, we find that even only one in 1000 vacationers has been infected, which makes infection seem unlikely. But then the test is positive. The gut feeling says; the probability that I was actually infected is 99%, so I am as good as sick. But think further:

If 100,000 tourists were in the vacation area, 100 are infected and tested positive, 999 are not infected and tested positive (because 1% of 99,900= 999). Thus 1098 people are tested positive, but only 100 are really positive. (9%)

Thus, by thinking more carefully, the probability has decreased by -90% and is now only 9% that I was really infected with a positive test.

II)

𝐖𝐢𝐞 𝐯𝐞𝐫𝐬𝐮𝐜𝐡𝐞 𝐢𝐜𝐡 𝐚𝐥𝐬𝐨 𝐢𝐧 𝐙𝐮𝐤𝐮𝐧𝐟𝐭 𝐟𝐚𝐥𝐬𝐜𝐡𝐞/ 𝐞𝐦𝐨𝐭𝐢𝐨𝐧𝐚𝐥𝐞 𝐒𝐭𝐚𝐭𝐢𝐬𝐭𝐢𝐤 𝐳𝐮 𝐯𝐞𝐫𝐦𝐞𝐢𝐝𝐞𝐧?

Of course, there is no simple solution here, however, one can find some ways to minimize the risk and identify relevant numbers.

First of all, it is recommended to at least additionally, but preferably exclusively and first of all, use the primary sources to use. Do not look for articles or sites that have cribbed Apple's quarterly numbers or their earnings report, look directly at https://investor.apple.com/investor-relations/default.aspx search for the financial statements:

https://www.apple.com/newsroom/pdfs/FY22_Q1_Consolidated_Financial_Statements.pdf

Of course, understanding such a balance sheet is more difficult than a pre-chewed text, but the risk of an emotional purchase is reduced by doing own research with factual sources.

Buying only on the basis of an analyst's opinion is nothing else, as one's own decision-making ability is being compromised on the basis of alleged expert knowledge.

Before buying stocks only based on analysts, one should remember that even funds do not often beat the broad market in the long run so far. If one buys individual stocks at all, this is probably due to an overestimation of one's own abilities😶. If one buys these however on opinion of an expert, it is actually even justified with the assumption of the abilities of a strange person.

Opinions of experts in certain economic areas to use as background knowledge, on the other hand, is reasonable, as long as their opinion appears in the decision only as an item on the pro / contra list AND these were checked for your qualification as well as your intentions.

(A mobility expert is thus logically to be treated with caution as an analyst, if he works at the same time as an external consultant of VW).

To recognize influenced statistics, it also helps to know other types of statistical tricks. If you want to look into this further, here is a list of the most common ones, this post is already way too long:

https://de.statista.com/statistik/lexikon/definition/8/luegen_mit_statistiken/

III) -𝐄𝐱𝐤𝐮𝐫𝐬-

𝐍𝐚𝐜𝐡𝐤𝐚𝐮𝐟𝐞𝐧 𝐨𝐝𝐞𝐫 𝐕𝐞𝐫𝐥𝐮𝐬𝐭𝐞 𝐫𝐞𝐚𝐥𝐢𝐬𝐢𝐞𝐫𝐞𝐧

The human being is actually not able to react to course changes in the short term due to his emotions. Spiegel puts it this way:

"When faced with a strong negative stimulus, such as a plunge in stock prices, the amygdala triggers a short, violent response without much reaction time: Fight or flight."

Meaning what? To buy a stock, you should assume some kind of bull scenario, it's not enough "the price is bound to go up." So you have to have reason to believe that growth is higher than expected, debt can be reduced faster, the research lead is higher than priced in, or, or, or.

Buy, hold AND CHECK

If this case does NOT occur, (Paypal did not achieve as much growth as expected) the next step would be to compare the long-term thesis with the short-term data and decide if it still holds. (as written in II: directly based on the quarterly figures).

If no: thesis no longer realistic = sell

Does it matter if the share price has fallen 50%? If one is sure of one's investment thesis and can continue to justify it, why should it matter. Depending on how likely you think this thesis is compared to your other investment theses, you can buy more, thus increasing the position size in relation to the other shares.

( Charlie Munger also invests according to this quite simple value investing strategy.

https://www.youtube .com/watch?v=JavygKq74sk&t=840s )

Additional relevant comments would be the following:

,,Selling a losing position is tantamount to admitting defeat. As long as the stock is in the portfolio, the losses can be recovered - hope dies last. This is often compounded by the problem of "selective perception": bad news about one's own shares is ignored, while good news is overrated.

Which brings us back to the issue of statistical influence. Not only the numbers, which the company presents, can be influenced, also the numbers [and colors, red is to lead to panic, reflex-like action. Why do you think the neo-brokers have these colors... oh well, they earn money on transaction fees...] which are visible in our depot, influence us unconsciously.

-excursion end-

IV)

𝐅𝐚𝐳𝐢𝐭

1) Statistics is really only ever helpful if you check the important stuff against primary sources and deal with it. Otherwise, it quickly leads to hasty decisions and burns 💵

2) Add to that the human brain, which is so afraid of losing money, that without content guardrails in investments we very quickly unfortunately do just that.

What else do I learn from this? Longterm stocks are only checked on the basis of newly published figures and otherwise the chart is trusted (more on this in the TA post).

Discussion thesis: A SL makes sense to limit losses, but I should only use it in the medium term (i.e. try to avoid the negative phases of the stock to get more profit from the positive ones). Because a long-term SL would mean uncertainty in the investment decision and thus make it null and void.

Or?

#learn
#basics
#stockanalysis
#stocks
#psychologyinfinance

Sources:

https://docs.google.com/document/d/1h7TSza-1SqeVOulPiWNDrQQb2cncgTYrEEd1cH4qUMk/edit?usp=sharing

++Linde and other industrial gas producers in comparison++

1. business model of $LIN
1]

Linde PLC is an industrial gases and engineering company. The company's business consists of two core product lines: Industrial Gases and Engineering. The main products of the industrial gases business are atmospheric gases such as oxygen, nitrogen, argon and noble gases, and process gases such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases and acetylene.

The company designs, engineers and builds industrial gas production plants and provides customers with a range of gas production and processing services, such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants.

Employee Satisfaction: [2]

Average rating:

According to the review portal kunuu, workers are satisfied with their employer on average. The company scores a 3.4 out of 5, and has a 50% recommendation rate. The biggest problem of the German workers stands out more clearly: the aggressive company culture. Many layoffs and poor chances of being hired.

Salary:

The majority of workers are happy with salaries at Linde. And rightly so. Rich starting salaries attract qualified employees to the company. Key positions at the company would include:

Engineer: 80,500€ / Buyer: 85,300€ / Project Manager: 97,900€.

General:

It should be noted that I underestimated Linde quite a bit. I was aware that Linde is a big player in the gas business, but the fact that Linde is the world market leader in industrial gases [3], besides AirLiquid, surprised me quite a bit. The chart alone in comparison to Airproducts and Shin-Etsu is a real treat... (picture is attached/ By the way, I would appreciate it if you could finally insert pictures between text, this would help the reading flow significantly)

Is Linde "too big to fail"?

Modern industrial gases are one of the components that make up the engine of modern industry. Without industrial gases, many "normal" products such as plastics or fertilizers would no longer be able to be manufactured. Industrial gases are accordingly indispensable! For example, without chlorine and ethylene, plastic could no longer be produced, or without nitrogen and ammonia, ammonia could no longer be produced. It is also interesting to note that without argon and helium, the semiconductor industry would no longer be able to produce (all products of Linde).

Prospects for industrial gases: [4]

Political and societal pressures, at least here in Germany, are increasing demand for alternatives to conventional oil, benefiting low-CO2 technologies such as hydrogen. In addition, more efficient mechanisms are being invented to improve the efficiency of industrial gases. Whether hydrogen propulsion will become widely accepted as a replacement for the internal combustion engine is questionable - industrial gases already seem to be more attractive for large means of transportation such as trucks or even airplanes. As already mentioned above, industrial gases are indispensable for chemical/medical and some technological industries.

2. key figures in comparison (Linde(DE) vs. Airproducts(USA) $APD
vs. Shin-Etsu $4063
(JPN)) [5]

a. Sales and profit growth (EBIT)

Sales growth over the last 5 years:

Linde: 23.88% / Airproducts 9.17% / Shin-Etsu 3.18%

EBIT growth over the last 5 years:

Linde:

- 2018-2019: (-42%)

- 2019-2020: (15,61%)

- 2020-2021: (50,68%)

- 2021-2022: (8,71%)

- Average growth rate: 6.6%

Airproducts:

- 2018-2019: (13,62%)

- 2019-2020: (5,87%)

- 2020-2021: (3,45%)

- 2021-2022: (9,86%)

- Average growth rate: 6.56%

Shin-Etsu:

- 2018-2019: (22,4%)

- 2019-2020: (2,58%)

- 2020-2021: (-5,6%)

- 2021-2022: (73,11%)

- Average growth rate: 18.5%

Average 5-year EBIT growth trend:

Linde: 6.6% / Airproducts: 6.56%/ Shin-Etsu 18.5%.

b. All about the dividend

When it comes to dividends, my focus is on sustainable growth. I avoid companies that already have too high a payout ratio, or which barely increases the dividend. Interesting ratios for this are:

- Current dividend yield

- Dividend continuity

- Dividend growth

- Payout ratio

Linde:

- Current dividend yield: 1.30%

- Dividend continuity: 30 years

- Dividend growth: (5 years: 8.27%); (10 years: 7.84%)

- Payout ratio: approx. 60%

Airproducts:

- Current dividend yield: 2.2%

- Dividend continuity: 35 years

- Dividend growth: (5 years: 11%); (10 years: 9.5%)

- Payout ratio: approx. 60%

Shin-Etsu:

- Current dividend yield: 2.13%

- Dividend continuity: 25 years

- Dividend growth: (5 years: 10%); (10 years: 9%)

- Payout ratio: approx. 55

c. Low debt

In order for a company to be flexible even in high-interest phases, it should have low debt. I personally equate a high equity ratio with security.

Equity ratio:

Linde: 50.25%

Airproducts: 48.34

Shin-Etsu: 82.4%

3. outlook

I expect my investment to grow steadily in the future and to pay me a nice dividend. Admittedly, none of the companies offers a high dividend yield, and to be honest, I don't have a clear favorite among the three stocks. Linde and Airproducts are the bigger companies, but they have already had their big growth spurts. Shin-Etsu is a small but interesting company, but can it really compete with the big top dogs. According to the current market distribution, Airproducts and Linde are ahead - Linde even a bit more. However, Linde has already done very very well, and has almost three times the market capitalization of Air Products. I will decide in the coming weeks whether to bet on Linde or Air Products, and then open a position for my dividend portfolio.

I will publish the purchase again in GQ.

Final question: Which stock would you buy?

By the way, the outline of this post is inspired by the post of @RealMichaelScott (How to analyze a dividend stock). And on the topic of hydrogen I was inspired by the post of @Hannes_SK (Bye-Bye $PLUG )

Sources:

[1]: https://de.marketscreener.com/kurs/aktie/LINDE-PLC-46923083/unternehmen/

[2]: Linde Erfahrungen: 711 Bewertungen von Mitarbeitern | kununu

[3]: Industriegase: Marktanteile größter Hersteller weltweit 2018 | Statista

[4]: Industriegase: Hersteller, Produktion und Anwendungen - Gasido.de

[5]: TraderFoxx; marketscreener; finanzen.net

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