CapMan - Company update - Sights set on growth

Fair value change driven weaker Q4
CapMan’s Q4 results were below our expectations, with revenue of EUR 14.1m (Evli 15.9m) and EBIT of EUR -4.8m (Evli EUR 5.1m). In terms of EBIT, the Management company and Investment business were clearly below our expectations, with EBIT of EUR 0.5m and EUR -4.5m (Evli EUR 3.5m/1.8m). The difference to the former was largely due to adjustments affecting revenue of around EUR 1m along with reorganization expenses of around EUR 1.5m. The latter saw clearly negative fair value changes due to the development of external funds. The Services business as expected continued on a track of good revenue and profitability development. CapMan’s BoD proposed a distribution of EUR 0.1 per share (Evli EUR 0.09). 

Expectations for solid AUM growth in 2024
After the essentially flat AUM development in 2023, the current fundraising outlook for 2024 is a more welcome one. With new funds such as NRE IV (target EUR 750m) and Growth III (Evli est. >100m) and on-going fundraising in for instance Social Real Estate and Infra II, we expect double-digit gross AUM growth which along with Dasos, not yet in our estimates, could well push AUM to around EUR 6bn in 2024. Although shadowed by market uncertainty, we still expect profitability improvement across the board, mainly from investment returns and carried interest towards the latter half of the year, which were weak in 2023. We have, however, slightly dimmed expectations for the aforementioned due to the market conditions and our 2024 EBIT estimate is down to EUR 28.9m (EUR 37.3m).

BUY with a target price of EUR 2.2 (2.4)
On our lowered earnings estimates we lower our TP to EUR 2.2 (2.4). Valuation remains slightly higher on our 2024 estimates (P/E ~14x), but with the estimated earnings potential in coming years (2025e P/E ~9x) the case remains attractive.