The stand at the car show in Munich worked almost like a dress rehearsal. A large, red arc in the eyes of the visitors, behind it presented Aumovio. It was the first time that the company publicly appeared under this name and found it to be perceived as a brand. It has only had an Instagram account for a few weeks, as well as a website. As a dress rehearsal, one could understand the appearance because Aumovio is only a completely independent company from this week. It is still part of the traditional German group Continental and forms the so-called “automotive” division, which delivers electronics and software for the car, but that will soon change. This Thursday, the Continental division will be separated, will be headquartered in Frankfurt in the future and will be on the stock exchange under the name Aumovio. For Continental shareholders, this means that you will suddenly also have shares in Aumovio in your depot. You will get an additional Aumovio share for two Continental shares in the depot. Continental reduced and focuses on a step that has been meticulously planned in recent months. A lot could be told about the background of this decision – for investors it is enough to know the following: Continental reduces itself and will focus on the business with which the company has started: mature. A few years ago, the group split off its drive technology business, now it is with Aumovio autoelectronics and brake systems. What does the split mean now for investors? Can you benefit from it, or you can involuntarily get a load in your depot that Continental wanted to get rid of? Spliting, also called spin-offs in the stock market language. They have become more and more popular, especially in recent years, both abroad and in Germany. One of the best known in Germany is the Siemens company, which has brought its energy -saving and health business to the stock exchange as Siemens Energy and Siemens Healthineers. Eon has split off Uniper, as did Mercedes-Benz Daimler Truck. Bayer detached Covestro ten years ago and Lanxess even a long time ago. In mid -October, Thyssenkrupp wants to separate from his marine -parted TKMS. The idea behind it is easier to understand when the bulky term split suggests. A wide variety of business areas come together in a large corporation, which often have little to do with each other. For a long time, these mixed companies were considered positive, after all, the better functioning division could cushion the weaknesses of the worse.
In the meantime, however, a different way of thinking has prevailed that says: such large companies are too complex to operate under one roof. Therefore, they are separated from each other. The stock exchange, at least the assumption, would reward this because the individual parts together were worth more than the large corporation alone. But what companies like to market as a focus on the core business often express critics: this is like the separation from a problem child or the dismissal of a weak growth. analyzed. For the German stock index, the specialist Sebastian Dörr compared how the shares of the original company and the split -down developed compared to the entire leading index DAX. So which investment was the most for investors. The number of ripings is very small compared to other markets. Nevertheless, many things can be learned from it, so the share price has increased significantly in the period between the announcement of the split and the actual implementation. The stock exchange initially rated the project positively. It is seen as a signal for strategic focus, says Dörr. The share price of these companies developed by ten percent better compared to the entire index.etwas it is more complicated after splitting off. In the evaluation, the original companies perform better than the entire index. They are often still seen as quality stocks, says Dörr. It is more difficult for the split company. On the one hand, it benefits from the great media attention that can arouse curiosity with investors. A German peculiarity reinforces this: “The capital market is smaller than anywhere else, and there are few names on the stock exchange, but very big names, such as Siemens, Bayer,” says Dörr. Or just Continental. This increased interest could have a positive effect on the course. On the other hand, I will keep the Conti share? On the other hand, many investors involuntarily received these shares into their portfolio through the split process. You now have to decide whether you want to keep them. Anyone who trusts the business model sell them. Some investors have to forced the shares, for example funds that focus on the DAX. The following logic is behind it: If the original company notes in the leading index, the new one is not automatically included. A fund that is only allowed to invest in Dax companies must get rid of the shares of the split company. The sales can trigger a drop in the price. In the evaluation, the scabs cut off on average less than the entire DAX within the first twelve months. This is not only the case on the German stock market. In the USA there is even a separate index that focuses on splitting in S&P 500. Within the past ten years, this has grown by nine percent per year – but remained significantly behind the classic S&P 500. The intermediate conclusion is thus sobering: Investors get out better on average if they sell the split company and instead invest in the broad index. This initially sounds bitter for investors. So what to do? Selling is an option. If you are ready to carry more risk and keep the stock, you can even be rewarded in the end. One advantage of splitting is that the responsibilities become clearer, says Thomas Schweppe, managing director of 7square and a good connoisseur of the European capital market. “Investors clearly know from a split in which businesses they invested,” he says. This allows you to better compare the company with the competition, such as Continental as a pure tire manufacturer with Pirelli or Michelin.Siemens Energy surprised, if you look at a longer period of time, many companies have managed to prove yourself as an independent company. Siemens Energy is an example of a success story. Since the split off in September 2020, the share price has increased by around 340 percent, that of Siemens by 100 percent. The DAX gained around 80 percent in the same period. Siemens Energy rose to the DAX around two years after splitting off as an independent company. This development was by no means certain: the split was great. The business with energy technology, which includes gas turbines, power grid and wind turbines, was considered to be weak in growth. Beginning also looked like the critics were right: the wind division caused problems, the federal government had to step in with a billion dollar aid package. But now the business with gas turbines is developing very well. Siemens Energy also benefits from the increasing importance of artificial intelligence, for which large data centers are built – and for which the corresponding energy technology is required. Just a few weeks ago, the Siemens Energy share price gave a record. When splitting Daimler Truck, once the Mercedes-Benz truck division, the result is not quite as glorious, but can also be seen: since the company acts independently, the price of the share has gained around 25 percent. This is less than the DAX in the same period, but significantly better than the Mercedes-Benz share with a minus of around 30 percent. It was similar with Vitesco, the former drive division of Continental, which was split off four years ago. The great failure that many critics Vitesco predicted failed to do. However, the company was taken from the stock exchange again some time later and instead taken over by Schaeffler, so the simple question is decisive for investors: How sustainable do you think the business model do you think? Aumovio does not make the answer easy for them. With its products, the company wants to symbolize the future: modern braking technology, driverless trucks and innovative software. “We are strongly set up in the electronic networking of the car,” said Philipp von Hirschheydt, head of Aumovio, recently in an interview with this newspaper. That sounds promising, but there are some doubts about this success. Can Aumovio survive on the market alone? After all, the company has many competitors from all over the world that are significantly larger. Does the company manage to convince with its business figures? The previous Continental division has been crisis for several years and has repeatedly written losses. The result was a strict austerity course, numerous places were canceled. In the second quarter of this year, the previous division was able to improve its result somewhat. Among other things, the cost reductions have led to more profit than compared to the previous year’s quartal, the profit margin rose. So how will Aumovio develop in the future? The analysts of the private bank Berenberg believe that the realignment could succeed. For the shareholders, however, the only thing that counts is whether Aumovio is really exhausting this potential in reality.
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