May 2021 marks the 10th anniversary of Delivery Hero's founding. The food delivery company will therefore have to wait a while longer for the title of "traditional company". And yet, in 2020, the e-commerce service provider has reached eye level with historic corporations such as Allianz, Henkel or Siemens. In August, Delivery Hero moved into the DAX. In stock market terms, the promotion to the top German stock market league was the highlight of an eventful year for the Berlin-based company. Operationally, the Corona pandemic gave Delivery Hero a massive boost. In the first nine months, the number of orders doubled to 362 million. In total, the company processed a gross merchandise value of EUR 3.4 billion, 70% more than in the same period last year, through its systems. Delivery Hero has withdrawn from the domestic market. Most of its business is in Asia and Africa and the Middle East.
The young global company is making investors' mouths water as a classic growth stock. The steep upward trend of the past months shows that the Berliners are forgiven for the still deep red figures. After a setback in the Corona sell-off, the stock quickly joined the segment of "stay-at-home" profiteers. In early July, Delivery Hero traded in triple digits for the first time. Initially, however, the large cap was unable to break above the EUR 100 mark. Instead, it formed a sideways movement lasting several months. At the beginning of November, an attempt to break out to the upside turned out to be a false signal. However, when the Corona exit restrictions were recently enforced again in many countries, the share escaped the sideways range. Apparently, investors are betting that the service provider's business will be humming more than ever at Christmas 2020. CEO and founder Niklas Östberg sees immense potential in the global food market - regardless of the current special situation. He points to megatrends such as online and mobile usage, lifestyle and urbanization.
In the 49 countries where Delivery Hero is currently active, the Swede estimates the market for food services at more than EUR 500 bn. At the same time, he is building up the "Quick Commerce" division. Delivery Hero delivers not only food but also medicines, electronic goods and flowers from special warehouses known as Dmarts. Nomen is omen here: the goods are with the clientele in less than 20 minutes. "This new standard will shape the future of Delivery," Östberg is convinced. By the end of the year, 400 Dmarts will be in operation, each stocking around 3,000 products. By way of comparison, as of September 30, the network under construction comprised 254 warehouses in 19 different countries. However, the company is not free of worries at the end of an eventful year. Top management is likely to be particularly preoccupied with the billion-dollar takeover of South Korean food supplier Woowa Brothers. The deal, which was announced almost exactly 12 months ago, has met with resistance from competition regulators: the Korea Fair Trade Commission (KFTC) is recommending that the planned joint venture only be approved if the Germans sell their South Korean subsidiary Yogiyo beforehand. Unsurprisingly, Niklas Östberg does not think much of this idea and is now trying to convince the authorities of alternatives.
At the same time, he makes no secret of the fact that the completion of the transaction, which was originally scheduled for the end of the year, could be delayed. What is certain is that the disclosure of the antitrust resistance temporarily slowed down Delivery Hero shares in November. For investors expecting further setbacks, Leonteq offers alternatives to direct investment in the form of new Softcallable Barrier Reverse Convertibles. In the product currency CHF, the issue comes with a guaranteed coupon payment of 14% p.a.. In the case of the EUR-denominated counterpart, the quarterly distribution amounts to 14.40% p.a.. All other parameters are identical: At the beginning of the 12-month term, the barriers are fixed at 49% of Delivery Hero's initial share price. As long as the underlying does not fall to or below this level, investors receive the nominal in full after expiry. Otherwise, they would be exposed to the full price risk of the e-commerce group. Please note: In the course of the soft callable feature, early redemption of these products may occur.
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