Next on my list - SGL Carbon

❌❌❌❌ - Turnaround SGL Carbon

SGL Carbon is the world leading manufacturer of carbon and graphite materials, that are mainly used in automobiles and airplanes to reduce weight, chemicals to mix into other materials, and for solar panels and wind-power plants!

We see that something happened the last 6 months, as the course went up a lot. The 10-year respective 5 and 3-year shows a decline! The 52-week high is €7.52 and the 52-week low is €2.43 compared to the actual stock price of €5.95. We are closer to the high, but still a way to go!

 The long term (10-year) trend is downward, extremely bad if you would have invested on hold it. The top here is over €30!! 10-years ago. We see as well that the trade volume is increasing the last 2-3years 

The 1-year chart shows an upward trend, a lot of volume since the start of the year! My question right now is if this is a turnaround and if we will have trend break! Normally you stop here, because it is already now looking bad, but for learning purposes let's go on! ❌

How is the shareholder structure?

What does this say me - BMW and Volkswagen owns together 25% of the company (I would guess they use carbon fiber and graphite in their cars), Susanne Klatten, one of Germany's billionaire is a Quandt daughter (Herbert Quandt rescued BMW many many years ago and is a German industrialist) and owns almost 30% of the company. We have Blackrock, Vanguard and Norways government invested in the company - so this is a quality sign for me!

We go to the balance sheet

Cash decreased 50% the last 5-years, as did the Current Assets ("Summe Umlaufvermögen") decreased, not as much as Cash, but still. The more tangible assets, property plant and equipment is almost at where it was 5 years ago, but lower than the last 2 years - I assume these are the factory and machines that produces the different materials. As we know 2020 is a down year, especially for car and airplane manufacturer - so this is acceptable. Overall the company shrunk the last 5 years, next reason to stop the analysis❌

Onto the other side of the balance sheet

First of the Debt-to-Equity ratio is >80%, and the trend is the same since last 5 years, no improvement! The long-term debts ("Langfristige Finanzverbindlichkeiten") are increasing since the last 4-years and the shareholders equity has decreased by ~50% during the same period! Another big point are the pension liabilities of €340m! ❌

Now I want to see the earnings of the company

Loss this year, loss last year, revenue down from last year (ok - 2020 was not the best of the years), there is a big post of Depreciation and Amortisation D&A of 190m€ (as well high to previous years), so cash-flow wise the company IS making money, even though it does not show up here! The is another 140m€ for other operation expenses ("Sonstige betriebliche Aufwendudngen"), I don't know what this is, but it looks certainly that they took a big expense during the year that is abnormal! 

I had to look at the annual report 2020 to understand, and there was a big write down of Impairment losses on Goodwill and Property, Plant and Equipment! ❌

I expect that there are no dividends paid out! 

Summary: I understand that people are betting on a turnaround, 1) a lot of restructuring costs have been taken 2020, the company is slightly cashflow positive, the economy recovers, 2) the company is positioned in   two mega trends, the raise of Electrical Vehicles and ESG (Environmental, Social and Government) with solar panels and wind power and 3) big pay-off if the will succeed