FY'24 review: improved cost mix ahead of AuM scaling

Digital Wealth in full swing. Next to a strong increase in AuM (+27% yoy to € 0.7bn), sales in the segment expanded by a staggering 77% yoy to € 3.9m (+109% yoy in H2’24). This implies an average sales margin on AuMs of 0.65% in FY’24 (vs. 0.42% in FY’23), showing that the € 150m additional AuMs should have carried an incremental 1.14% sales margin. In our view, this bodes extremely well for FY’25e, where a substantial part of the group’s AuM growth should stem from the Digital Wealth segment (i.e., “Wertanlage” in cooperation with Union Investment). Furthermore, the additional sales carried a 70% incremental EBITDA margin (FY’24 segment EBITDA; € -1.7m vs. € -2.9m in FY’23) which also shows the strong earnings potential following sufficient scale.

Wealth Management paints a similar picture. Similar to Digital Wealth, Wealth Management expanded AuMs (+17% yoy) and sales (+16% yoy), which implies a sales margin of 0.53% (vs. 0.49% in FY’23). EBITDA improved as well (FY’24: € -0.3m, vs. € -1m in FY’23), also carrying a 70% incremental EBITDA margin thanks to an increasing fix cost coverage.

Improved cost mix. On group level, the above mentioned development showed an improving cost mix: Relative to sales, personnel expenses decreased by 1.6pp yoy to 64.2% of sales, but the larger margin driver were decreasing material expenses by 4.3pp yoy to 15% of sales due to third party services being internalized. Mind you, that the main cost reductions regarded fix costs, meaning that with increasing AuM and sales, profitability should expand disproportionately.

Positive FCF in H2’24. A key highlight was the better than expected FCF development, which came in even positive with € 1.7m in H2’24 (FY’24: € -5.5m), only partially thanks to a positive WC swing.

In sum, the share offers an attractive entry opportunity, as with the Union Investment cooperation in place, FY’25e is seen as the year of scaling AuMs, which should come in with strong incremental sales and EBITDA margins, but also positive cash generation which are all visible already. Therefore, we reiterate our BUY recommendation with an unchanged PT of € 7.40, based on DCF.