Heliad Equity Partners |
Key portfolio holdings drive results
Investment companies |
Scale research report - Update
14 September 2017 |
Share price graph
Share details
Business description
Bull
Bear
Analyst
|
||||||||||||||||||||||||||||
Heliad Equity Partners benefited from the stock price appreciation of its major listed portfolio holdings (most notably FinTech and MagForce), posting a considerable increase in PBT to €10.9m from a pre-tax loss of €24.8m in H116. Importantly, this includes a considerable proportion of realised gross capital gains of €7.8m (above €2.5m in H116), translating into an improved cash position (net cash of €0.5m compared with net debt of €2.1m in FY16). Consequently, net asset value improved by 8.7% vs FY16 to €9.16 and the stock is now trading at a 23% discount to its NAV.
Solid H117 growth on the back of capital gains
Heliad reported an EPS of €1.13 in H117 vs. -€2.58 in H116, assisted by revaluation gains (€10.8m vs. €0.1m in H116), lower depreciation of financial assets (€0.6m vs. €22.1m in H116) and net realised capital gains (€2.2m vs. -€0.2m in H116) driven by partial disposals of listed portfolio holdings (FinTech Group, DEAG, Max21 and MagForce). Results were further supported by lower other operating expense (down 48.9% y-o-y to €1.8m with costs of management and liability declining by 33.7%).
Positive NAV drivers in H117
Heliad’s NAV per share increased to €9.16, which is an 8.7% increase from end-2016 levels. This was largely driven by share price appreciation of listed equity investments, such as FinTech Group (+24.3% in H117) and MagForce (+46.9%). FinTech Group reported strong FY16 net profit of €12.3m ahead of analyst expectations and raised its net income guidance for 2017 to €16.8m from €15.1m previously. MagForce’s share price was driven by the steady progress in its NanoTherm nanoparticle-based therapy for cancer.
Valuation: Discount to NAV persists
After appreciating by c 23% ytd, Heliad’s current share price stands at €7.05 and represents a 23% discount to last reported NAV per share. Importantly, shares of listed portfolio holdings appreciated further by 10-20% from end-June levels (with the exception of Max21’s shares, which declined slightly by 2%) along with the continued global equity market rally, suggesting that the discount to current NAV may be higher currently.
|
Historical financials
Source: Heliad Equity Partners accounts |
Edison Investment Research provides qualitative research coverage on companies in the Deutsche Börse Scale segment in accordance with section 36 subsection 3 of the General Terms and Conditions of Deutsche Börse AG for the Regulated Unofficial Market (Freiverkehr) on Frankfurter Wertpapierbörse (as of 1 March 2017). Two to three research reports will be produced per year. Research reports do not contain Edison analyst financial forecasts.
Financials: H117 results released
Heliad reported a considerable year-on-year improvement in results in H117, with EBT reaching €10.9m vs a loss of €24.8m in H116. This was mostly driven by revaluation gains of €10.8m (compared with just €0.1m in H116) and significantly lower depreciation of financial assets (€0.6m vs €22.1m in H116). Income from the sale of financial assets (representing realised positive capital gains) increased by 217.8% y-o-y, fuelled by holding reductions in FinTech Group (now holding a 10-20% stake as at end-June), DEAG Deutsche Entertainment (currently <5% stake), MAX21 Beteiligungs (<5%) and MagForce (<5%).
The solid performance was largely the result of the share price appreciation of listed equity investments, particularly FinTech Group (+24.3% in H117) and MagForce (+46.9%). Importantly, Heliad’s private investments showed positive operational and financial development in H117 as well.
Other operating expenses declined by 48.9% y-o-y amid the absence of expenses from currency conversions (H116: €1.5m) and a 33.7% y-o-y fall in costs of management and liability to €1.2m. Net income improved to €10.8m from a loss of €24.5m in H116, implying EPS of €1.13 (H116: loss of €2.58).
Heliad’s share price at end-June stood at €6.75, representing a 26.3% discount to the end-June NAV per share of €9.16, which increased 8.7% from €8.43 at end-2016. FinTech Group and MagForce shares appreciated further and the year-to-date performance now stands at c 40% and c 72%, respectively (as at 11 September). After the reporting date, Magforce announced that it received a loan of up to €35m from the European Investment Bank for the EU rollout of its NanoTherm devices. Currently, Heliad’s shares trade at a 23% discount to last reported NAV. The equity ratio reached 97.1% compared to 95.4% at end-2016.
Operating cash flow was a negative €2.9m, similar to last year (H116: €2.8m). Investment cash flow was positive at €5.0m, as outflows related to short-term cash investments (€3.6m) and investments in financial assets (€3.1m) were more than offset by proceeds from disposals (€11.6m). On the financial cash flow’s side, payments of dividends (€1.4m) and repayments of borrowings (€0.4m) were offset by proceeds from recent capital increase (€2.0m). As a result, Heliad’s cash balance improved to €2.4m from €0.1m at the end of 2016. Simultaneously, debt declined to €1.8m from €2.2m in FY16, translating into net cash of €0.5m (FY16: net debt of €2.1m).
Exhibit 1: Results highlights
€000s |
H117 |
H116 |
Y-o-y (%) |
Income from the sale of financial assets |
7,825 |
2,462 |
217.8 |
Other operating income |
3 |
311 |
(99.0) |
Gains from revaluation |
10,849 |
78 |
N/M |
Securities |
10,106 |
0 |
- |
Investments |
743 |
78 |
852.6 |
Retirement of financial assets |
(5,636) |
(2,626) |
114.6 |
Income from investments |
63 |
44 |
43.2 |
Depreciation of financial assets |
(604) |
(22,072) |
(97.3) |
Financial revenue |
207 |
432 |
(52.1) |
Financial expenses |
(37) |
0 |
N/A |
Other operating expenses |
(1,778) |
(3,479) |
(48.9) |
Costs of management and liability |
(1,186) |
(1,788) |
(33.7) |
Expenses for options |
(142) |
0 |
N/A |
Expenses from currency conversions |
0 |
(1,466) |
N/M |
Creation of provisions |
(115) |
(59) |
94.9 |
Remaining other operating expenses |
(335) |
(166) |
101.8 |
Depreciation on intangible assets |
(2) |
0 |
N/A |
EBT |
10,891 |
(24,849) |
N/M |
Income taxes |
(100) |
315 |
N/M |
Net result for the period |
10,791 |
(24,535) |
N/M |
EPS (€) |
1.13 |
(2.58) |
N/M |
Source: Heliad Equity Partners accounts
Valuation
Heliad assesses its own portfolio value and calculated an NAV per share of €9.16 at 30 June 2017, meaning the shares trade at a 23% discount, well above the discount for the LPX Europe Index of c 7%. This may be for a number of reasons, including the concentration of investments and low free float. Nevertheless, the discount narrowed recently following good performance of major portfolio holdings.
|
Exhibit 2: Heliad’s share price and NAV performance |
|
|
|
|
Source: Heliad Equity Partners corporate website, Edison Investment Research |
|
|
Exhibit 2: Heliad’s share price and NAV performance |
|
|
|
|
|
|
Source: Heliad Equity Partners corporate website, Edison Investment Research |
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 295 Madison Avenue, 18th Floor 10017, New York US |
Sydney +61 (0)2 8249 8342 Level 12, Office 1205 95 Pitt Street, Sydney NSW 2000, Australia |
|