Topic: Yesterday, EVDI published surprisingly strong indication for 9M figures compensating for weak H1 figures published earlier this month. The outlook however remains clouded.

• Operating income came in at € 3.1m (-6% yoy), including c. € 2.8m sales, c. € 0.2m financial income (mostly from associated companies) as well as c. € 0.1m other operating income (all eNuW). The strong topline figure compares to € 1.5m in H1 and should be mainly due to higher margins on the financing volume which decreased by 30% yoy to € 25.8m.
• EBIT of € -1.3m remained stable vs H1 as cost cutting measures seem to bear fruit paired with a sequentially improving topline.

With the strong indicative 9M figures in the books, management became more optimistic with regards to the FY23 figures, now expecting to exceed our old sales estimate (eNuW: € 2.8m) by 35-45% and reach an operating income of € 4.3-5.0m.

As the situation in the German real estate market is seen to remain depressed, driven by inflation and rising interest rates, which weigh heavy on the whole industry, we are more cautious than management regarding FY23 as ramped-up financing costs and increased default risks should continue to burden EVDI´s operationsas both naturally reduce the number of attractive projects for EVDI (in terms of risk-return).

Beyond 2023, the outlook is brighter: EVDI is facing a long-term growing market, interest rate hikes seem to slow down and prices in the real-estate market started to decrease. All that should drive the number of projects and volumes again. Further, the takeover of wevest that unlocked bigger transactions, new products and cross-selling potentials, and the regional expansion should start to bear fruit.

Thanks to future topline growth paired with the scalable and diversified platform business model, we see stable EBIT margin north of 20% in the mid- to long-term (eNuW: FY´27e), which is in line with managements long-term vision (20% EBIT-margin).

As the short term outlook is clouded and the uncertainty in the industry is high, the stock remains a HOLD for the moment with a slightly increased PT of € 5.20 (old: € 5.00) based on DCF.