CapMan - Near-term softness persists
CapMan’s Q3 was below estimates mainly due to carry and FV changes. Potential appears to remain high but near-term market conditions remain uncertain.
Below expectations mainly through carry and FV changes
CapMan reported Q3 results somewhat below our expectations. Revenue amounted to EUR 13.7m (EUR 17.3m/17.3m Evli/Cons.) while operating profit amounted to EUR 4.8m (EUR 7.0m/7.2m Evli/cons.). The main difference to our estimates came from the Management Company business, with limited carried interest and management fees also on the softer side due to limited new fundraising. Fair value changes were further slightly below our expectations. Assets under management amounted to EUR 5.0bn, on par with previous year levels. CapMan updated it distribution policy, aiming to 70% of profits attributable to equity holders excl. FV change impact and may additionally pay out distributions accrued from investment operations. The BoD is expected to propose a DPS of EUR 8-12 cents to the 2024 AGM, a notable decrease from a DPS of EUR 17 cents in 2023.
Near-term still appears slow
Performance remains weakened by low carried interest and FV changes and signs of significant near-term improvement in that regard are limited. Our revised 2023e estimates for revenue and operating profit are EUR 61.2m (68.7m) and EUR 13.7m (22.5m) respectively, and our 2024 operating profit estimate is down by ~20%, anticipating a slower start to the year. Although not visible in the financial performance, near-term activity appears reasonably high through the fundraising pipeline and carry potential, with the Services business also continuing solid performance. We also interpret management comments as likely M&A activity in the near-term. The main uncertainties remain the timing uncertainty and investor demand.
BUY with a target price of EUR 2.4 (2.8)
With our lowered estimates and the reduced distribution outlook, we lower our TP to EUR 2.4 (2.8). CapMan is clearly gearing up for growth and the current valuation in our view does not reflect the earnings potential in coming years.
CapMan reported Q3 results somewhat below our expectations. Revenue amounted to EUR 13.7m (EUR 17.3m/17.3m Evli/Cons.) while operating profit amounted to EUR 4.8m (EUR 7.0m/7.2m Evli/cons.). The main difference to our estimates came from the Management Company business, with limited carried interest and management fees also on the softer side due to limited new fundraising. Fair value changes were further slightly below our expectations. Assets under management amounted to EUR 5.0bn, on par with previous year levels. CapMan updated it distribution policy, aiming to 70% of profits attributable to equity holders excl. FV change impact and may additionally pay out distributions accrued from investment operations. The BoD is expected to propose a DPS of EUR 8-12 cents to the 2024 AGM, a notable decrease from a DPS of EUR 17 cents in 2023.
Near-term still appears slow
Performance remains weakened by low carried interest and FV changes and signs of significant near-term improvement in that regard are limited. Our revised 2023e estimates for revenue and operating profit are EUR 61.2m (68.7m) and EUR 13.7m (22.5m) respectively, and our 2024 operating profit estimate is down by ~20%, anticipating a slower start to the year. Although not visible in the financial performance, near-term activity appears reasonably high through the fundraising pipeline and carry potential, with the Services business also continuing solid performance. We also interpret management comments as likely M&A activity in the near-term. The main uncertainties remain the timing uncertainty and investor demand.
BUY with a target price of EUR 2.4 (2.8)
With our lowered estimates and the reduced distribution outlook, we lower our TP to EUR 2.4 (2.8). CapMan is clearly gearing up for growth and the current valuation in our view does not reflect the earnings potential in coming years.