Topic: During last week's digital roundtable, hosted by us, the CFO Peer Reichelt provided a business update as well as with a promising outlook for the remainder of the year and beyond. Key takeaways:

Value-accretive M&A transaction. The fund initiator GSR GmbH, a subsidiary of Netfonds, acquired 80% of the outstanding shares of another, not named fund initiator, increasing GSR´s AuM by € 140m to € 330m. The acquired fund initiator should have a positive effect on the Groups EBITDA to the tune of c. 300-600k (eNuW) in 2024e. We expect that Netfonds paid some € 2-3m (eNuW), making it an attractive acquisition. With the value-accretive deal, Netfonds continued its growth and scale-path.

Strong H1 figures ahead: After the record Q1 figures with AuC of € 25.1bn and gross sales of € 56m, stock markets have reached new all-time highs in Q2, providing confidence that Netfonds should have continued organic growth also in Q2. That, paired with 1) value accretive smaller transactions (i.e. MFK and Comfort Finance) for very reasonable prices (eNuW: 4-8x EBITDA) for its advisor network VB-Select, 2) the initiation of an own money market fund and 3) the acquisition of and umbrella in Luxembourg, should have further driven top-line and bottom-line (thanks to cross-selling and synergy effects).

Consolidation of the insurance brokerage market in full swing. The Groups proprietary, 360° finfire platform is seen to fuel consolidation of the insurance broker market that is, in contrary to the investment adviser market, still highly fragmented. Thanks to finfire, the selling and managing of insurance products is much easier unlocking enormous cross-selling potentials, as the already onboarded investment adviser can additionally offer a wide range of insurance products to its customers. finfire hence remains the company´s key mid- to long term growth and scalability driver. The expected strong organic growth momentum is expected to be accompanied by further value-accretive M&A deals that has to come at reasonable price, as management underlined during the virtual roundtable.

Overall, we see Netfonds well on track to reach its mid-term target of € 59m net sales (vs eNuW: € 59m) and € 23m EBITDA (vs eNuW: € 20m) by FY26.

BUY with a new PT of € 74.00 (old: € 73.00), based on DCF.