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Research: Financials
Lloyd Fonds (LF) continues its operational realignment process with Strategy 2023/2025 initiated in FY20. The new business model has been implemented under the Lloyd Liquid Assets segment, with €1.1bn of AUM gathered so far, and management reiterated its target to reach €7bn by 2024. The AI-based portfolio management (LAIC) has been successfully launched, with €15m in AUM raised so far. While the company reported a net loss in H120 results due to continued transformation costs and the COVID-19 crisis, management expects H220 to break even.
Lloyd Fonds |
Focus on building scale
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Fund management |
Deutsches Eigenkapitalforum 2020
19 October 2020 |
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EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES. |
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Lloyd Fonds (LF) continues its operational realignment process with Strategy 2023/2025 initiated in FY20. The new business model has been implemented under the Lloyd Liquid Assets segment, with €1.1bn of AUM gathered so far, and management reiterated its target to reach €7bn by 2024. The AI-based portfolio management (LAIC) has been successfully launched, with €15m in AUM raised so far. While the company reported a net loss in H120 results due to continued transformation costs and the COVID-19 crisis, management expects H220 to break even.
H120 financials: Higher share of new business
In H120, LF reported a 64% y-o-y growth in revenues, stemming primarily from the consolidation of SPSW Capital and Lange Assets & Consulting, both acquired in Q419. LF introduced new segment reporting, with its new asset management business delivering revenues of €3.6m (58% of group) and real assets generating €2.6m (down 31% y-o-y). As the business is still in realignment phase, it is bearing the increased costs of integration and is still loss-making at EBIT level; however, the loss was slightly lower year-on-year (€4.3m vs €4.6m in H119). LF’s net loss amounted to only €3.7m in H120, supported by €2.4m of tax loss carried forward.
New strategy on track
LF intends to continue its operations as an active investment manager and gather momentum by increasing its AUM. During H120, AUM increased by 5% to €1.1bn despite COVID-19-related difficulties in new client acquisition, and the FY20 AUM guidance stands at €1.4bn. The acquisition of the two entities in Q419 was a transformation milestone. Going forward, scale will be increased mostly organically and supported by further M&A. Meanwhile, we note that real assets include areas affected by the global slowdown, including in particular container shipping and aviation.
Valuation: Discounting the future
LF shares trade at an FY21e EV/EBITDA multiple of 25.3x. As LF is still in transition, we compare its valuation to both real assets investing companies (LF trades at 80% premium) and asset management companies (120% premium). On FY22e estimates the premiums change respectively to a 10% discount and a 7% premium, which we believe indicates a market expectation of successful implementation of the new strategy. In terms of P/E ratios on the other hand, LF trades at a sizeable premium to both subgroups, with an FY22e multiple of 26.9x.
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Consensus estimates
Source: Lloyd Fonds, Refinitiv as at 19 October 2020 |
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Research: Investment Companies
Deutsche Beteiligungs (DBAG) is a well-established private equity company investing primarily in mid-sized German companies. It also manages €2.1bn of third-party capital, which generates stable recurring fee income. DBAG invests in buyouts alongside its managed funds, with long-term investments made from its own balance sheet. This year, the company launched its new buyout fund (DBAG Fund VIII, with €1.1bn in commitments), which will translate into higher management fees.