Yesterday, Multitude published Q2´23 figures. While current trading remained solid, ongoing tight cost control bear fruit, visible in a particularly strong bottom line:

• Sales came in at € 55.5m

  (+3% qoq, +4% yoy), bang in line with our estimates of € 55.7m, driven by the strong growth of the lending portfolio to 521m (+2% qoq, +9% yoy). Importantly all three tribes contributed to the growth (ferratum tribe: € 45.1m, +2% qoq, +3% yoy; CapitalBox: € 5.5m, +1% qoq, +10% yoy; sweep: € 5.0m, +13% qoq, +67% yoy).

• EBIT increased by 66% yoy to € 11.3m

  (+18% qoq), 5% above our estimates of € 10.8m. The strong performance on the bottom line is due to tight cost control measures (personnel: -7% yoy; other operating expenses: -17%) and growth of the loan book with stable margins resulting in higher revenues.

• EBT doubled vs Q1 to € 6.5m

  (EBT margin: 12%), significantly above our estimates of € 4.9m and the previous year (Q2´22: € 0.6m), thanks to lower than anticipated interest expenses of € 5.3m (-24% qoq, -15% yoy vs eNuW: € 6.2m).

After the strong Q2,

of € 45m (vs eNuW: € 45.3m, +43% yoy). Further sequential growth of the net loan book to € 560m until eoy, combined with ongoing tight cost control should allow to reach the goal that is implying an EBIT margin of 19%. Expecting a moderate sequential increase of interest expenses, we see FY23 EPS at € 0.87.

In a nutshell, Multitude should remain a growing company with perspectively three profit centres 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.

Stock still is heavily mispriced, trading at negative EV and a 3.7x PE´23,  completely neglecting the promising guidance for 2023e and 2024e and the earnings potential.

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