Guys, you should all bear in mind that we are currently sitting at a market value of 180 Million €. This value is basically taking into account that Steinhoff will be liquidated.
Recent company's who have filed for liquidation have around the same market cap. For example Heartz and Wirecard.
So in my opinion I cannot see the price dropping much further unless the share will be suspended and we loose everything. So you should rather now take the decision to either cut your losses or you stay on board.
In my opinion we are at a much beter space at the moment then in 2018 and 2019. Why do I say this:
- All units are profitable, there is no remaining unit in the Steinhoff group which is generating a negative cash flow from its operations. All non-essential or loss making units where disposed off at reasonable prices.
- The group debt was restructured and will hopefully be extended which gives Steinhoff more time to reduce its debt. Yes, interest rates are crazy, however if legal claims are laid bye and Steinhoff obtaines a clean audit opinion they will definitely be able to obtain much cheaper debt. Global interest rates are on their lowest levels since decades.
- The group has made a formal proposal to settle ALL legal claims against it with one blow. Trust me this was not easy to come up with this proposal and I personally think/hope this was already discussed with the major parties. I mean according to law we only need 50% of the claimants to approve it. So we basically just need Wiese to approve the proposal. Also everyone was stating that Steinhoff has legal claims in excess of 9 Billion € against it. If this proposal is accepted it will only be around 0.8 billion € of which half will be settled via shares. Just as a side note, that is like 4 times the current market cap of Steinhoff.
- Steinhoff will retain its core operating units in future- All these units have high growth potential in future. (Pepkor, Pepco, MF, Greenlit) I think Conforama will still be disposed off in full. The remaining operating units easily will generate an EBITDA of well above 1 Billion € per year going forward.
Now a lot of you guys are probably asking yourself now but why is the share price falling if Steinhoff is at a beter position?
- We have around 87% of the shares in private investor hands. They are driven by emotion and Steinhoff is really not for the faint hearted.
- Christo Wiese had to dispose of his shares due to margin calls. His first 20% was thrown on the market without a limit. Now in the previous two or three months he had to sell his remaining stake to cover margin calls. Thus share price was depressed further.
- Exit from the SDAX this month. Meaning Index had to re balance and sell Steinhoff shares
Now what needs to happen for the share price to go up in my view?
- Legal claims need to be resolved. Proposal needs to be accepted and implemented - In progress
- Debt must be reduced and refinanced at much lower interest rates. - In progress
- Clean audit opinion - In progress
- Continuation of the strong performance of the operational units.
- Big institutional investors need to buy or we need a new anchor investor who will hold 25% and more. - Will only happen once all points above are cleared.
So guys we have come all this way, I know it was a tough road this far and the road ahead is still tough. However I do still believe in the Plan management has come up with and I personally will follow it till the sweet or bitter end.
If you don't believe in the story then rather cut your losses and move to some other investment.
Keep strong guys!!
