Original-Research: MLP SE (von NuWays AG): BUY

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Original-Research: MLP SE - from NuWays AG

23.09.2024 / 09:01 CET/CEST

Dissemination of a Research, transmitted by EQS News - a service of EQS

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Classification of NuWays AG to MLP SE

Company Name: MLP SE

ISIN: DE0006569908

Reason for the research: Update

Recommendation: BUY

Target price: EUR 11.50

Last rating change:

Analyst: Henry Wendisch

Banking business is no one-hit wonder

Despite declining interest rates, MLP's banking business looks set to remain

strong. In detail:

Generation of interest income: MLP's banking business comprises EUR 3bn of

interest receiving assets with an average interest rate of 3% from three

different pillars: (1) Loans given out to MLP customers (43%), mainly for

real estate and medical practice financing, (2) Deposits at commercial banks

(25%) held as investment purposes as part of the banking business and (3)

deposits at central banks (32%).

Interest payments to customers: MLP's customers have deposited EUR 2.9bn, for

which MLP currently pays 1.2% interest on average (per H1; annualized), in

three types of accounts: (1) checking accounts for 0% interest p.a., (2)

overnight deposits for currently 1.5% interest p.a., and (3) time deposits

for currently 2.75% interest p.a. Here, the mix of deposits is undisclosed,

but our ballpark estimate would be 40% in checking accounts, 30% in

overnight deposits and 30% in time deposits (eNuW).

What changes with falling ECB rates: With a decline of ECB rates (as

expected by the ECB Survey of Professional Forecasters and us respectively),

we expect a proportionate decline in average interest rate received, but

only for short-term maturity commercial and central bank deposits (57% of

int. receiving assets). On the other hand, the longer-term maturity

fixed-rate loans given to MLP's customers should show stable or slightly

rising interest rates, as here the change in ECB rate drop comes into effect

with a substantial delay and the loan book should gradually shift towards

higher rate loans as old loans from the low interest rate are running out.

For interest expenses, we also expect MLP to reduce interest rates on

short-term maturity deposits proportionately to the ECB rate decline, in

order to protect the net interest margin of currently 61% (H1'24). As the

changes of interest receiving assets and customer deposits are

unpredictable, we model no changes here.

Net interest income to peak now, but to remain at solid levels going

forward: In our base case scenario, reflecting current market expectation

for rate declines and assuming changes at neither int. receiving assets nor

customer deposits, we expect a net interest income of EUR 46m in FY'25e (EUR 41m

in FY'26e), both at solid levels, reflecting a 'new normal' after years of

low interest rates.

Furthermore, we conduct a sensitiviy analysis (for FY'26e) in order to

assess the impact of deviations from our assumptions (see below), showing

net interest incomes in the range of EUR 23m to EUR 65m.

Against this backdrop, we remain confident that MLP remains on track to

reach its guidance and continue to grow earnings and thus reiterate our BUY

recommendation with unchanged PT of EUR 11.50, based on FCFY'24e and SOTP

You can download the research here: http://www.more-ir.de/d/30829.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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1992871 23.09.2024 CET/CEST

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