Original-Research: MLP - from NuWays AG

Classification of NuWays AG to MLP

Company Name: MLP
ISIN: DE0006569908

Reason for the research: Update
Recommendation: Kaufen
from: 04.04.2024
Target price: EUR 12.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Henry Wendisch

Dry spell's over: Comeback of performance fees; chg. est.

For the first time since Q4 2021, MLP looks set to record performance fees of € 7m in Q1, as capital markets have developed favourably, pushing FERI's funds to new high water marks. In detail:

FERI's largest fund, the EquityFlex, surged 11.5% during Q1, outperforming the benchmark by 1.5pp (S&P500: +10% in Q1). Performance based compensation amounts to 15% of that outperformance and given EquityFlex' volume of € 1.36bn ($ 1.46bn), we should see € 2.9m of performance fees.

The second largest fund (OptoFlex) closed 6.1% above its old ATH, exceeding the € STR of 3.9% (Optoflex' Benchmark) by 2.1pp. MLP also receives 15% of that outperformance as performance fees, which should come in at € 4.1m, based on Optoflex' fund size of € 1.3bn.

As we assume 25% of performance fees to be paid out as fund managers' bonuses, we expect an EBIT contribution of € 5.3m in Q1. Next to Wealth Management, MLP should also continue to benefit from (1) the ongoing strong Banking business and (2) regulatory and market improvements in real estate:

(1) ECB interest rates have not been cut in Q1 and ECB signals to not trim rates in the near future. Hence, interest income should remain high during FY'24e (eNuW: € 69m) as elevated rates act with a full-year effect in '24. Further upside to our estimate should emerge, as our initially assumed average interest rate of 3.8% for FY'24 (Q1: 4.0%, Q2: 4.0%; Q3: 3.8% and Q4: 3.5%) seems conservative, as Q4'23 yielded an interest rate of 4.6% (annualized) and rates have been unchanged since then.

(2) Investing in newly built real estate has become incrementally more attractive for investors thanks to the recently passed 'Wachstumschancengesetz', changing the depreciation regime from linear to degressive. This should support MLP's RE development business (focus on retirement homes) which can be brokered to MLP's above average wealthy customers. This adds to slight upturn from low levels in the RE market, thanks to a decline in 10y fixed rate mortgages from 4.2% in Nov'23 to now 3.6%.

In sum, MLP benefits from three drivers at once and should start well into the year. Hence, we reiterate our BUY recommendation and raise our PT to € 12.00 (old: € 11.00), based on FCFY'24e.

You can download the research here:
http://www.more-ir.de/d/29305.pdf
For additional information visit our website www.nuways-ag.com/research.

Contact for questions
Die Analyse oder weiterführende Informationen zu dieser können Sie hier downloaden: www.nuways-ag.com/research. 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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