Course fireworks until the last minute

D.he newcomer to the stock exchange Siemens Energy has made a breathtaking final spurt in the last days of December. The listing of the share closed on the last trading day of 2020 at a high. The energy technology company’s share price has risen by 36 percent since the note was taken – that’s more than a conciliatory end to the year for a high-deficit company. New investors can cheer just as much as Siemens shareholders who have kept their energy stocks booked into the depot on September 28th. And the Siemens group, which carried out the largest German IPO in 2020 with the largest spin-off to date, can rejoice as the main shareholder with considerable price gains.

On the last trading day, it went up until the last minute, even if the closing price of 30 euros (plus 0.33 percent) was below the daily high. This means that the titles have risen by 16 percent since December 21st alone. This gives the first explanation for the bull market: On that day, the newcomer to the M-Dax rose to join his “sister” Siemens Healthineers, the medical technology division of the parent company. Unlike Energy, this went public in March 2018 via a public offer (IPO) and just as quickly conquered the mean value index.

The manufacturer of gas turbines, equipment for the oil industry and wind turbines was appointed M-Dax member at the beginning of December, which market participants already discounted in November and so they began to buy. The soaring price of the past trading days is not only due to the year-end rally. Because index funds that track the M-Dax are likely to have covered up by the end of the month; recently the world’s largest wealth manager, the American Blackrock, with more than 3 percent.


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To the detailed view

Gradually, trading in the stocks switches to normal operations. So far, market activity has been shaped by the necessary re-formation in the shareholder structure, which on the day of the spin-off was a reflection of Siemens’ ownership structure. Index-oriented funds that only track Dax stocks had to sell. A third of the almost 727 million Energy shares are likely to have changed hands in this way. According to the company, this process is largely complete. The shareholder structure is on a more stable foundation: Siemens is the largest shareholder with 35.1 percent, 9.9 percent is held by the independent Siemens Pension Trust; 33 percent are with institutional investors, 14 percent with private investors; the rest has not yet been identified.

The way for the expected rise to the Dax in autumn 2021 with 40 members is paved. With a market value of 22 billion euros and the high free float of 55 percent, important hurdles have been overcome. The deficits in the insufficient trading turnover will be eliminated by then – especially if Siemens places another tranche, which according to its own announcement should happen 12 to 18 months after the initial listing. Should the course plateau hold or be raised, this is possible before the summer break. The main shareholder is happy about the strong increase in the value of his stake anyway. A sale of 10 percent to investors outside the stock exchange would bring in more than 2 billion euros.

That looked different at the stock exchange premiere. The first price of 22.01 euros left deep disappointment. The market value of 16 billion euros was unflattering for a company with 27.5 billion euros in sales, an order backlog of 79 billion euros and 93,000 employees, but a net loss of 1.8 billion euros.

Analysts actually saw a valuation then that has been achieved today. Another driver is the wondrous euphoria for the German-Spanish wind turbine manufacturer Siemens Gamesa, in which Energy holds 67 percent. In one year, its rate has more than doubled. The package held by Energy is worth 15 billion euros and covers 70 percent of its own market capitalization. Gamesa, of all things, is mainly responsible for the horrific losses of the majority shareholder. The hope of a new management alone cannot explain Gamesa’s miracle. Rather, rumors about a compensation offer to the free float were fueled. But that is currently out of the question for Energy boss Christian Bruch. Recently, speculation was specifically spread that the Germans could sell Gamesa, Bruch denied. The markets didn’t care: Siemens Gamesa’s course continues to fly high – and with it Siemens Energy is also gaining altitude.

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