Multitude SE

Sound Q2 ahead // On track to reach FY EBIT guidance

Frederik Jarchow21 Aug 2023 05:57

On Thursday, Multitude will publish Q2´23 figures. While current trading should have been solid, ongoing tight cost control should have bear fruit, visible in strong bottom line. Here is what to expect in detail:

Sales are seen up 4% yoy at 55.7m
(eNuW, +3% qoq), driven by all three tribes that should have contributed to the growth (eNuW: ferratum tribe: € 45m, +2% qoq, +3% yoy; CapitalBox: € 5.8m, +5% qoq, +16% yoy; sweep: € 4.9m, +12% qoq, +65% yoy). The overall net loan book is seen higher at € 540m (+13% yoy).
EBIT is expected to come in at a strong € 10.8m
(+13% qoq, +27% yoy) on the back of the sequentially improving topline as well as ongoing cost control and efficiency measures that should have resulted in stable qoq OPEX. Furthermore, and thanks to stricter lending, impairment on loans should have remained stable as well (eNuW: € 20.2m, 3.7% of loan book vs 3.9% in Q1).

That said,

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

of € 45m (vs eNuW: € 45.3m, 43% yoy). Further sequential growth of the net loan book to € 592m until eoy, combined with ongoing tight cost control should allow to reach the goal that is implying an EBIT margin of 19%.

Moreover, interest rates that are expected to increase moderately

from 2.5% in Q1 to 3% in Q4 (eNuW), following roll-over effects, look set to be off-set by an increasing topline (interest spread should remain stable).

In a nutshell, Multitude should remain a growing company with perspectively three profit centers within the Group (currently two: ferratum and CapitalBox). The strategic transition from a near prime loan provider to a prime loan provider bode well for the company and should continue to eliminate risks, 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 CapitalBox 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.