Catella: EO item hurts Q2; core segments main focus - ABG
This is a third party research report and does not necessarily reflect our views or values
Negative extraordinary item heavily impacts Q2…
…but focus should shift to core underlying segments
Trading at EV/EBIT of 9x, 44% below our peer group
For Q2’21 results (report due on 20 August), we expect EBIT of SEK -111m vs. SEK 39m in Q2’20. Q2’21 is the last quarter in which Equity, Hedge and Fixed income funds (IPM) will burden the PnL, after which Catella will become more property investment-focused. This is a positive, in our view, as we think it is Catella’s core competitive advantage. IPM was closed during Q2, which Catella flagged already in the middle of April. Subsequently, the Q2 report is bound to suffer due to the cost of winding down IPM, which, according to the company’s press release, is expected to hurt net profit by ~SEK 103m (SEK 39m relates to write-off of goodwill and SEK 64m from other wind-up costs). In our view, the report should instead focus on the current operational segments. We expect the Corporate Finance segment to show y-o-y improvement and contribute positively to group EBIT; we estimate SEK 9m. In the Property Investment Management (PIM) segment, we forecast AUM growth of 5% y-o-y (unadjusted for the PAM divestment in Q1’21). We estimate operating profit of SEK 72m, roughly in line with SEK 76m a year ago, even though our calculated performance fee from the European residential fund is down y-o-y, where we estimate SEK 65m in Q2’21 vs. SEK 91m in Q2’20.
On average, international alternative asset managers currently trade at an EV/EBIT of 16x for 2022e. In comparison, Catella is trading at an EV/EBIT of 9x, equivalent to 44% below our peer group, even though Catella has a solid balance sheet and solid track record within property investment management, which accounts for the majority of the company.
…but focus should shift to core underlying segments
Trading at EV/EBIT of 9x, 44% below our peer group
For Q2’21 results (report due on 20 August), we expect EBIT of SEK -111m vs. SEK 39m in Q2’20. Q2’21 is the last quarter in which Equity, Hedge and Fixed income funds (IPM) will burden the PnL, after which Catella will become more property investment-focused. This is a positive, in our view, as we think it is Catella’s core competitive advantage. IPM was closed during Q2, which Catella flagged already in the middle of April. Subsequently, the Q2 report is bound to suffer due to the cost of winding down IPM, which, according to the company’s press release, is expected to hurt net profit by ~SEK 103m (SEK 39m relates to write-off of goodwill and SEK 64m from other wind-up costs). In our view, the report should instead focus on the current operational segments. We expect the Corporate Finance segment to show y-o-y improvement and contribute positively to group EBIT; we estimate SEK 9m. In the Property Investment Management (PIM) segment, we forecast AUM growth of 5% y-o-y (unadjusted for the PAM divestment in Q1’21). We estimate operating profit of SEK 72m, roughly in line with SEK 76m a year ago, even though our calculated performance fee from the European residential fund is down y-o-y, where we estimate SEK 65m in Q2’21 vs. SEK 91m in Q2’20.
On average, international alternative asset managers currently trade at an EV/EBIT of 16x for 2022e. In comparison, Catella is trading at an EV/EBIT of 9x, equivalent to 44% below our peer group, even though Catella has a solid balance sheet and solid track record within property investment management, which accounts for the majority of the company.