GRENKE share: The mud battle is not over yet | 11/30/20


Despite all denials and countermeasures by the company and its founder, Wolfgang Grenke, the share price has not yet recovered from the attack. About the state of the company, what the analysts say and what the stock is doing.


:In mid-September, the authors of the self-proclaimed research service Viceroy shot publicly for the first time against the Baden-Baden GRENKE, a leasing specialist primarily for office equipment and software. The Briton Fraser Perring, who is behind Viceroy, accused the MDAX company of fraud and balance sheet manipulation. Company founder Wolfgang Grenke is said to have enriched himself unfairly for years through a network with affiliated companies.

One of the linchpins of Perring’s theory is the company’s franchise system. Many of these franchise companies are run by former GRENKE employees. This system would either hide air bookings or divert money on a large scale, so the allegation. In addition, Perring had claimed that a large part of the reported financial resources did not exist. The fear of a second Wirecard case soon arose.

Wolfgang Grenke vehemently protests against a comparison with the now insolvent payment processor. The manager, the company’s board of directors and the supervisory board also reject all of Viceroy’s allegations to this day as unfounded. The leasing specialist has since done a lot to refute the allegations. GRENKE also reserves the right to take legal action.

A special report, which GRENKE commissioned its regular auditor KPMG, has meanwhile cleared Viceroy’s accusation of excessively high liquid funds. In addition, the company Warth & Klein Grant Thornton was commissioned to review the franchise businesses and their takeovers.

In October, GRENKE felt relieved on many points by an interim result from the auditors. No significant abnormalities, for example in the business model or the organization – that was the conclusion of the Management Board and the Audit Committee of the Supervisory Board. With the exception of the account balances, there is no official certificate from the auditors. It is open when a final result will follow.

There is also nothing new from the Bafin market regulator, which is also investigating. Several investigations are now underway there, including into possible market manipulation. Bafin is also taking a close look at the 2019 Group Annual Report. There is also a special audit at GRENKE Bank, among others. All investigations continued, said a spokeswoman on request. In addition, the customs anti-money laundering unit has been involved. According to its own information, it examines “in particular possible references to offenses relating to investment fraud, insider trading and market manipulation”.

Fraser Perring, who was already messing with the Wirecard group, which has since collapsed under a billion-dollar financial gap, won’t give up anytime soon at GRENKE either. In the past few weeks, the shortseller has published further documents with allegations – one of them entitled “GRENKE – Business Anomalies Discovered”. He also continues to denounce Wolfgang Grenke as one of the “lurking in the shadows” beneficiaries of the franchise system.

According to its own statements, the group had accelerated its international expansion through the franchise companies. The majority of the capital in these companies is held by various financial investors, including CTP Handels- und Beteiligungs GmbH (CTP). Its indirect owner is Wolfgang Grenke. However, it has only been so since the beginning of 2020, which is why – unlike Viceroy’s request – it has not yet had to state this in the annual report.

Perring still sees himself in the right. He recently claimed that manager GRENKE had been influencing CTP since the early 2000s by installing shop stewards there through his consulting company.

The group has now responded to some of Perring’s allegations with a planned reorganization: The system, which was heavily attacked by Viceroy, is to be ended and the remaining franchise companies to be integrated quickly. The company’s founder also offered to sell his stakes in the franchise companies to the GRENKE Group. The same applies to Garuna AG, which also holds shares. Wolfgang Grenke has been suspending his mandate as Deputy Chairman of the Supervisory Board since September.

The group also countered Perring’s accusation of inadequate control mechanisms – for example by adding a Chief Risk Officer (CRO) to the Executive Board. In addition, Group boss Antje Leminsky now oversees the internal audit. In spite of everything, the mud battle with Perring did little damage to business at GRENKE. It was more likely to be the Corona crisis: Due to the pandemic, new business is significantly below the previous year’s level.


Since the allegations were published, only a few analysts have dared to come up with a new assessment. After their guild did not give a good picture in the Wirecard case and called for high price targets for a long time, the experts are more cautious this time. For example, analysts from Deutsche Bank, NordLB and the Kepler and Warburg companies have suspended their votes since September.

Not so, industry expert Roland Pfänder from Oddo BHF – he recently included GRENKE in the rating with “Buy” and a price target of EUR 46. Pfänder believes that GRENKE can rebuild trust after the short seller attack. And the corona crisis will also have shaken off the group by the end of 2022.

The experts from Bankhaus Lampe are also confident. Analyst Andreas Schäfer considers Viceroy’s allegations to be unfounded and, thanks to the low stock valuation, raised his vote from “Hold” to “Buy” at the beginning of November. The expert was positively surprised by the course of business in the third quarter. However, he assumes that the new lockdown measures in the Corona crisis will likely delay the recovery at the leasing specialist.

But there are also cautionary voices: Philipp Häßler from Pareto Securities, for example, has recently not considered the time to get into the share despite the good quarterly figures. He stuck to his neutral vote and justified this with the high level of uncertainty caused by the Corona crisis and the loss of trust in the company.

For example, the interim results of the auditors, according to the assessment of trader Stefan de Schutter from Alpha Wertpapierhandel, left many questions unanswered. “At GRENKE you think you have refuted a lot, but that’s not how I see it.” In October he criticized that things had basically gone wrong at GRENKE and that much of the company’s business was built on “quicksand”.

Of the experts recorded by Bloomberg, three currently recommend the paper to buy, three to hold it – there is currently no sales vote. The average target price is a little more than 50 euros and thus almost at the level it had before the attack and well above the current price.


After the shortseller attack, investors are still licking their wounds. After the attack in mid-September, the price of GRENKE shares fell to less than half within three days. From the closing price on the eve of the allegations at 55 euros, the paper had slumped to below 24 euros – at its peak, the attack had thus depressed the market value by more than 1.4 billion euros.

It reflects the skepticism on the market that the share has not recovered from this attack to this day – but at least the price has been able to recover somewhat from its intermediate low. The paper is currently trading at 38 euros, around 30 percent below what the share cost before the attack. Some investors will probably want to wait for the further results of the auditors first.

Nevertheless, positive analysts have certainly contributed to a price recovery in the past few weeks. Most recently, Oddo’s buy recommendation provided a little boost. The fact that the company drew direct conclusions from the allegations also helped the share on its feet. The upward trend was even stronger after the first exonerating interim results from the examiners.

At the beginning of October it even looked at times as if the sad episode for GRENKE on the stock exchange could soon be over. After confirmation of the bank balance by KPMG, the rate had soared within a few days by more than 40 percent to 46 euros. According to information from the market, short sellers who had bet on a falling GRENKE price had increasingly closed their positions.

But now the air seems to have left the paper again. Due to its low market capitalization, which was last at 1.8 billion euros, this development could possibly even bring GRENKE shares down into the SDAX if the Siemens spin-off (Siemens) Siemens Energy is likely to move into the mean index in December. Currently, however, GRENKE shares are still in a head-to-head race with Aareal Bank to remain in the MDAX.

One thing is certain: It was anything but a good year for GRENKE shareholders. Since the beginning of the year, the paper has lost around 60 percent of its value. Because the corona crash was still a long way from being ironed out when the shortseller attack hit the stock. And even investors who entered the Corona low in mid-March at around 41 euros are currently sitting on losses.

/ tav / men / zb / fba


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