Scale market report: stock picking mandatory

The Scale Index continues to tread water and small caps have yet to make a comeback. However, the best Scale member has more than tripled in price over the past year.

16 October, 2024 FRANKFURT (Frankfurt Stock Exchange). “Small caps benefit more than average from interest rate cuts”, ‘Why small cap stocks now offer opportunities’, ‘Opportunity for double alpha in Europe's small caps’ - the comeback of small caps is currently being proclaimed more often than ever. But the small caps are still lagging behind the large caps. While the DAX continues to set new all-time highs, the Scale small cap index is treading water. The Scale All Share stood at 1,158 points on Wednesday afternoon, roughly the same level as the previous month and slightly below the level at the beginning of the year.

Verve Group outperforms everyone

Only precise differentiation helps: The top performer in the Scale segment over a twelve-month period is the advertising software provider Verve Group (SE0018538068). The share price has risen from EUR 0.88 to EUR 3.22 since October 2023 - more than tripling. The pharmaceutical company Apontis Pharma (DE000A3CMGM5), the cybersecurity company Cyan (<DE000A2E4SV8) and the asset manager MPC Capital (DE000A1TNWJ4) have also performed very well, with share price gains of 66%, 55% and 51% respectively.

In contrast to Verve, Apontis and Cyan, which are trading below their recent highs, MPC Capital has just reached a multi-year high of 4.66 euros.
The Hamburg-based asset manager specializes in projects in the maritime industry and energy infrastructure for institutional investors. MPC recently expanded its management platform with the acquisition of a portfolio of energy-efficient container ships.

Cyan: “Highly dynamic development, but speculative”

Cyan is also doing well.The share is currently trading at 2.16 euros, compared to 1.37 euros a year ago.However, the analyst firm SMC Research still sees room for improvement. Cyan recorded highly dynamic development in its core cybersecurity business in the first half of the year, it says. The company is well positioned, SMC expects dynamic sales and earnings development in the future and confirms its “buy” rating, albeit as a “speculative buy”, with a slightly increased price target of 4.40 euros.The company offers IT security products for end customers of mobile and fixed-line internet providers and financial service providers.

2G has many fans

Even if it is not reflected in the share price, things are also going well for 2G Energy (<DE000A0HL8N>). The manufacturer of combined heat and power systems and heat pumps reported an order intake of a good EUR 80 million for the third quarter - an increase of 91% compared to the previous year. 

“The order backlog has thus reached a record level, which will ensure full capacity utilization until well into the second half of 2025,” explains the analyst firm First Berlin.
2025 will probably be the strongest year in the company's history in terms of sales and earnings. First Berlin continues to recommend buying the share and has a target price of EUR 34. SMC Research is also convinced by 2G and speaks of a “spectacular” order intake. SMC also recommends buying and now has a target price of EUR 35. The share price rose above 27 euros in May and is currently 23.30 euros.

Potential for Daldrup & Söhne too?

In addition to 2G Energy, Daldrup & Söhne (DE0007830572), the provider of drilling and environmental services, is also seen as a beneficiary of the energy transition.For Daldrup, the first half of 2024 was once again characterized by a positive operating performance in all business areas - despite the generally weak economic environment.SMC Research is also positive here: 
In view of a strong tailwind for geothermal energy, the analyst firm expects further growth and rates the share as a buy with a price target of EUR 11.20 (currently EUR 8.22).
 

Big losses for Veganz and PAL Next

By contrast, the Veganz Group (DE000A3E5ED2), the Berlin-based supplier of vegan food, reported a decline in turnover in the first half of the year. The reason: product range adjustments. As a result, the company now expects a significant decline in turnover and a lower EBITDA for the full year 2024. The share price was still around 23 euros at the beginning of the year, but is now only 7.66 euros.

The film production company Pantaflix, which is now called Pal Next (DE000A12UPJ7) and focuses primarily on AI, has also seen its share price fall. The share price had risen to over 2.50 euros in February. Now it is just 1.25 euros. 
The analyst firm Montega even considers the share to be fairly valued at just 1 euro and recommends selling.The AI-generated animation series Space Vets offers promising opportunities, particularly in the animation sector.However, the development is difficult to predict. 

Verve now top seller

The highest-turnover Scale share on Xetra and the Frankfurt Stock Exchange in September was the Verve Group (8.9 million euros), followed by 2G Energy (7.9 million euros), Deutsche Rohstoff (6.1 million euros), Mensch und Maschine (5.5 million euros), Formycon (5.4 million euros) and Datagroup (5 million euros). Since the beginning of the year, 2G has been in the lead, ahead of Formycon, Datagroup, Cliq Digital, Deutsche Rohstoff and Mensch und Maschine. 

By Anna-Maria Borse © 16 October, 2024, Deutsche Börse AG