Having reduced its FY'25 EBIT guidance last week, yesterday's Q3 figures show a healthy core business. In detail:
MLP reduced its FY'25e EBIT guidance last week to € 90-100m (before: € 100-110m) due to a mix of two main reasons:
(1) a low-double digit € m amount of performance fees was baked into the original guidance. In Q3, MLP recorded performance fees of only € 2.8m (vs. € 17m in Q3'24) and thus only € 4.8m per 9M (vs. € 26m in 9M'24). As we now expect € 6.5m in FY'25 performance fees (Q4: € 1.7m), the previously anticipated figure seems out of reach.
(2) the turn around in its real estate development segment Deutschland.Immobilien (DI) was initially expected to provide a € 12m incremental EBIT tailwind in FY'25e, but falls short of expectations. Although Q3 showed a slightly positive € 0.4m EBIT (9M: € -3m), the current development projects should not be sufficient to reach a positive EBIT for FY'25e, in our view. Therefore, we now estimate this segment to deliver € -11m in FY'25e EBIT (prev.: € 0m), which also includes an estimated goodwill impairment of € 6m.
RE development to be completely abandonded. Following several years of uncertainty and having experienced a slowdown in demand after the sharp increase in interest rates in 2022, MLP has decided to completely abandon any new RE development projects, where MLP carries the development risk. Only existing projects will be finished. This decision might imply an additional impairment of DI's remaining goodwill of up to € 11.7m in Q4'25e. On the positive side, MLP therefore substantially derisks its business and thus upgraded its FY'28e mid-term EBIT target range to € 140-155m (prev. € 140-150m).
Q3 shows healthy core business. Total sales arrived 2% lower at € 244m, however, underlying sales (excl. performance fees) grew by 3% yoy in Q3, showing the intact core business. More importantly, the Q3 EBIT of € 18.4m improved against a high comparable base (Q3'24: € 17.8m with a strong performance fee effect). In turn, this highlights a strong improvement in underlying profitability (EBIT ex performance fee effect), which has expanded by 146% yoy to € 16.5m with a 4pp yoy higher underlying EBIT margin. Specifically, the largest profitability driver was the banking business, showing a stellar 29% EBIT margin (+8.7pp yoy), but also supported by margin improvements at DOMCURA (+9.5pp yoy) and Financial Consulting (+2.9pp yoy).
In light of this, the magnitude of MLP's negative share price development following the guidance cut, seems unjustified in our view, especially in light of the solid underlying performance shown in Q3. MLP's core business remains well intact and the company's value should not be derived from RE development and performance fees, in our view. Therefore, the share price drop offers a buying opportunity, which is why we recommend to BUY with a slightly lower PT of € 12.50 (old: € 13.00), based on FCFY'26e.
ISIN: DE0006569908