Currency in EUR
Last close As at 25/03/2023
EUR17.25
▲ 0.05 (0.29%)
Market capitalisation
EUR235m
Research: Financials
JDC Group (JDC) reported preliminary FY22 results that were on the lower side of the guided range for revenues and on the higher end for EBITDA. FY22 revenue increased by 6.3%, compared to 18% in 2021, reflecting low German consumer confidence especially in December. This led to weaker demand especially for life insurance products. JDC expects FY23 revenue growth to accelerate, to 17% at the midpoint of guidance (€175–190m) based on cooperation agreements that are already signed. The EBITDA margin is also expected to increase based on a guided EBITDA range of €11.5–13.0m. We will review our valuation after the final results, which will be published on 31 March.
JDC Group |
On track for a strong FY23 |
Q422 preliminary results |
Insurance |
10 March 2023 |
Share price performance Business description
Analyst
JDC Group is a research client of Edison Investment Research Limited |
JDC Group (JDC) reported preliminary FY22 results that were on the lower side of the guided range for revenues and on the higher end for EBITDA. FY22 revenue increased by 6.3%, compared to 18% in 2021, reflecting low German consumer confidence especially in December. This led to weaker demand especially for life insurance products. JDC expects FY23 revenue growth to accelerate, to 17% at the midpoint of guidance (€175–190m) based on cooperation agreements that are already signed. The EBITDA margin is also expected to increase based on a guided EBITDA range of €11.5–13.0m. We will review our valuation after the final results, which will be published on 31 March.
Year |
Revenue |
EBITDA |
EPS* |
DPS |
EV/EBITDA |
P/E |
12/21 |
146.8 |
8.3 |
0.07 |
0.0 |
40.8 |
250.7 |
12/22** |
156.1 |
8.9 |
0.07 |
0.0 |
26.9 |
250.7 |
Note: *EPS are reported. **2022 numbers are preliminary.
Lower sales in Q4
JDC announced preliminary FY22 and Q422 numbers on 9 March. FY22 revenue of €156.1m was at the lower end of the guided range of €155–165m and below consensus estimates (€161m). EBITDA amounted to €8.9m, compared with guidance of €7.5–9.5m (consensus €8.8m). In Q422, revenue declined 7.8% to €40.3m. This decrease is mainly due to lower life insurance, investment products and construction/real estate financing, driven by decreasing consumer confidence in Germany towards the end of the year. This is a trend that began in Q3 and led to a downward revision of guidance in November.
FY23 revenue growth guidance 17% at midpoint
The outlook for FY23 is promising, with 17% revenue growth at the midpoint of the guided €175–190m range and 38% EBITDA growth at the midpoint (guided range €11.5–13.0m), based on cooperation agreements already signed. This is somewhat below current consensus estimates (€195m revenue, €14m EBITDA). We note that JDC is usually conservative with its initial outlook, leaving room for potential upside going through the year. We will adjust our estimates after the final results, which will be published on 31 March.
FY23 off to a good start
JDC has started FY23 well (January still weak, but February and March so far strong) both in Advisortech (~80% of revenues) and in Advisory (~20% of revenues). The onboarding of German savings bank-related insurers Provinzial is progressing very well (especially in Cologne), while the contributions from savings bank related insurer VKB and cooperative bank insurer R+V could take longer. These will probably start to materialise in 2024 according to management. The recently acquired Top Ten Financial Network Group is likely to start contributing to revenues as of Q3/Q4 (€2–10m) after the deal gets confirmation from the German financial regulator. Furthermore, JDC expects to acquire several insurance brokers with the Bain/GWL joint venture (Summitas Gruppe) this year (not included in the guidance).
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Research: Industrials
paragon has announced the result of the Eurobond tender offer at 60% of nominal, securing just under €1.7m nominal out of a potential €5m. The offer forms part of the ongoing debt reduction programme that will see the majority of the outstanding bond liabilities (both Swiss franc and euro) redeemed over the next few months (see our previous note). While the shares and bonds have been responding well to the management initiatives, these appear to pose a considerable potential opportunity for investors, assuming the operational growth strategy is successfully implemented.
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