Original-Research: LAIQON AG (von NuWays AG): Buy

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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

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The issuer is solely responsible for the content of this research. The

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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: % yoy to EUR 1.6bn) and Digital

Wealth (includes LAIC and growney) which grew sales by 27% yoy (AuM: %

yoy to EUR 0.6bn). Consequently, LAIQON's sales margin on AuM (excl. segment

'Group') remained stable at 0.42% (.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 햹 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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1984639 10.09.2024 CET/CEST

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