MLP raised its FY26 EBIT guidance to € 110-120m (old eCons: € 112m) from € 100-110m last Friday, increasing the mid-point by c. 10%. The revised range still leaves room for a beat (eNuW). We raise FY26e EBIT to € 123m (previously: € 116m), c. 7% above the revised mid-point. Beyond the current earnings momentum, Germany's pension reform opens a further growth opportunity from 2027.
Q3 performance fees make the guidance hike look conservative. Strong investment performance at FERI lifted performance-based compensation to c. € 21m in Q3, up from € 2.8m a year earlier. The quarterly total was almost twice the € 10.7m generated throughout FY25. Management's previous guidance assumed no further performance fees in H2. Assuming an incremental EBIT margin of c. 66% on performance fees (eNuW), Q3 fees alone imply an EBIT contribution of c. € 14m, exceeding the € 10m increase at the guidance mid-point. The revised guidance likely assumes no further performance fees in Q4. With the funds appearing close to their high-water marks, further gains could trigger additional fees before year-end, supporting upside potential.
Higher rates add earnings momentum into FY27. The ECB's September hike took the deposit rate to 2.5%, following June's increase to 2.25%. MLP holds c. € 3.2bn of interest-earning banking receivables, including € 918m of overnight Bundesbank deposits that immediately benefit from the higher rate. On unchanged volumes, each 0.25pp increase in the average yield across the entire book adds c. € 8m of annual gross interest income before slightly higher funding costs (eNuW).
Pension reform opens a new recurring revenue opportunity. From January 2027, the Altersvorsorgedepot will allow state-subsidised investment in funds and ETFs without a mandatory capital guarantee. In our view, voluntary transfers of existing Riester savings are the key earnings driver for MLP. We expect the new depot to generate recurring fees on accumulated assets, broadening MLP's revenue opportunity beyond Riester's contribution-linked remuneration. As these assets transfer into the new system, a preliminary estimate points to c. € 6-7m of incremental EBIT p.a. by 2028 (eNuW; net), supporting higher FY27-28 forecasts.
The advisory opportunity extends beyond retirement saving. Choosing a suitable product, deciding whether to transfer existing savings and determining an appropriate investment strategy should stimulate discussions with both existing and new clients. These conversations give MLP's advisers an opportunity to review clients' wider financial needs, supporting additional business in wealth management, insurance and financing, in our view.
Action: EPS estimates raised by c. 5% on average for FY26-28, reflecting higher performance fees and interest income, plus Germany's pension reform.
Detailed Q3 results on 12 November should provide further evidence on underlying growth and the interest result. Stronger near-term earnings and an additional pension growth opportunity support our BUY, new PT € 14 (old: € 12), based on a higher ROE in our Residual Income model.
ISIN: DE0006569908
