On Monday, the TKMS share celebrated a spectacular stock market debut in Frankfurt. But the initial euphoria among investors appears to have quickly dissipated.
• TKMS share with a losing streak after a strong first day of trading
• Initial analyst ratings are cautious
• High trading volumes indicate profit-taking
At the beginning of the week, thyssenkrupp listed its marine division TKMS (thyssenkrupp Marine Systems) as an independent company on the stock exchange. The first day of trading was extremely successful: the initial price of the TKMS share was 60 euros, which was above expectations. Analysts had previously calculated a starting price of around 36 euros per share. Ultimately, the share rose by 35.17 percent to 81.10 euros via XETRA on its first day of trading. At the daily high it even went up to 107 euros.
After a hopeful start, the naval shipbuilder’s shares suffered price losses in the following trading days: the TKMS shares closed with losses on Tuesday, Wednesday and Thursday. At the XETRA close on Thursday, the title was at 70.20 euros, around 13.44 percent lower than at the end of the first day of trading.
Before the weekend, however, there was a small glimmer of hope again, as the share temporarily gained 7.05 percent to 75.15 euros in XETRA trading on Friday. Although the TKMS share is still well below the closing price on the first day of trading, it can still remain well above its initial price.
Analysts are cautious
The first analyst assessments after the IPO were mostly cautious. Deutsche Bank Research started its assessment on October 22nd with a “Hold” recommendation and a price target of 75 euros. Bernstein Research, which issued an “underperform” rating for TKMS on October 21st, was particularly skeptical – a clear signal of limited growth prospects.
High trading activity indicates rebalancing
What was also noticeable was the enormous trading volume in the first few days after the IPO. On October 23rd alone, up to 179,686 shares changed hands on over-the-counter trading venues such as Tradegate. This unusually high level of activity suggests significant rebalancing and could be an indication of profit-taking by early investors. The rapid fall in share price after the IPO is explained by market observers as a revaluation of the company after the initial hype.
Strong market position and strategic importance
TKMS, based in Kiel, is a world leader in the construction of conventional submarines and frigates. The company has an order backlog of 18.6 billion euros that extends into the 2040s. The German and Norwegian navies are among the important clients. In addition, TKMS is applying for a major contract worth billions to build new submarines in Canada, in which a South Korean manufacturer is also competing.
For the coming years, TKMS is aiming for annual sales growth of 10 percent and plans to increase the EBIT margin to over 7 percent. These goals are to be achieved by using direct access to the capital market and further expansion into international markets. However, the company also faces challenges, such as increasing competition from companies such as Rheinmetall, which recently acquired the Naval Vessels Lürssen shipyard.
After the overall rather sobering first week of trading, it now remains to be seen how the TKMS share will perform on the stock market in the long term.
Editorial team finanzen.net
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