At current levels, MLP’s stock offers a strong upside potential while potential downside risks seem priced in and should not impact bottom line significantly. Here is our take:

(1) Strong diversification of negatively correlated business segments protects MLP against changing macroeconomic environments. Currently, the downturn in real estate and the absence of performance fees due to burdened capital markets, are overcompensated by a strong banking business.

(2) Solid visibility on profitability: For FY’24e, we expect EBIT to improve by € 11m to € 90m (+13% yoy), mainly supported by the strong banking business (55% of EBIT), but also by easing OPEX inflation compared to FY’23e, all the while top-line growth remains intact (+4% yoy).

(3) Tailwinds from new interest rate era: Due to recent interest rate hikes as well as a favourable customer deposit mix, MLP can rely on comfortable interest spreads in its banking business. As significant interest rate cuts seem unlikely at the moment, we expect this effect to carry on throughout 204 and beyond. This should yield an interest result of € 54m for FY'24e (eNuW), which has an incremental EBIT margin of close to 100%.

(4) Positive upside potential from highly profitable performance fees around the corner: FERI’s largest fund “Optoflex” recently exceeded its threshold to receive highly profitable performance fees. Should capital markets continue to develop favourably, an additional EBIT contribution of c. € 10-30m for FY'24e could serve as a cherry on top, as these are not reflected in our estimates.

(5) Further downside from real estate unlikely: With Germany's RE transaction market slightly picking up again and no major rate cuts in sight, a worsening of MLP's real estate business seems unlikely. With only a 3% sales share, the impact of RE on the group is also limited.

Current valuation is unjustified: Underlying profitability nearly quadrupled over the last years, but the stock has not performed accordingly, now trading at historically cheap multiples, a 21% FCFY’24e, a 58% discount to its fair SOTP value and a 5% dividend yield. Given this superb value for money profile, MLP shares look set for a re-rating. As a result, we add MLP to our NuWays' Alpha List 2024 and strongly recommend to BUY with unchanged PT of € 11.00, based on FCFY’24e and SOTP.