RS Feedback: attractive value for money

Henry Wendisch02 May 2024 05:59

On Monday, we hosted a roadshow with CEO Dr. Schroeder-Wildberg, here are our takeaways:

Growth in Wealth Management: The overall growth in wealth across MLP's mass affluent, often highly educated client base should lead to higher demand for wealth management consultancy. This growth in wealth should stem from (1) the rise of the customers' income over their expected life cycle, (2) a wave of inheritances to come in the next 5-10 years in Germany, which should be over-proportionate at MLP's client base, given their academic background and (3)  the growing need of MLP clients, whose life insurance expires over the next two years far (€ 3bn pay-out), to invest.

Demographic change in Germany leads to ever increasing need to provide for old-age outside of the crippling state pension. Thus, private and corporate pension schemes experience a growing demand, especially from young people. This is MLP's heritage business and continues to be well served by MLP's consultants.

High sales quality: With 68% of revenues being recurring, MLP's sales quality has improved substantially over the last years (30% in 2005). Moreover, MLP also does not rely on one revenue pillar anymore, but shows multiple, negatively correlated revenue streams (see p. 2)

Light at the end of the real-estate tunnel: In the last 3 years, MLP's real estate business experienced a perfect storm, first with the COVID related postponements of projects (development) and secondly with the quick interest rate hike leading to a near standstill in brokerage and development. Now, the trough should have been reached and management sees light at the end of the tunnel, as the market seems to be have gotten used to current interest rates 

M&A war chest filled: Out of the € 190m net cash position, € 100m can be used for acquisitions. However, current prices are still to high in order to acquire value-accretive targets for the industrial broker segment. Thus, MLP stays is ready and open for acquisitons should the opportunity arise.

The impressions given by management underpin our positive view. At current valuation, the stock offers an attractive value for money proposition. BUY with unchanged PT of € 12.00, based on FCFY'24e.

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