Topic: Yesterday, MLP released final Q2 results in line with the preliminary EBIT figure, giving further insights into its moving parts. In detail:
Q2 sales arrived as expected flat yoy at € 228m (eNuW: € 230m), as a mix of manifold revenue drivers: Wealth declined by 4% yoy to € 120m (eNuW: € 117m) due to lower interest income and the much lower performance fees. On an underlying level (sales ex performance fees), the Wealth competence field could actually grow sales by 3.5% yoy. Life & Health grew modestly by 1% yoy to € 66m (eNuW: € 69m) on the back of a strong health insurance business (+8% yoy). Moreover, P&C showed a strong growth of 9% yoy to € 37m (eNuW: € 35m).
As already announced per ad-hoc on 31st July, Q2 EBIT came in at € 4.9m with a 2.1% margin (-2.9 pp yoy) in a seasonally weak quarter. The main reason behind this development is a mix of many moving parts:
Lower interest rate environment: the recent ECB interest rate cuts led to a lower net interest income (NIC) of € 13.2m (Q2'24: € 14.2m), for which we assume an 85% incremental EBIT margin (i.e. a € -0.9m yoy EBIT effect).
Lower performance fees: Q2'24 had a positive € 5.4m performance fee contribution, whereas Q2'25 only had € 1.6m, due to volatile capital markets. Assuming a 65% incremental EBIT margin of performance fees, this should have led to a negative € 2.5m yoy EBIT effect.
Temporarily higher IT costs: in an anyhow seasonally weak quarter, the timing of temporarily higher IT costs (eNuW: € 1.5m) was unfavorable, further dragging EBIT.
Nevertheless, MLP confirmed its FY'25 EBIT guidance of € 100-110m. Although H2'25 now requires an EBIT of € 57-67m (vs. H2'24 of € 46m EBIT incl. a € 16m EBIT contribution from performance fees), in order to reach the guidance, management feels confident to achieve it. On the back of continuous momentum in health insurance, non-life insurance as well as RE brokerage (which comed with operating leverage and higher brokerage margins) and with some € 4m in H2 performance fees baked in, we expect H2 EBIT of € 59m, in line with the guidance. Admittedly, the target now seems at risk if the RE development segment Deutschland.Immobilien does not develop as planned in H2. However, Q3'24 saw a strong performance fee contribution from unobservable (and unpredictable) PE fund carries of € 17m. These might also be in the cards for Q3'25 (at a lower or maybe similar magnitude) and would thus support reaching the guidance, but that remains speculative for now.
All in all, the release should not have come as a surprise. Consequently, we regard the negative share price reaction yesterday as overdone and on the contrary recommend to BUY, as the shares remain attractively valued (only 6.6x FY'25e EBIT). As our estimates remain unchanged, we also maintain our PT of € 13.00, based on SOTP and FCFY'25e.
ISIN: DE0006569908
