Original-Research: LAIQON AG - from NuWays AG 10.09.2024 / 09:01 CET / CEST Dissemination of a Research, transmitted by EQS News - a service of EQS Group AG.
10.09.2024 - 09:01:29Original-Research: LAIQON AG (von NuWays AG): Buy
Original-Research: LAIQON AG - from NuWays AG 10.09.2024 / 09:01 CET/CEST Dissemination of a Research, transmitted by EQS News - a service of EQS Group AG. The issuer is solely responsible for the content of this research. The result of this research does not constitute investment advice or an invitation to conclude certain stock exchange transactions. --------------------------------------------------------------------------- Classification of NuWays AG to LAIQON AG Company Name: LAIQON AG ISIN: DE000A12UP29 Reason for the research: Update Recommendation: Buy from: 10.09.2024 Target price: EUR 7.10 Target price on sight of: 12 months Last rating change: Analyst: Henry Wendisch Mixed H1 due to divestment and growth investments; chg. est. LAIQON released mixed reported H1Ž24 figures which are burdened by the disposal of the non-core legacy business, but showed top-line growth in line with AuM growth across its core segments. However, LAIQON should remain unprofitable on EBITDA level and cash burning in FY'24e, before positive effects of the Union Investment cooperation come into effect next year. Reported sales declined by 7% yoy to EUR 14.7m, due to the divestment of a non-core business unit (LLOYD FONDS Real Assets; EUR 2m sales in H1'23) at the end of FY'23. Adjusting H1'23 for the sale, H1'24 sales would have risen by 7% yoy. Top-line growth and stable sales margins in core business segments: Asset Management grew by 6% yoy (AuM: + 9% yoy to EUR 4.4bn), followed by Wealth Management, which grew by 12% yoy (AuM: +3% yoy to EUR 1.6bn) and Digital Wealth (includes LAIC and growney) which grew sales by 27% yoy (AuM: +20% yoy to EUR 0.6bn). Consequently, LAIQON's sales margin on AuM (excl. segment 'Group') remained stable at 0.42% (+0.01pp yoy; annualized). Moderate AuM growth in line with market growth: While AuMs grew by 8% yoy, sequential growth stood only at 1.5% qoq in Q2 (6% annualized) vs. 5% qoq in Q1. The slowing momentum is partially stemming from the muted small- and midcap performance in Q2 (SDAX: + 1.1% qoq). Going forward, AuM growth should return to higher momentum following the launch of 'WertAnlage' (product in cooperation with Union Investment) in Oct. 2024 (eNuW: EUR 300m by Y/E'24 and EUR 930m by Y/E'25e). Profitability muted due to growth investments: While reported EBITDA came in at negative EUR -2.9m (vs. EUR -1.9m in H1'23) due to the decline in reported sales, adjusted EBITDA would have improved by EUR 0.8m (H'1 23: EUR -3.7m adj. vs. EUR -1.9m reported). However, excluding the EUR 1m of highly profitable performance fees (vs. none in H1'23), adj. EBITDA would have declined by EUR 0.2m, indicating a decline in underlying profitability, stemming from initial ramp-up costs for the upcoming launch of 'Wertanlage'. Cash burn to continue ... As of H1, cash stood at EUR 4.3m (vs. EUR 7.1m per Y/E'23), showing a H1 cashburn of EUR -8m before financing (EUR -3m after financing) due to EUR -4.7m in negative WC swings stemming mostly from an increase in deferred tax assets which will eventually have a positive cash effect with increasing pre-tax profitability. For Y/E'24, we expect LAIQON to show a cash position of EUR 8.4m (eNuW) thanks to the latest capital measures (see update; EUR 7.2m cash inflow) and an lower cash burn before financing of EUR -3.5m in H2. ... but enough cash runway to execute key growth project: This should give LAIQON enough room to maneuver into H1'25 in order to execute the go-live of 'Wertanlage', which starts in mid-Q4'24. Mid-term targets to be reached at lower-end: LAIQON's GROWTH 25 mid-term targets of EUR 8-10bn in group AuM by Y/E'25e should be reached at the low-end (eNuW: EUR 8bn), which requires a moderate AuM growth of c. 7% in Asset and Wealth Management and substantial additions of EUR +1bn in the segment Digital Wealth, whereof EUR 930m should stem from the Union Investment cooperation (eNuW). For the latter, LAIQON expects EUR 1.5bn by Y/E'25e, hinting towards upside to our estimates. EBITDA break even in FY'25e likely: Based on (1) average AuMs of EUR 615m from 'Wertanlage' in FY'25e, (2) an expected 0.4% sales margin on AuMs and (3) an estimated 75% incremental EBITDA margin, the cooperation should add some EUR 1.8m in incremental EBITDA for FY'25e. This, coupled with decreasing OPEX on group level (ramp-up costs are incurred this year), should lead to group EBITDA break-even in FY'25e (eNuW: EUR 0.3m). Despite mixed results, we regard the potential from Union Investment as a major share price catalyst going forward, as it has the potential to put LAIQON back to positive EBITDA levels and stop the cash burn. First tangible results of that cooperation are due with FY'24e figures, until which LAIQON has enough cash-runway. Therefore, LAIQON remains a BUY with a new PT of EUR 7.10 (old: EUR 9.10), based on DCF. You can download the research here: http://www.more-ir.de/d/30747.pdf For additional information visit our website: www.nuways-ag.com/research Contact for questions: NuWays AG - Equity Research Web: www.nuways-ag.com Email: research@nuways-ag.com LinkedIn: https://www.linkedin.com/company/nuwaysag Adresse: Mittelweg 16-17, 20148 Hamburg, Germany ++++++++++ Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte. 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