By Chantal Marx, Pritu Makan, Sithembile Bopela, Zimele Mbanjwa, Motheo Tlhagale, Khumbulani Kunene
Beiersdorf (BEI GR)
Beiersdorf AG is a German multinational company that manufactures personal-care products and pressure-sensitive adhesives. Its brands include Elastoplast, Eucerin, Labello, La Prairie, Nivea, Tesa and Coppertone.
The company's half-year result to the end of June was disappointing but against a generally soft skincare market globally. This led to the company revising its estimates for growth and margin expansion in its Consumer business for FY25 which, in turn, saw a strong negative market reaction. Encouragingly, the company managed to outperform the broader skincare market where most competitors also struggled. The weakness for Beiersdorf was most pronounced in Nivea where growth was impacted by a demanding base and mass market consumer stress. Derma performed exceptionally well, outperforming the market and accelerating growth in 2Q25. La Prairie looked weak on the face of it, but a notable improvement was seen in 2Q25 with the organic sales decline of 1.5% looking much better versus a 17.5% y/y decline experienced in 1Q25. Importantly, China sales turned positive in 2Q25.
We remain upbeat about the continued roll out of Derma Epigenetics, particularly in the Nivea brand, across different geographies in the next six months with a strong performance expected in this regard in FY26. Sales have been very strong in products containing this active ingredient under the specialist derma Eucerin brand.
Beiersdorf is trading on a forward PE of 21.8 times, a deep discount to peers. The company has historically traded at a slight premium. Relative to its own long-term forward PE rating (28.6 times), the stock is trading at a substantial discount. We view the valuation as compelling in the context of its defensive nature, ability to compound growth, and decent near-term growth to come.
Align Technology (ALGN)
Recent 2Q25 results were disappointing. Diluted adjusted EPS grew 3.3% y/y to $2.49 while revenue declined 1.6% to $1.0 billion and adjusted operating profit slipped 1% y/y to $215.9 million. Revenue was impacted by weakness in Clear Aligner (~79.5% of revenue) revenue which fell 3.3%, while an uptick in Imaging Systems and CAD/CAM Services revenue (+5.6%) assisted in capping losses.
The share price fell a massive 28% after the results - presenting an attractive entry point for longer-term investors. In 2Q25, demand in North America was impacted by tariff uncertainty and less affordable financing options for both aligners and capital equipment - this could fade in the periods ahead. The European performance was also soft amid macroeconomic uncertainty, and consequent elective procedure hesitancy. Management has assumed this will continue in 3Q25 (further dampening investor sentiment) but looking beyond near-term weakness, we expect a solid growth rebound medium term. Additionally, it is encouraging to see Systems and Services continuing to grow strongly.
Align continues to generate most of its revenue from North America and remains exposed to trade risks surrounding tariffs in the region, which has already impacted demand. Revenue also tends to be seasonal and is heavily impacted by consumer (in aligners) and business confidence (in systems).
Align Technology is trading on a forward PE of 13.5 times, which is significantly below its average long-term rating of 35 times.
ASML (ASML NA, ASETNC, ASETNQ)
ASML designs and manufactures deep ultraviolet (DUV) lithography systems and extreme ultraviolet (EUV) lithography machines that are used to manufacture semiconductor chips. ASML is the only manufacturer of EUV systems that print smaller chip features, resulting in faster, more powerful chips. This enables the production of highly powerful chips required to drive the AI revolution at scale, and at a lower cost.
For 2Q25 ended 30 June, ASML delivered a positive result, with earnings, revenue and the gross margin topping guidance and expectations. The share sold off heavily on conservative near term guidance by the management team amidst a shroud of trade, macro, and geopolitical uncertainties. While FY25 guidance was maintained and is broadly in line with expectations, CEO Christophe Fouquet also noted that he can no longer say with any certainty that sales would grow in FY26. Indeed, the group's exposure to potential negative effects of US tariffs is significant. The group still holds a positive longer-term view. Total revenue for 2030 is expected to be between €44 billion and €60 billion (implying an 8% to 14% CAGR), with the gross margin being somewhere between 56% and 60% (well ahead of current levels).
Given the still robust long-term outlook and the further derating of the share price recently, ASML offers good value for long-term investors on a forward PE of 25.2 times, well below its average rating over time.
Hermes (RMS FP)
Hermes was founded in 1837 by Thierry Hermès as a Parisian harness workshop, quickly gaining acclaim for its craftsmanship, particularly its signature saddle stitch. By the 1920s, Hermès had diversified into ready-to-wear fashion, scarves, ties, and perfumes - always maintaining a commitment to artisanal quality. During the 1930s, Hermès introduced some of its most recognised original goods including the “Sac à dépêches” (renamed the “Kelly bag” after Grace Kelly in the mid-1950's), and the Hermès carrés (square scarves). Another famous Hermès handbag, the “Birkin bag” (named after British Actress Jane Birkin who co-designed the bag) was launched 1984. Today, Hermès International is not just a luxury brand but a cultural institution, revered for its craftsmanship, discretion, and exclusivity.
Hermes also recently released 1H25 results. As expected, sales were resilient and ahead of peers in a challenging market. Gross profit was stable and while operating profit was better than expected, there was some margin dilution that worried a very skittish market. Management maintained its medium-term target for sales, but we still saw a derating in the share price as the margin outlook near term was less certain than usual amid commodity price volatility and nervous consumer behaviour (particularly in aspirational categories).
When looking at Hermes' valuation multiples relative to industry peers, the company trades at a substantial premium. This is justified, however, by generally resilient demand for its products, and the company's ability to raise prices and control production. A better way to look at the company is perhaps to look at its valuation multiples relative to itself, in which case Hermes is regarded as offering value (on a longer-term basis) currently.
Hermes forward PE over time
For 1Q26 to the end of April, the company released results that were broadly ahead of market expectations and management's guidance. Data Cloud and AI integration continues to deliver for the company with ~60% of first quarter top 100 deals including Data Cloud and AI. The revenue performance was strong across all geographies. The bottom-line was greatly supported by solid margin expansion. Guidance for the next quarter and full year was in line with consensus expectations at the time.
Despite strong numbers across the board and indeed when looking at the broader industry, Software companies have derated more recently when looking at the broader AI value chain. Investors have favoured investing in the so called “hyperscalers” and software companies exposed to the thematic has sold off – in part as it is believed they will be displaced, which we think is an unfair assessment, particularly for businesses that have a high installed base and are entrenched in business processes across industries and jurisdictions (including Salesforce).
CRM is trading on a forward PE of 21.6 times, which is very undemanding compared to its history and represents a deep discount to peers. The stock has historically traded at a premium to its competitors.
NextEra Energy Inc. (NEE US)
NextEra is a leading energy company specialising in electric power and energy infrastructure development. The company's portfolio includes natural gas, nuclear and renewable energy, including industry leading wind and solar power and battery storage. The group's core businesses include Florida Power & Light Company (FPL), America's largest electric utility by retail electricity produced and sold, and NextEra Energy Resources (NEER), a major developer of energy infrastructure with 20% share of the US renewables market. This dual structure gives it both stable cash flows from regulated operations and high growth potential from renewables.
Downside risks to our view include policy changes, specifically the potential repeal of the Inflation Reduction Act (IRA). While a complete repeal of the Act remains a low probability outcome, any roll back or delay in clean energy incentives, including tax credits, will negatively impact energy supply chains in the medium term, specifically smaller clean-energy rivals. However, as the global clean energy transition remains underway, NEER's scale and pipeline progress bode well for further potential upside and market share gains in a renewables pull-forward environment.
On a forward PE multiple of 11 times, the company trades at premium relative to its peers but an attractive discount to its own long-term average.
Both ASP Isotopes and Renergen are expected to remain loss making over the medium term as ASPI moves towards commercialising its isotopes business and Renergen scales Virginia Phase 1 production. We did not consider in our valuation the outlay or eventual revenue generation from Renergen's Phase 2 project but note that it provides meaningful optionality for the combined entity longer term.
