Deutsche Post shares trading at 20-40 pct discount vs rivals partly on US
Deutsche Post World Net AG chief financial officer Edgar Ernst said the company’s share price is currently trading at a discount of about 20-40 pct compared with its rivals partly because of its problems in the US.
In an interview with Boersen-Zeitung, Ernst also said another reason is the overhang in shares of Deutsche Post.
He said once the US operations start making positive contributions to group earnings and when the state-owned Kreditanstalt fuer Wiederaufbau (KfW) sells its remaining Deutsche Post shares as part of the government’s privatisation, then the discount would be reduced.
‘(Our discount) is between 20 pct and 40 pct. And that is clearly too much. Our benchmark for that is UPS, Fedex and TNT,’ he said.
He said guidance given to investors has been for the US business to be earning profits in 2009.
Deutsche Post Regards Itself as Undervalued – April 11, 2006
Borsen-Zeitung. Edgar Ernst, finance director of German logistics and postal service group Deutsche Post, said in an interview that his company was undervalued and that its current market capitalization of 25bn euros meant that it was worth between 20 per cent and 40 per cent less than competitors such as Dutch group TNT and US groups UPS and Fedex. Shares in Deutsche Post have risen very little since the beginning of 2006, while Germany’s Dax share index has gained 10 per cent. Mr. Ernst believes that the main reason for Deutsche Post’s comparatively low market capitalization is the fact that it is still registering losses in the US. In the interview, Mr. Ernst stressed that his group had no plans to sell its loss-making US activities and predicted that they would start contributing positively to group net profits in 2009. Mr. Ernst also believes that Deutsche Post’s share is undervalued because of the uncertainty in connection with the deregulation of letter forwarding services and the fact that Germany’s Reconstruction Loan Corporation still dominates the group with a stake of 42 per cent.
