ProCredit Holding - Looking oversold at FY21 P/BV of 0.3x

ProCredit Holding (PCB) has reported a strong set of FY21 results, with net income up 92.4% y-o-y to €79.6m and an ROE of 9.7%. However, this was overshadowed by Russia’s invasion of Ukraine, where PCB had 12.8% of its loan book at end-2021 and generated 27.2% of net profit before allocation of group functions in FY21. While the situation in Ukraine remains difficult to predict, we note that PCB’s loss is limited to the €129.9m equity and €48.8m other funding provided to the local bank by ProCredit Holding and ProCredit Germany (c 21% of PCB’s group equity) at end-2021. We temporarily refrain from issuing forecasts and a valuation for PCB, but believe that investors may have overreacted as it is now traded at only c 0.3x its group tangible book value at end-2021 of €14.2 per share.