creditshelf (CSQ) is addressing the underserved SME credit market in Germany through the development of its fully integrated online platform, including product portfolio extension and acquisition of new investors. As is typical for an early-stage business, CSQ is currently loss-making, but is seeing dynamic sales growth. Future growth will be supported by the €16.5m gross proceeds raised during the IPO, completed last July.
creditshelf |
Financials |
Share price graph
Share details
Business description
Analyst
|
Emerging marketplace for SME loans
creditshelf (CSQ) is addressing the underserved SME credit market in Germany through the development of its fully integrated online platform, including product portfolio extension and acquisition of new investors. As is typical for an early-stage business, CSQ is currently loss-making, but is seeing dynamic sales growth. Future growth will be supported by the €16.5m gross proceeds raised during the IPO, completed last July.
Higher credit volumes and gross margin
CSQ reported a 287% y-o-y revenue increase to €765m in H118, largely driven by the growth in credit volume brokered (up by 86% vs H117). The company’s gross margin improved on the back of higher ticket size (€530k vs H117 at €275k) and average duration (18.2 months vs 10.9 in H117). In Q217, CSQ introduced service fees in addition to the brokerage fees already charged, with the former contributing 32% to group revenues in H118 (vs 25% in H117). PBT was negative at €2.9m (H117: negative €0.7m) and was affected, among others, by the IPO-related retention bonus (€1.4m), increased marketing expenses (€376k vs H117: €80k) as well as share-based compensation costs (€577k vs H117: €23k).
IPO proceeds to assist growth strategy
CSQ successfully completed its IPO in July at an issue price of €80 per share, translating into €16.5m gross proceeds (vs initial target at €15–20m). This includes c €1.5m bought by the majority limited partner of the largest shareholder. The funds will be used to finance the further development of data-driven processes, algorithms and models used on the platform (which should consume c 20–35% of the net proceeds) and to invest in new products with the current focus on factoring and analysis-as-a-service (10-13%), as well as marketing, IT infrastructure and incentive programmes (39-61%). CSQ is in discussions with banks related to referrals of SME borrowers. All these actions are aimed at achieving CSQ’s mid-term target of €500m loans brokered pa vs H118 last 12 months (LTM) at €41m.
Valuation: Reflects an early-stage growth profile
It is difficult to value CSQ’s shares due to its early-stage, high-growth profile, still negative earnings and limited number of comparable listed peers operating similar platforms. We note that some of them, unlike CSQ, are balance sheet lenders and thus not directly comparable. The shares currently trade at an LTM Mcap/sales ratio of 53x, compared to Funding Circle (its closest peer) at 11x.
|
Consensus estimates
Source: creditshelf accounts, Bloomberg consensus estimates as at 10 October 2018. Note: consensus based on estimates of a single analyst. |
|
|
The recently completed merger between Glenalta and CFT creates a business with significant funding to support the group’s ambition to be a leading consolidator of processing, packaging and sorting technologies in the food and beverage sector. Benefiting from the global population megatrends or urbanisation and growing middle classes demanding higher-quality food and drink products, CFT should also augment growth by entering new product segments with high growth dynamics.