STOCK MARKET BLOG SEPTEMBER 2024

by the CEO Silvano Grimaldi of the independent asset management company GRIMALDI & PARTNERS AG

MONTHLY REVIEW

The international stock markets ended the month of SEMPTEMBER mostly with gains.

DRIVING FACTORS

Jumbo interest rate cut (50 bps) by the US Federal Reserve in its September meeting.
Investors' hopes for looser monetary policy in the US and China.
Investors also hope that the US economy can avoid a recession.
Due to the weakening economy in the People's Republic, China's central bank PBOC announced extensive measures to stimulate the economy (including lowering interest rates on existing real estate loans).

STOCK IN FOCUS

STRAUMANN adjusts targets for the full year and separates from DrSmile

Straumann once again managed to surprise positively on Wednesday. In addition to the divestment of the sluggish DrSmile splint business, the dental implant manufacturer performed surprisingly well in the first half of the year and adjusted its targets for the full year.

Straumann generated sales of 1.27 billion Swiss francs in the first six months, an increase of 11.3 percent. Organically, i.e. excluding acquisitions and currency effects, growth was 16.1 percent (previous year: 7.5 percent). DrSmile is no longer included in this. Including DrSmile, organic growth would have been significantly lower at 12.9 percent.

The sale of the aligner business not only has an impact on the figures for the past first half of the year. Straumann has also adjusted its outlook. Accordingly, the company is now aiming for organic sales growth in the low double-digit percentage range for the full year 2024 (previously high single-digit) and a margin of around 27 to 28 percent (previously around 26%) at constant exchange rates.

In the first six months, the margin on operating profit (EBIT) was 26.4 percent and profit itself was 336 million (previous year: 312 million). The margin on core operating profit, which excludes certain special items, was 27.8 percent and the corresponding EBIT was 354 million (previous year: 332).

Normalization expected

The CEO explains that the sales guidance sounds somewhat cautious in view of the development in the first half of the year because of the uncertainties in the second half of the year. The US market did perform better in the second quarter than in the first quarter. However, the outlook for the US economy is subject to certain risks.

The manager also expects a certain slowdown in growth rates in Asia, the region with the strongest growth rates at present. This is mainly due to the Chinese market, for which the CEO is predicting a gradual normalization of growth figures. Daniellot assumes that annual growth of between 15 and 20 percent will be achieved in China.

The news about Straumann was well received on the stock exchange and by analysts, as evidenced by the share price increase of more than 13 percent. "After a rather gloomy reporting season in the dental sector, Straumann delivered an above-average quarter and increased profits," summarized the responsible JPMorgan analyst.

MONTHLY OUTLOOK

Opportunities

The upcoming reporting season for the third quarter of 2024 will show a solid and mostly better than expected earnings situation for companies.
October is the traditional start of good trading months for the stock markets with positive returns.

Risks

The Middle East conflict threatens an uncontrollable escalation.
Negative surprises in the publication of earnings figures in the tech sector.

We expect an upward trend for the month of OCTOBER .

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