JDC Group — FY22 guidance reiterated after strong Q222

JDC Group (SCALE: JDC)

Last close As at 28/03/2024

EUR22.20

0.20 (0.91%)

Market capitalisation

EUR301m

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Research: Financials

JDC Group — FY22 guidance reiterated after strong Q222

JDC Group (JDC) reported strong Q222 numbers and reiterated its FY22 guidance for revenues of €165.0–175.0m (FY21: €146.8m) and EBITDA of more than €11m in FY22 (FY21: €8.3m). We have left our estimates unchanged. In our recent update, we concluded that, based on 2023e consensus EV/sales, EV/EBITDA multiples and our DCF calculation of €37.90 per share, JDC’s valuation does not seem demanding.

Edwin de Jong

Written by

Edwin De Jong

Analyst

Financials

JDC Group

FY22 guidance reiterated after strong Q222

H122 results

Insurance

12 August 2022

Price

€21.2

Market cap

€290m

Net cash (€m) at 30 June 2022

1.5m

Shares in issue

13.7m

Free float

52.0%

Code

JDC

Primary exchange

Deutsche Börse Scale

Secondary exchange

N/A

Share price performance

Business description

JDC Group is a leading German insurance platform, providing advice and financial services to professional intermediaries, banks and directly to end-customers. It also provides its digital platform for end-clients and for the administration and processing of insurance products, as a white-label product.

Next events

Q3 results

15 November 2022

Analyst

Edwin De Jong

+44 (0)20 3077 5700

JDC Group is a research client of Edison Investment Research Limited

JDC Group (JDC) reported strong Q222 numbers and reiterated its FY22 guidance for revenues of €165.0–175.0m (FY21: €146.8m) and EBITDA of more than €11m in FY22 (FY21: €8.3m). We have left our estimates unchanged. In our recent update, we concluded that, based on 2023e consensus EV/sales, EV/EBITDA multiples and our DCF calculation of €37.90 per share, JDC’s valuation does not seem demanding.

Year
end

Revenue
(€m)

EBITDA
(€m)

EPS*
(€)

DPS
(€)

EV/EBITDA
(x)

P/E
(x)

12/20

122.8

5.1

(0.09)

0.0

18.7

N/A

12/21

146.8

8.3

0.07

0.0

40.8

262.9

12/22e

170.5

11.6

0.24

0.0

24.2

84.4

12/23e

199.2

15.1

0.42

0.0

17.9

49.5

Note: *EPS is reported.

JDC’s Q2 revenues increased by 15.7% y-o-y to €37.8m (approximately 11.3% organically) compared to 20.2% in Q122. Advisortech’s revenues increased by 17.6% y-o-y (20.2% in Q1), partly driven by the acquisition of insurance market data firm Morgen & Morgen in H221. Advisory revenues were stable compared to the 10% growth in Q1. The reason for the slightly slower growth in Q2 is that part of the commission depends on the development of capital markets. JDC’s H122 organic growth of approximately 13.7% compares well to the near 10% growth of the insurance activities of the company’s competitor Hypoport in H122.

H122 EBITDA increased by 24% to €5.4m as gross margins grew. This was also driven by the acquisition of Morgen & Morgen, which has much higher gross margins than JDC’s regular activities. JDC reported a net profit of almost €1.6m, compared to €1.0m in H121. Following the strong H122, JDC reiterated its FY22 guidance of revenues of €165.0–175.0m and EBITDA of more than €11m. However, the company did state that, although it has not been affected so far, H2 could be influenced by macro developments such as the Ukraine war, COVID-19 and the energy crisis. We believe this guidance is prudent, but it might seem conservative given that around 55% of revenues are usually made in the second half of the financial year.

Revenue contributions from large client wins like German savings banks and insurers, such as Provinzial and, to a lesser extent, Versicherungskammer Bayern, are important to the investment case. However, these contributions will probably be limited to around €5.0m this year and make a more meaningful contribution next year, according to JDC. Despite this, in H122 customer turnover increased by 31.3% to €3.5m, which we believe is creditable. We have not adjusted our estimates after the Q222 results. Our EPS estimates are slightly lower than consensus and generate a forecast P/E of 30.8x in FY24, which we believe is undemanding for what is largely a platform fintech company.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by JDC Group and prepared and issued by Edison, in consideration of a fee payable by JDC Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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