Last week, Bernd Egger, the CFO of Multitude attended our stockpicker summit on Mallorca, where he left a bullish impression in regards to the further development of the company, particularly when it comes to improving the group's profitability. Our key takeaways:

• Multitude is seen well on track to reach its FY23 EBIT guidance

  of € 45m that was again reconfirmed (eNuW: € 45.3m). Assuming sequential improvements, we expect sales to grow by 10% yoy to € 234m (€ 592m of NAR) combined with tight cost-control resulting in rather stable OPEX.

• The cash cow of the Group, ferratum, should clearly be the main EBIT contributor

  with € 52m in FY23, eNuW. Cross-financing sweepbank is expected to cut its EBIT loss in half (from € -22m in FY22 to € -12m).

• Full focus on profitability at sweepbank.

  After a period of ramping up personnel, heavily investing into the development of new features and driving the regional expansion, sweepbank is now trimmed to break even. Still the guidance of € -10m looks ambitious after € -4m in Q1. We hence expect € -12m for FY23.

• Current trading of Capital Box is stronger than initially expected

  and could potentially even overachieve the tribe guidance of € 5m in EBIT (eNuW: € 6m; € 1.3m already achieved in Q1).

• Interest rates are expected to increase moderately

  from 2.5% in Q1 to 3% in Q4 (eNuW), but should be offset by increasing topline (interest spread should remain stable).

Overall, Multitude is a growing company with perspectively three profit centers within the Group. The strategic transition from a near prime loan provider to a prime loan provider is eliminating risks and further stabilizing operations and profits. The strategic transition is visible in the shift from Microloans to recurring credit limit within the ferratum tribe as well as the growing sales share of Capital Box and sweepbank.

Shares still looks heavily mispriced, trading at negative EV (net cash of c. € 100m including c. € 30m that can be used for operations), neglecting the promising guidance and the resulting earnings potential.

BUY with an unchanged € 11 PT, based on our residual income model.