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Last close As at 09/06/2023
EUR18.00
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Market capitalisation
EUR246m
Research: Financials
JDC Group (JDC) reported Q322 numbers and lowered its guidance for FY22 revenues of €155–165m (previously €165–175m) and EBITDA of €7.5–9.5m (previously more than €11m). The new guidance implies 1.1% revenue growth and EBITDA of €2.0m at the midpoint in Q422 (Q421: €3.0m). Given the 12.4% revenue growth in January to September 2022, this guidance may prove conservative. As such, we have adjusted our estimates towards the upper end of the guided range. In our new estimates, JDC trades on EV/EBITDA of 16.6x in FY23e, which we see as undemanding for what is essentially a platform business. Our discounted cash flow calculation generates a valuation of €36.40 per share.
JDC Group |
Lower FY22 guidance and estimates |
Q322 results |
Insurance |
21 November 2022 |
Share price performance
Business description
Next events
Analyst
JDC Group is a research client of Edison Investment Research Limited |
JDC Group (JDC) reported Q322 numbers and lowered its guidance for FY22 revenues of €155–165m (previously €165–175m) and EBITDA of €7.5–9.5m (previously more than €11m). The new guidance implies 1.1% revenue growth and EBITDA of €2.0m at the midpoint in Q422 (Q421: €3.0m). Given the 12.4% revenue growth in January to September 2022, this guidance may prove conservative. As such, we have adjusted our estimates towards the upper end of the guided range. In our new estimates, JDC trades on EV/EBITDA of 16.6x in FY23e, which we see as undemanding for what is essentially a platform business. Our discounted cash flow calculation generates a valuation of €36.40 per share.
Year |
Revenue |
EBITDA |
EPS* |
DPS |
EV/EBITDA |
P/E |
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 |
161.2 |
8.6 |
0.07 |
0.0 |
25.7 |
231.6 |
12/23e |
192.9 |
13.3 |
0.31 |
0.0 |
16.6 |
52.0 |
Note: *EPS are reported.
Lower sales growth in Q3 and lower FY22 guidance
Like many companies reporting in Q3 this year, JDC is not immune to macroeconomic headwinds. Revenue growth slowed to 1.1% y-o-y to Є34.8m, from 15.7% in Q2, mainly due to a 6.3% revenue drop in the Advisory business (to €8.3m). The more important Advisortech division (c 85% of revenues), which includes JDC’s insurance platform business, grew revenues by 9.5% (Q2: 17.6%). EBITDA fell to €0.8m in Q322, from €1.7m in Q2 and €1.0m in Q321, and net loss was €1.1m, compared with a loss of €0.8m in Q321.
In its H122 report, JDC was cautious about business developments in H2 and is now very uncertain about the usually strong Q4 period. Consumers are growing more cautious as inflation soars and energy prices remain high. This is likely to translate into reluctance to spend on investments and/or life insurance policies. As a result, JDC is revising its expectations for FY22 revenues down to €155–165m (from €165–175m) and for EBITDA to €7.5–9.5m (from more than €11m). At the same time, JDC confirmed its medium-term plan for revenues of at least €250m and EBITDA of more than €20m in 2025, which we believe is realistic given the large contracts that were closed in recent years.
Albatros contract extended
A positive development is that JDC’s long-term and largest customer Albatros (Lufthansa) extended its contract by five years. Meanwhile, the onboarding of savings banks of VKB and Provinzial is progressing and management states that the pilot with cooperative bank R&V is successful. The joint venture with Bain and Great West (Summitas Gruppe) looks on track to make its first deals in 2023. As such, the company’s large projects are going according to plan. We have adjusted our FY22 estimates reflecting the lowered guidance and now expect FY22 sales of €161.2m (previously €170.5m), which is at the higher end of guidance, with changes due to lower Advisory revenues and a decline in the Direct business. Given the lower sales and operating leverage in the model, we now forecast FY22 and FY23 EPS of €0.07 (previously €0.24) and €0.31 (previously €0.42), respectively. We retain our longer-term estimates.
Exhibit 1: Financial summary
€m |
2019 |
2020 |
2021 |
2022e |
2023e |
2024e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||||
Revenue |
|
|
111.5 |
122.8 |
146.8 |
161.2 |
192.9 |
225.5 |
Cost of Sales |
(79.8) |
(89.1) |
(105.1) |
(117.4) |
(142.8) |
(169.1) |
||
Gross Profit |
31.7 |
33.7 |
41.7 |
43.8 |
50.1 |
56.5 |
||
EBITDA |
|
|
4.2 |
5.1 |
8.3 |
8.6 |
13.3 |
18.0 |
Operating profit (before amort. and excepts.) |
|
(145) |
(0.1) |
0.5 |
2.9 |
2.7 |
6.8 |
|
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0 |
0 |
0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0 |
0 |
0 |
||
Share-based payments |
0.0 |
0.0 |
0.0 |
0 |
0 |
0 |
||
Reported operating profit |
(0.1) |
0.5 |
2.9 |
2.7 |
6.8 |
11.2 |
||
Net Interest |
(1.6) |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(1.8) |
(1.0) |
1.4 |
1.2 |
5.3 |
9.7 |
Profit Before Tax (reported) |
|
|
(1.8) |
(1.0) |
1.4 |
1.2 |
5.3 |
9.7 |
Reported tax |
(0.1) |
(0.1) |
(0.5) |
(0.2) |
(1.1) |
(1.9) |
||
Profit After Tax (norm) |
(1.8) |
(1.2) |
0.9 |
0.9 |
4.2 |
7.7 |
||
Profit After Tax (reported) |
(1.9) |
(1.2) |
0.9 |
0.9 |
4.2 |
7.7 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0 |
0 |
0 |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0 |
0 |
0 |
||
Net income (normalised) |
(1.8) |
(1.2) |
0.9 |
0.9 |
4.2 |
7.7 |
||
Net income (reported) |
(1.8) |
(1.2) |
0.9 |
0.9 |
4.2 |
7.7 |
||
Basic average number of shares outstanding (m) |
13.0 |
12.6 |
13.7 |
13.7 |
13.7 |
13.7 |
||
Average Number of Shares Outstanding (m) diluted |
|
12.3 |
12.8 |
13.1 |
13.7 |
13.7 |
13.7 |
|
EPS (€) |
|
|
(0.14) |
(0.09) |
0.07 |
0.07 |
0.31 |
0.57 |
EPS - normalised (€) |
(0.14) |
(0.09) |
0.07 |
0.07 |
0.31 |
0.57 |
||
DPS (€) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Gross Margin (%) |
28.4 |
27.5 |
28.4 |
27.2 |
26.0 |
25.0 |
||
EBITDA Margin (%) |
3.7 |
4.2 |
5.7 |
5.3 |
6.9 |
8.0 |
||
Normalised Operating Margin (%) |
-0.1 |
0.4 |
2.0 |
1.7 |
3.5 |
5.0 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
59.4 |
59.5 |
78.0 |
74.4 |
70.5 |
66.9 |
Intangible Assets |
49.9 |
47.9 |
66.4 |
63.7 |
60.8 |
58.1 |
||
Tangible Assets |
2.7 |
5.1 |
5.6 |
4.7 |
3.7 |
2.8 |
||
Investments & other |
6.8 |
6.4 |
6.0 |
6.0 |
6.0 |
6.0 |
||
Current Assets |
|
|
42.9 |
32.3 |
43.7 |
50.7 |
63.8 |
80.5 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
19.0 |
18.4 |
19.2 |
21.1 |
25.2 |
29.5 |
||
Cash & cash equivalents |
21.1 |
11.7 |
21.9 |
26.7 |
35.2 |
47.0 |
||
Other |
2.8 |
2.3 |
2.6 |
2.9 |
3.4 |
4.0 |
||
Current Liabilities |
|
|
45.8 |
25.8 |
36.9 |
39.2 |
44.4 |
49.7 |
Creditors |
28.5 |
19.9 |
23.8 |
26.1 |
31.3 |
36.6 |
||
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
12.6 |
1.1 |
1.0 |
1.0 |
1.0 |
1.0 |
||
Other |
4.6 |
4.9 |
12.1 |
12.1 |
12.1 |
12.1 |
||
Long Term Liabilities |
|
|
26.0 |
38.7 |
46.0 |
46.0 |
46.0 |
46.0 |
Long term borrowings |
19.2 |
19.4 |
19.5 |
19.5 |
19.5 |
19.5 |
||
Other long-term liabilities |
6.9 |
19.3 |
26.5 |
26.5 |
26.5 |
26.5 |
||
Net Assets |
|
|
30.5 |
27.3 |
38.8 |
39.8 |
44.0 |
51.7 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
30.5 |
27.3 |
38.8 |
39.8 |
44.0 |
51.7 |
CASH FLOW (€m) |
||||||||
Operating Cash Flow |
(1.7) |
3.3 |
5.6 |
8.4 |
12.2 |
16.1 |
||
Working capital |
5.5 |
5.5 |
9.3 |
0.2 |
0.4 |
0.4 |
||
Net operating cash flow |
|
|
3.8 |
8.9 |
14.9 |
8.6 |
12.7 |
16.5 |
Capex |
(4.6) |
(2.0) |
(2.1) |
(2.3) |
(2.7) |
(3.2) |
||
Acquisitions/disposals |
0.0 |
0.0 |
(11.0) |
0.0 |
0.0 |
0.0 |
||
Net interest |
0.0 |
0.0 |
0.0 |
(1.5) |
(1.5) |
(1.5) |
||
Equity financing |
0.0 |
0.0 |
10.6 |
0.0 |
0.0 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
10.1 |
(16.3) |
(2.2) |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
9.3 |
(9.4) |
10.2 |
4.8 |
8.4 |
11.9 |
||
Opening net debt/(cash) |
|
|
7.3 |
(2.0) |
(11.6) |
(1.4) |
(6.2) |
(14.7) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
(0.2) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(2.0) |
(11.6) |
(1.4) |
(6.2) |
(14.7) |
(26.5) |
Source: Company accounts, Edison Investment Research
|
|
Research: Investment Companies
Ocean Wilsons (OCN) reported in its Q322 trading update that its investment portfolio’s (OWIL’s) NAV had declined by 19.5% year to date due to the current difficult financial markets (eg the MSCI World Index fell by 25%). However, Wilson Sons (PORT3), the listed Brazilian maritime company in which OCN has a controlling 57% stake, saw its quarterly PBT grow 20% y o y in US dollar terms. The towage and offshore vessels divisions (two of PORT3’s three key divisions) continue to have positive operating trends. The third division, container terminal ports, is still experiencing the headwinds of a global logistics bottleneck but the situation is expected to improve in the coming quarters. Despite the decline in OWIL’s NAV, OCN is trading at a 52% discount to the look-through value of its stake in PORT3 and the OWIL portfolio. This rises to 58% if we use our fair value for PORT3.
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