Administer - Turnaround story starting to bear fruit

Specialist in personnel and financial management services

Administer Group is a multi-talent in payroll and financial management services, software solutions, consulting, personnel and international services. The company is the largest salary outsourcing partner in Finland and the leading expert in the fight against the grey economy. Administer serves more than 5,000 customers, from SMEs to large companies, as well as public sector actors. Administer Group is anchored by its four key brands: payroll management service company Silta Oy, accounting firm Administer, business service and employment expert Econia Oy and software company EmCe Solution Partner Oy. This diversified portfolio enables Administer Group to deliver comprehensive services across multiple domains.

Shifting strategic focus towards improving profitability

Following a turbulent start as a listed company after the IPO in December 2021, Administer has demonstrated improved profitability in the first two quarters of its 2024-2026 strategic period, driven by a cost savings program initiated in 2023. The company aims to reach EUR 100 million in revenue and an EBITDA-margin of 15% by the end of the strategic period. While the EBITDA-margin guidance of 6-9% (H1’24: 9.5%) for 2024 appears attainable, achieving the targeted 15% by 2026 poses a challenge. To further improve profitability, a shift towards higher-margin services or a substantially improved demand situation is in our view needed.

BUY with a target price of EUR 3.0

Excluding goodwill amortization, Administer is trading at a 2024E target EV/EBIT multiple of 10.5x and a P/E ratio of 11.4x, representing a discount compared to its peers. Our DCF valuation backs the undemanding valuation. The long-term potential is furthermore significant, should financial targets be achieved. We retain our TP at 3.0 and BUY-rating.