Catella: Slower quarter but main scenario still intact - ABG

Q3’22e EBIT of SEK 50m, down 2% y-o-y

Estimates unchanged for 2022-2024

2023e EV/EBIT of 7x with 6-11% dividend yield

Expect no contribution from Principal Investments in Q3’22
For the Q3’22 report, due on 28 October, we expect a group EBIT of SEK 50m (51m), down 2% compared to Q3’21. Looking at the operational segments, we estimate that Investment Management (IM) will grow AUM 1% q-o-q to SEK 137bn in the third quarter and that the segment will deliver an operating profit of SEK 51m, down 11% y-o-y, driven by our expectation of no performance fees in Q3’22, compared to Q3’21 which was boosted by two larger divestments by APAM which contributed with variable revenues. Within Principal Investments, we expect no earnings contribution for the third quarter; instead we expect the divestment of Kaktus, Vaggeryd and the remaining income from the Norrköping project to occur in Q4’22. Lastly, we expect a small earnings contribution from the Corporate Finance segment given that Q3 is a seasonally slower quarter, in combination with fewer transactions in the quarter due to the volatile capital markets. For Q3’22 we expect operating profit of SEK 11m for the segment, up from -3m one year ago, where the yearly earnings growth is helped by the exit of the German and Baltic Corporate Finance regions earlier this year.

Sale of Kaktus & Vaggeryd pushed out to Q4’22e
Our only estimate change ahead of Q3’22 is that we push the sale of the Principal Investments projects, Kaktus and Vaggeryd, to Q4’22e instead of Q3’22e, which was our previous assumption. Apart from that, we make no other estimate changes. Given that the divestments are simply a timing issue, we make no revisions to our FY 2022-24 scenario.

2023e EV/EBIT of 7x, ~40% below average of peers
In our view, the company has many attractive fundamentals combined with an appealing dividend yield of 6-11% within our forecast horizon. Catella has so far delivered an impressive avg. IRR of above >50% on its exited Principal ...
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