Topic: After a historically bad year 2023 for EVDI and the whole sector, the worst seems to be over, and we see light at the end of the tunnel for EVDI. Here is why:

The real-estate sector shows first signs of a recovery. Apart from normalizing construction cost inflation (4.3% in Q4’23 vs 16.9% in Q4’22), real estate prices are coming down as well, as shown by the Q3 housing price index (-10.2% yoy). That paired with declining financing rates (10y swap rates are -95bps since October), should allow for a revitalization of the industry in 2024 that should bode well for EVDI.

Cross-selling potential with wevest. Once the integration of wevest is completed, we expect cross-selling potentials between the wevest´s and EVDI´s customer base strengthening the client relationship.

ECSP license enable new products. The recently granted ECSP license, allows EVDI to offer new products such as whole loans and senior loans. On top, cross-country generation and financing of loans is possible. That, paired with the wevest license which allows for loans with a volume of up to € 8m, should drive sales going forward.

Interesting opportunities in the renewable space. Like its peer Exporo, EVDI could further diversify its business by additionally offering renewable energy projects such as solar parks on its platform. We observe that the demand for such products on the investor as well as on the project developer side is growing. While the margins (spreads) in this space are lower due to lower interest expenses, the risks are lower as well.

Apart from that, EVDI announced changes in the management board end of last year. Tobias Barten (former Co-CEO) left the company to take over as CEO of EVDI´s partner Engel&Völkers Capital. Karl Poerschke, the former Head of Finance succeeded in the role of COO. While we consider Karl as a perfect match, the new role of Tobias should further fuel collaborations between EVDI and EVC.

While we see a lot of upside in the mid-term, we remain conservative for the moment, trimming our estimates for FY23 and beyond in order to reflect the weak industry sentiment with insolvencies and delays that could cause impairments.

HOLD with a reduced PT of € 4.80, based on DCF.