The company was one of the big Corona winners in 2020/21: HelloFresh. The share price of the German cooking box mail order company increased almost fivefold during this period. The start-up, which was founded in Berlin in 2011, even made it into the DAX. But as the pandemic drew to a close, investors also visibly lost their appetite. From a high of almost EUR 100, the share price fell to EUR 15. This meant that the stock not only returned to its pre-Corona level, but also had to vacate its place in the top stock market league. Currently, the HelloFresh share is trying to make a comeback.
While the stock has been going up and down, the operating business - at least in terms of business volume - has been steadily moving upwards. Meals delivered, for example, nearly quadrupled to more than a trillion between 2019 and 2022. Sales shot up from EUR 1.8 billion to EUR 7.6 billion during this period. The stock price is also pointing north in the current fiscal year, even if the pace of growth is no longer comparable with earlier years. The number of meal deliveries increased by a moderate 4.5% in the first half of the year, while the average order value rose by 8.1%. As a result, revenues from January to June increased slightly by 1.6% to EUR 3.93 billion.
On the earnings side, however, the past two years have seen a downward trend. However, after an equally disappointing start to 2023, the second quarter showed a significant improvement. With the help of a savings program, among other things, operating profit increased by 31.5% to EUR 191.9 million. HelloFresh thus reported the best quarterly result in the company's history. The number of active customers, however, is still declining. After the first customer loss in 2022, the number of active customers decreased by another 1.5% to 7.1 million in the past quarter.
The development in the first half of the year was not sufficient to maintain the original full-year targets. In mid-July, company co-founder Dominik Richter backed away from these and is now projecting revenue growth of 2% to 8% in 2023; previously, the range was 2% to 10%. Adjusted operating profit is now expected at EUR 470 to 540 million, corresponding to a narrowing on the downside. Previously, the Group had targeted a corridor of EUR 460 to 540 million. Richter is combative: "Profitable growth will remain our top priority in 2024, and we will take advantage of all opportunities that present themselves to achieve this."
One of the hopefuls for the future is ready-to-eat meals, which saw triple-digit percentage growth in 2022 while breaking even on an operational basis. In order to meet the high demand, HelloFresh recently even expanded production capacities in this area. The meals sold under the Factor brand are expected to show the highest growth in the group between 2025 and 2030, together with other newly launched brands. In the current year, management expects revenues in this segment to exceed EUR 1 billion.
The medium-term targets for the Group as a whole envisage average annual sales growth of 11% to EUR 10 billion by 2025. Operating profit is expected to grow disproportionately by then and roughly double to EUR 1 billion. Consequently, the margin will increase from currently around 6% to 10%. As far as the development of net income is concerned, the company is keeping a low profile, but analysts are optimistic. After a one-third increase in the current year, earnings per share (EPS) are expected to rise by almost 61% in 2024 and by 35.6% in 2025. This compares with a relatively moderate P/E ratio of 14.2 based on estimates for 2025.
In recent weeks, the HelloFresh share has been able to break free from its sideways trend to the upside and marked a new high for the year at EUR 31.20. Starting from the low of EUR 15.40, this corresponds to a doubling. However, the further potential now seems extremely limited. The average price target of the analyst consensus is EUR 31.42. A direct investment therefore does not sound very attractive with hardly any upside potential at full downside risk. In contrast, the new Softcallable Barrier Reverse Convertibles promise double-digit percentage returns even in the event of price stagnation or even moderate setbacks. The coupons amount to 12.00% p.a. for the CHF variant and even 15.00% p.a. for the EUR product. In addition, the two BRCs offer a comfortable downside buffer. The barrier is set at 49% of the starting value, which means that the threshold will still be below the 52-week low despite the recent rapid price increase. If the barrier remains intact during the maximum term of 15 months, the maximum yield will be achieved. After six months at the earliest, the issuer has the right to terminate the barrier reverse convertibles prematurely.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.