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The Frankfurt Stock Exchange is the live stock exchange of the Frankfurt Stock Exchange (FWB), which is owned by Deutsche Börse AG. Deutsche Börse AG also operates the electronic trading platform and the futures exchange Eurex and is a majority owner of Tradegate exchange – which generally sees the highest volume for dual-listed companies on the German trading exchanges. This is the first step for a dual-listing of a global corporate in Germany. There are over 13,000 dual-listed companies on the Frankfurt Stock Exchange and around 500 German companies with a primary listing. The quotation board is where companies listed on a recognised global exchange can be traded through a market maker system with no regulatory or compliance obligations. All companies whose shares are already listed or included at another international or domestic trading venue and apply for admission to the Open Market are included in the Quotation Board. For dual-listed companies the market-makers sets the buy/sell with reference to a company’s home exchange prices, trades on their own account, guarantees best prices and a market for the company’s shares on Frankfurt Stock Exchange. In this era of low liquidity on home exchanges (LSE, ASX, TSX and CSE) companies should consider maximising their home exchange listing and utilising this asset to dual-list on Frankfurt Stock Exchange where dual-listing is relatively inexpensive and affordable and creates opportunities to develop a global investor base. in 2024 some of the key sectors to engage with European retail investors are technology, biotech, medtech, uranium, critical raw materials and drone technology. ASX listed company Droneshield (ASX: DRO) sees extraordinary levels of trading on Frankfurt Stock Exchange and German trading exchanges such as Tradegate with about 20% of ASX volumes in Germany. Quality Uranium stocks from Australia and Canada have performed very strongly in 2024. There are 4 main benefits for companies of a dual-listing in Germany. 1. Investors in Europe can trade shares cheaply without highout high transaction costs, Generally most major EU brokers charge more for ASX, TSX or LSE trades than they do for shares quoted on Frankfurt Stock Exchange. There is also the opportunity for a listing to be accepted by one of EU's major neobrokers such as Trade Republic where trades average €1 a trade. Trade Republic has over 2 million customers in Europe. 2. Companies can diversify their investor and shareholder base. A globally engaged and diversified shareholder base is an asset and de-risks a company from having all investors in one geographic location. 3. Companies can take advantage of marco themes and trends that may not be applicable in home exchange country. For example, in Europe the Ukraine war and drone technology is a major issue and theme that influences retail investment decisions. Hence the demand and interest in companies such as Droneshield this year. 4. European investors can trade in their own time zone. contact us today to find out how a Frankfurt Dual Listing can create positive shareholder value. 
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Droneshield (ASX: DRO) has been shooting the lights out over the past 12 months. The Company’s share price was A$0.38 on 1 January 2024 and has climbed rapidly to close at A$1.48 on 24 July 2024 with a market cap at around A$ 1.1 billion. The stock briefly hit a record high of A$2.60 on 15 July. The Company released its H1 2024 results this week showing revenues of A$24.1 million, up 110% on 1H23 ($11.5 million). This was the highest ever first half year revenues in the Company’s history. H1 2024 customer cash receipts of $21.4 million, up 40% vs 1H23 ($15.3 million). However, there was disappointment from investors on sales growth and net cash outflows (A$ 29 million for the 6 months). Droneshield is also listed on all the major German exchanges of Frankfurt, Stuttgart and Tradegate. What is truly remarkable is the passion with which German retail investors have embraced the company. In July 2024, the company has seen around 20% of its ASX volumes on German trading exchanges and considerable German language discussion of the company on European equity forums and reddit. Why is this? There are several reasons. Great Narrative. Companies should never forget the power of narrative and images to engage with retail investors. Droneshield has done this very successfully. A clear strategy of use of multi-layered Artificial Intelligence to fight drones – simple and arresting. Plus, a skilful use of video and media to develop that narrative.  German Media engagement. Droneshield has successfully developed relationships with German stock media such as Der Aktionär and these assists develop German retail engagement. Strong sales growth. The main reason for retail buying according to studies is the expectation of future cash flows – either in form of dividends or capital growth from sale of shares. Both require sales growth. Droneshield reported sales of A$24 million in H1 2024 – up from $A 11 million in H1 2023. Ukraine war and reliance on drone technology. The war in Ukraine has been characterised by massive drone deployment, with thousands of unmanned aerial vehicles (UAVs) used to track and attack enemy forces, guide artillery and bomb targets. In Ukraine over 2,000 SMEs are working on drone technology. This is also feeding significant media interest in Germany and Europe. Understanding the German equity markets. Due to the nature of German Stock Exchange regulations, there are very few small and mid-cap companies with a primary listing on Frankfurt. There were only a dozen primary German listings on Frankfurt Stock Exchange in last 2 years including Porshe. Most small and mid-cap companies in German are private or owned by venture capital. Therefore, retail investors wanting to invest in publicly traded small-mid cap companies (particularly in biotech, CRM, and tech sectors) are drawn to companies with a primary listing on ASX or TSX. In these markets with low liquidity in the small and mid-cap market, companies should think about maximising their primary exchange listing and looking a dual listings such as Germany and Frankfurt Stock Exchange.  |
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November 2024
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