Last close As at 05/08/2026
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Deutsche Börse is a broad financial market infrastructure business with a clear plan to realise structural growth opportunities across its pre-trade, trading and clearing, and post-trade activities. Selective acquisitions will be sought to augment this potential. The shares trade on a marked discount to global peers.
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Deutsche Börse |
Financial services |
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Deutsche Börse is a client of Edison Investment Research Limited |
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Targeting diversified growth
Deutsche Börse is a broad financial market infrastructure business with a clear plan to realise structural growth opportunities across its pre-trade, trading and clearing, and post-trade activities. Selective acquisitions will be sought to augment this potential. The shares trade on a marked discount to global peers.
Roadmap 2020
In May this year, Deutsche Börse (DB1) presented its strategic plan, ‘Roadmap 2020’. This set out the priorities of new CEO, Theodor Weimer (growth, technology leadership and discipline in execution) and the group’s favourable starting point with good organic growth opportunities across the business. DB1 aims to accelerate both secular and cyclical organic growth, supporting this with a disciplined M&A programme focusing on fixed income, commodities, foreign exchange, investment fund services and data provision. Investments in technology are to be expanded to help realise growth and improve scalability: key technologies involved are blockchain, big data analysis, cloud computing, and robotics and artificial intelligence. Financial targets include: organic, secular, compound annual growth in net revenue of over 5% in the period to end 2020, with the potential for additional positive cyclical effects; net profit CAGR of 10-15%; dividends equivalent to c 40-60% of net profit; gross debt below 1.5x EBITDA; and a structural cost reduction of €100m by the end of the period (at a cost of c €200m).
Results for Q318
Q318 results, on an adjusted basis, showed net revenue up 13% y-o-y to €651.4m and operating costs up 5%, which allowed EBITDA to increase by19% and net profit by 21% to $245.5m. DB1 reported continued good progress on its Roadmap targets, including structural revenue growth running ahead of its target at c 7%, while cost efficiency measures are on track. Cyclical factors have also been positive with market volatility and higher US interest rates contributing to the result through trading volume and interest income. Acquisitions made a small contribution to growth in the quarter and DB1 indicates further opportunities in the pipeline. The group looks for FY18 net profit growth similar to the first nine months of 2018 (+16%, excluding exceptional items).
Valuation: Undemanding P/E versus major peers
DB1 trades on prospective P/E multiples more than 25% below its larger global exchange peers, a conservative rating given the group’s diversification and structural growth plans.
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Consensus estimates
Source: Deutsche Börse, Thomson Reuters collected consensus estimates |
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Research: Investment Companies
Deutsche Beteiligungs (DBAG) is an experienced private equity investor focused on mid-sized German companies. It is distinguished from private equity peers by generating significant fee income from managing c €1.4bn in third-party funds. After an exceptional FY17, DBAG has delivered steady underlying NAV growth so far in FY18, but its shares have significantly derated. Portfolio company valuations were affected by the market decline in early 2018, and a change in accounting for carried interest provisions has had a smaller negative effect on FY18 performance. However, the majority of portfolio companies saw earnings expectations improve over the first nine months of FY18, and a brisk rate of new investment activity during the year is encouraging for DBAG’s medium-term prospects.