Yesterday, Multitude reported Q1´24 figures above expectations, but still with room for sequential improvements until YE. In detail:

• Sales of € 64.2m (10% yoy, 1% qoq), was above the anticipated € 59.0m, mainly driven by the stronger growth of the net loan book (NAR) to € 658m (including c. € 589 loan to customer and c. € 68m attributable to warehouse lending; vs. € 638m in Q4´23). With € 54.1m ferratum contributed most (84% of sales, 13% yoy, 1% qoq), followed by CapitalBox (12% of sales, 17% yoy, 17% qoq) and Wholesale banking with 4% of total sales (€ 2.3m; 190% yoy, 21% qoq).
• EBIT came in at € 11.6m (32% yoy, -15% qoq), beating our expectation by 13% (eNuW: € 10.3m), thanks to the stronger topline and lower S&M and personnel as well as other operating expenses, all compensating for impairments on loans that were up significantly (€ 28.3m, 35% yoy, 6% qoq) vs eNuW: € 23.6m). Reasons for the lifted impairments were the ramped-up loan book on the one hand, but also credit losses in certain CapitalBox markets. As interested expenses also expanded by 48% to € 8.7m (vs eNuW: € 7.7m), EBT of mere € 2.8m (-3% yoy, -30% qoq), left room for improvements.

Overall, Multitude reported a solid set of Q1 figures. While the sales growth trajectory is fully intact marking a new record level, the development of impairment is weighing on profitability. As management is working on this issue with the highest priority, we see good chances for improvements within the next quarters. That, paired with further topline growth following the growth of the loan book in Q1, as well as the ongoing tight cost control resulting in stable other OPEX should unlock significant scale effects from Q2 onwards, allowing meaningful EBIT growth. Still, for now, we conservatively expect € 61.4m EBIT in FY24, which is below the approved management guidance of € 67.5m

As the stock is trading at a 4.3x PE´25, the growing, highly profitable, resilient and dividend paying company looks undebatable cheap.

BUY with an unchanged PT of € 12 PT, based on our residual income model. Mind you that Multitude is one of our NuWays Alpha picks for FY24.