Strong Q1 driven by wealth management and banking

Henry Wendisch16 May 2024 05:55

MLP released a strong set of Q1 results in line with expectations and at new record levels. In detail:

Sales increased by a solid 8% yoy to € 284m (eNuW: 280m), slightly above estimates. The main drivers were the strong banking business (Interest Income +89% yoy to € 22m) and Wealth Management, which had tailwinds from elevated capital markets and grew sales by 17% yoy of € 86m. While the Non-Life Insurance business benefitted from higher inflation rates in the past, the momentum has expectedly slowed down with easing inflation. Thus, Non-Life Insurance recorded sales growth of 6% yoy to € 97m. Also, Real Estate Brokerage showed a recovery of 70% yoy to € 3m, however from low levels. In contrast, Real Estate Development remains muted with sales of € 3.4m,down 66% yoy, due to MLP's decision to halt projects in the current market environment (see p. 2 for details)

EBIT came in as expected with a substantial improvement of 14% yoy to € 37m (13% margin, +0.7pp yoy). The main margin drivers were the ongoing strong interest result of € 13.6m (+32% yoy) coupled with the recognition of € 3.8m in performance-based compensation at FERI's funds - the first time since Q4'21. Due to a base effect, other OPEX have declined by 7% yoy to € 43m, whereas personnel expenses rose by 11.4% yoy to € 58m (5.4% wage inflation and 5.6% increase in headcount). On a segment basis (for details see p. 2), Banking and Wealth Management remain MLP's current EBIT drivers, while RE development burdens profitability.

On a positive note, MLP could grow its fundaments for recurring revenues to new record levels. First, AuM increased by € 2.3bn (€ 200m net capital inflows and € 2.1bn from rising valuation) to a staggering € 59.3bn and serves as the bedrock for profitable and recurring sales in Wealth Management. Secondly, the Non-life Insurance Volume grew by 7% yoy to € 719m, which is comparable to German SMEs in this field.

All in all, MLP is on track to outperform its conservative guidance of € 75-85m EBIT (vs. eNuW: € 88m). By simply assuming the last years' Q2-Q4 EBIT of € 46m (excluding € 7.8m in one-offs) for the remainder of this year, FY'24e EBIT would stand at € 83m already.

Therefore, we reiterate our BUY recommendation with slightly lower PT of € 11.50, based on FCFY'24e (€ 10.50) and SOTP (€ 12.50).

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