Following quickly on from Jo Beckendorff‘s assessment of the bicycle industry’s stock market bulls, we move to assess those firms that did not fare so well in what was generally a good year for listed companies.
Where there are winners, even in an exceptional bull year like 2019, there are of course also losers. Overall, 13 of our 29 bicycle stocks (44.8 percent) ended 2019 with share price decreases. Nine of these 13 values (69.2 percent) slipped double-digits downwards.
First and foremost: Canadian conglomerate Dorel, which is traded on Nasdaq, oversaw a 2019 share price 64.1 percent to the red. Both Dorel Sports divisions – with its Pacific Cycle Group (targeting the mass market), Cycling Sports Group (CSG – brands Cannondale, GT, etc), which focuses with its premium brands on the IBD market, as well as its sister divisions Dorel Juvenile and Dorel Furnishings – were hit hard by the trade war between the USA and China.
Their products became more and more expensive. This led somehow to a loss of competitiveness. As far as the bicycle sector is concerned, Dorel is currently also busy searching for alternative production locations. A production outside of China seems to be the only way to avoid punitive (dumping) tariffs. However, these changes are also causing one-off expenses, a key way to depress profits.
Vista Outdoor, a second North American company, is among the top five dips on our bicycle chart 2019. With a share price drop of 34.7 percent, this US share is the third placed loser. However, the parent company of the Bell, Blackburn, Camelbak and Giro brands, which are all dedicated to the bicycle business, was also, but not only, thwarted by the trade war.
Vista Outdoor is still stomping on restructuring paths. After the sale of its eyewear division (Bollé, Cébé, Serengeti brands) in 2018, the company intends to concentrate in future on the product categories hunting and shooting sports, drinking systems and outdoor cooking products.
As far as the bicycle accessory brands Bell, Blackburn and Giro which are running under the Action Sports Division umbrella (Camelbak doesn’t belong to this division), there seems to be no agreement yet on where the journey will lead. Initially, a planned sale was communicated. This is no longer being discussed after the appointment of a president for the Action Sports Division president in October 2019. Which in turn proves that Vista Outdoor is still searching for a road to success.
However, with a share price decrease of 39 percent Atlas Cycles is ahead of Vista Outdoor. Although the Indian bike manufacturer is a big player in its home country, it still has a hard time scoring globally with its bike products. And the bicycle itself no longer has the status it once had in India.
With a share price decrease of 33.6 percent British Halfords Group is our fourth 2019 share value loser. Investors simply ignored Halfords shares when a financial forecast was revised downwards during the announcement of the first financial half-year 2019 report.
Brexit certainly also contributed to the fact that foreign investors kept their hands off the shares of the British car parts and bicycle supplier. According to Halfords, retail sales in key Brexit year 2019 especially did not achieve what had been predicted. Domestic investors were disappointed after a good performance in the previous year, especially in the bicycle business (exacerbated by a long dry island summer of 2018). As a result, the share was actually penalized more than it perhaps deserved.
In fifth place, among our top five share price losers list of 2019, is Taiwanese bicycle component supplier Sun Race Sturmey-Archer.
After a difficult to explain and astonishing all-time high with a skyrocketing three-digit share price growth increase the company was the top winner of our bicycle stock chart 2017. Since 2018 share price is moving step-by-step back down to earth. After a harsh 49.3 percent share price drop in 2018, a further 26.2 percent decrease followed in 2019. Gradually, however, the share should now have some ground under its feet again.
Chart newcomer Anta Sports
Finally, a word from our bike chart newcomer Anta Sports Products. We included this company after last year it took over our previous participant Amer Sports (among others parent company of Suunto as well as Salomon Group, parent of Mavic and Enve). After the sale, Amer shares left the trading floor.
The new Amer Sports parent company Anta Sports Products is China’s largest sports supplier. Since 2007 it has been listed on the Hong Kong stock exchange. Right after the Amer Sports takeover, Anta Sports sold the French bicycle components brand Mavic to US investor Regent. This means that with Enve, the Chinese now only has one bicycle (component) brand in its portfolio. Since Anta shares are now newly included in our chart, we have not registered a value comparison with 1.1.2018.
Since its IPO, Anta shares have only known one direction – with one exception in the financial crisis year 2018. And this is up. However, the unrest in Hong Kong is currently putting a second damper on these shares. This means that at the beginning of November, with 78.88 HKD Anta shares stood at an all-time high. On December 31, 2019, it was only 69.75 HKD.
How things continue will depend, among other things, on when and if the dispute between China and Hong Kong can be settled at all. The falling share price shows that investors do not yet believe that this home-made crisis will end.
Our outlook for 2020
What can investors expect in the stock market year 2020? First, we must say that the past extraordinary bull year 2019 obviously can’t be topped. While, on the one hand, hopes of solutions in the trade war between USA and China, as well as in the matter of Brexit are good for the stock market, there will certainly be further ricochets with many unknowns (keyword USA/Iran).
In addition, many important decisions are pending in 2020, such as the presidential election in the USA. These will be joined by major sports events such as the 2020 Summer Olympics in Tokyo, or the 2020 European Football Championship, which will be held for the first time in eleven European cities and one Asian city (Baku/Azerbaijan). How the respective reaction to these major events and the crises is met will play a part. As mentioned above, several factors and cannot be predicted.
Market observers advise not to lose sight of the overall market in these global times. Basically, it is important to keep an eye on the currently popular sectors of consumption and services. In addition, the focus is on those sectors that take the environment into account.
The role that the mechanical engineering and automotive industries play, which for the past year have been in dire straits, depends on how quickly and at what price they can offer alternatives. It will also be exciting to see how they will use their power to tackle the trend topics of e-Cargo and other micro-mobility solutions that have already been taken up by several bicycle suppliers. As said – it remains most exciting.
Pic: Berlin Stock Exchange/Börse Berlin