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FRANKFURT (dpa-AFX) – Encouraging statements by the management of financial services provider GRENKE on Thursday lured investors back into the shares. In the morning, the papers were at the top of the MDAX with an increase of more than seven percent. They clearly moved away from the 50-day line to which they had fallen in their setback since the beginning of June. Meanwhile, analysts reacted to the key figures presented by the group for the past quarter with mixed feelings.
Grenke CEO Antje Leminsky spoke of the first signs of improvement in June after Grenke’s new business plummeted in April and May. However, the management does not yet want to lean too far out of the window and already speak of a trend – this will continue to depend heavily on the overall economic development. When the new business is moving towards normalization is currently not foreseeable. Grenke therefore does not want to give a forecast.
Despite the current profits, the balance sheet of the Grenke share has been deep red with around a fifth of a minus since the end of 2019 – a good 30 percent are missing from the interim high of € 100 reached in February. The stock had plummeted in the wake of the Corona crash, largely due to investors’ fear of high credit defaults. The low in March had gone down to 40.50 euros before the paper recovered to almost 82 euros in early June. Since then, however, the stock has continued to pull downwards.
Despite the bright spot in June, the company’s new leasing business shrank 45 percent year-over-year in the quarter. Although the decline was within the framework of the recently announced order of magnitude of around 50 percent of the new business volume planned at the beginning of the year and thus before the pandemic – Philipp Hssler from the analysis company Pareto spoke of values well below his expectations.
Hssler also reminded that the third quarter, which is usually the seasonally weakest, is now approaching. Although he believes that Grenke should be able to hold its own in a difficult environment and that things could go up again in the next quarters, he probably feels comfortable with his neutral stance and the current price target of 72 euros.
For the Warburg expert Marius Fuhrberg, however, the sharp decline in new business was not a big surprise – after all, the management had already prepared extensively for the strain caused by the pandemic. The analyst now assumes that growth rates in new business should pick up again in the second half of the year. It remains to be seen how the loss rates in the group portfolio will develop and whether the provisions already created will suffice for this. But Fuhrberg still sees the investment background at Grenke fully intact and continues to recommend buying the share. He believes the paper can still do a lot up to its target price of EUR 99./tav/ag/jha/