Taaleri - Initiate coverage with BUY

We initiate coverage of Taaleri with a BUY-rating and target price of EUR 11. We expect continued growth in continuing earnings while viewing stronger investment and performance based return potential in the mid- to long-term. Taaleri has seen considerable profitability improvements and we expect profitability to remain at good levels.

Growth in continuing earnings

We expect to see growth in continuing earnings in all three segments. In Wealth Management we expect growth to be supported by increasing AUM, driven by private equity funds, and in Financing from growth in the insurance portfolio. Growth in Energy is supported by the newly completed SolarWind fund. We expect continuing earnings to grow at a CAGR of some 13 % during 2017-2020E. We expect performance and investment returns to decline in 2018 following strong returns in 2017 and expect the returns to increase in the mid- to long-term. Our revenue estimate for 2018 is EUR 72.2m.

Expect continued good profitability

Taaleri’s profitability has seen improvements in recent years, with 2017 being an exceptionally strong year in terms of both revenue and profitability. We expect profitability to remain at good levels but to decline slightly in 2018 due to lower revenue. In 2019-2020 we expect profitability to pick up following higher revenue and cost discipline. We expect to see the largest profitability increases in Wealth Management and Energy, with Energy expected to be profitable from 2019 onwards.

BUY with a target price of EUR 11

We initiate coverage of Taaleri with a BUY-rating and target price of EUR 11, based on our SOTP and DCF valuation. On our estimates Taaleri trades at P/E of 17.9x and 12.3x for 2018E and 2019E respectively. On our estimates relative valuation is somewhat elevated on 2018 multiples following expected weaker earnings. On 2019E multiples valuation is in line. We expect stronger mid and long-term potential.

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