JDC Group — Lower FY22 guidance and estimates

JDC Group (SCALE: JDC)

Currency in EUR

Last close As at 07/02/2023

EUR16.80

−0.50 (−2.81%)

Market capitalisation

EUR230m

Research: Financials

JDC Group — Lower FY22 guidance and estimates

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.

Edwin de Jong

Written by

Edwin De Jong

Analyst

Financials

JDC Group

Lower FY22 guidance and estimates

Q322 results

Insurance

21 November 2022

Price

€16

Market cap

€219m

Net debt (€m) at 30 September 2022

1.9

Shares in issue

13.7m

Free float

52%

Code

JDC

Primary exchange

Deutsche Börse Scale

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(7.1)

(15.9)

19.5

Rel (local)

16.3

(7.2)

47.9

52-week high/low

€27.20

€14.55

Business description

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

Next events

Deutsches Eigenkapitalforum 2022

28–30 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 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
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

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


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

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

More on JDC Group

View All

Latest from the Financials sector

View All Financials content

Research: Investment Companies

Ocean Wilsons Holdings — Adverse financial markets but PORT3 is doing well

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.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free