Catella: Investment Management continues to deliver - ABG

Strong Q2 beat driven by Investment Management We increase our ’23e-’24e underlying EBIT by 5% 2023e EV/EBIT of 7x with appealing dividend yield

Strong Q2 beat driven by Investment Management Catella delivered another strong report, in which both sales and EBIT showed strong yearly growth development. The operating profit attributable to Catella’s shareholders improved by SEK 319m and came in at SEK 328m in Q2’22, which was 26% above ABGSCe. The strong Q2 result was primarily driven by the Investment Management (IM) segment, which delivered another set of impressive numbers with operating profit up 151% y-o-y in Q2, driven by both higher fixed and variable fees. The AUM base continues to increase, growing by 8% q-o-q, at SEK 135bn. Management also flags that it has an additional SEK +10bn in committed AUM capital to be used in the coming 9-12 months in new development projects and properties, enabling continued growth. In addition to the continued strong underlying development for IM for Q3’22e, we expect divestments of the Vaggeryd and Kaktus projects, where the latter is Catella’s largest project to date.

’23e-’24e underlying EBIT up by 5% The AUM within the Investment Management segment was 6% above our estimate; we have consequently raised our AUM base, which increases our estimates for the segment and also hikes our group EBIT by 5% for 2023e and 2024e.

2023e EV/EBIT of 7x with appealing dividend yield Catella has entered a harvesting period, with seven projects scheduled to be divested in 2022, including the Kaktus project in H2’22. The company is facing easy comps, which is why we expect strong growth throughout the year. In our view, the company has many attractive fundamentals including a strong balance sheet, combined with an appealing dividend yield. Applying our latest revisions, Catella is trading at a 2023e EV/EBIT of 7x, which is 40% below the average of our broader peer group.

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