Märkte & Kurse

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Original-Research: LAIQON AG - from NuWays AG

10.09.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.

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Classification of NuWays AG to LAIQON AG

     Company Name:                LAIQON AG
     ISIN:                        DE000A12UP29

     Reason for the research:     Update
     Recommendation:              Buy
     from:                        10.09.2024
     Target price:                EUR 7.10
     Target price on sight of:    12 months
     Last rating change:
     Analyst:                     Henry Wendisch

Mixed H1 due to divestment and growth investments; chg. est.

LAIQON released mixed reported H1´24 figures which are burdened by the
disposal of the non-core legacy business, but showed top-line growth in line
with AuM growth across its core segments. However, LAIQON should remain
unprofitable on EBITDA level and cash burning in FY'24e, before positive
effects of the Union Investment cooperation come into effect next year.

Reported sales declined by 7% yoy to EUR 14.7m, due to the divestment of a
non-core business unit (LLOYD FONDS Real Assets; EUR 2m sales in H1'23) at the
end of FY'23. Adjusting H1'23 for the sale, H1'24 sales would have risen by
7% yoy.

Top-line growth and stable sales margins in core business segments: Asset
Management grew by 6% yoy (AuM: + 9% yoy to EUR 4.4bn), followed by Wealth
Management, which grew by 12% yoy (AuM: +3% yoy to EUR 1.6bn) and Digital
Wealth (includes LAIC and growney) which grew sales by 27% yoy (AuM: +20%
yoy to EUR 0.6bn). Consequently, LAIQON's sales margin on AuM (excl. segment
'Group') remained stable at 0.42% (+0.01pp yoy; annualized).

Moderate AuM growth in line with market growth: While AuMs grew by 8% yoy,
sequential growth stood only at 1.5% qoq in Q2 (6% annualized) vs. 5% qoq in
Q1. The slowing momentum is partially stemming from the muted small- and
midcap performance in Q2 (SDAX: + 1.1% qoq). Going forward, AuM growth
should return to higher momentum following the launch of 'WertAnlage'
(product in cooperation with Union Investment) in Oct. 2024 (eNuW: EUR 300m by
Y/E'24 and EUR 930m by Y/E'25e).

Profitability muted due to growth investments: While reported EBITDA came in
at negative EUR -2.9m (vs. EUR -1.9m in H1'23) due to the decline in reported
sales, adjusted EBITDA would have improved by EUR 0.8m (H'1 23: EUR -3.7m adj.
vs. EUR -1.9m reported). However, excluding the EUR 1m of highly profitable
performance fees (vs. none in H1'23), adj. EBITDA would have declined by EUR
0.2m, indicating a decline in underlying profitability, stemming from
initial ramp-up costs for the upcoming launch of 'Wertanlage'.

Cash burn to continue ... As of H1, cash stood at EUR 4.3m (vs. EUR 7.1m per
Y/E'23), showing a H1 cashburn of EUR -8m before financing (EUR -3m after
financing) due to EUR -4.7m in negative WC swings stemming mostly from an
increase in deferred tax assets which will eventually have a positive cash
effect with increasing pre-tax profitability. For Y/E'24, we expect LAIQON
to show a cash position of EUR 8.4m (eNuW) thanks to the latest capital
measures (see update; EUR 7.2m cash inflow) and an lower cash burn before
financing of EUR -3.5m in H2.

... but enough cash runway to execute key growth project: This should give
LAIQON enough room to maneuver into H1'25 in order to execute the go-live of
'Wertanlage', which starts in mid-Q4'24.

Mid-term targets to be reached at lower-end: LAIQON's GROWTH 25 mid-term
targets of EUR 8-10bn in group AuM by Y/E'25e should be reached at the low-end
(eNuW: EUR 8bn), which requires a moderate AuM growth of c. 7% in Asset and
Wealth Management and substantial additions of EUR +1bn in the segment Digital
Wealth, whereof EUR 930m should stem from the Union Investment cooperation
(eNuW). For the latter, LAIQON expects EUR 1.5bn by Y/E'25e, hinting towards
upside to our estimates.

EBITDA break even in FY'25e likely: Based on (1) average AuMs of EUR 615m from
'Wertanlage' in FY'25e, (2) an expected 0.4% sales margin on AuMs and (3) an
estimated 75% incremental EBITDA margin, the cooperation should add some EUR
1.8m in incremental EBITDA for FY'25e. This, coupled with decreasing OPEX on
group level (ramp-up costs are incurred this year), should lead to group
EBITDA break-even in FY'25e (eNuW: EUR 0.3m).

Despite mixed results, we regard the potential from Union Investment as a
major share price catalyst going forward, as it has the potential to put
LAIQON back to positive EBITDA levels and stop the cash burn. First tangible
results of that cooperation are due with FY'24e figures, until which LAIQON
has enough cash-runway.

Therefore, LAIQON remains a BUY with a new PT of EUR 7.10 (old: EUR 9.10), based
on DCF.

You can download the research here: http://www.more-ir.de/d/30747.pdf
For additional information visit our website: www.nuways-ag.com/research

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
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1984639 10.09.2024 CET/CEST

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