Original-Research: Multitude SE (von NuWays AG): Buy

Classification of NuWays AG to Multitude SE

Company Name:	Multitude SE
ISIN:	MT0002810100
Reason for the research:	Update
Recommendation:	Buy
from:	14.10.2024
Target price:	EUR 12.00
Target price on sight of:	12 months
Last rating change:
Analyst:	Frederik Jarchow

Sensible strategic acquisition of stake in Lea Bank ASA

Topic: Multitude announced to have acquired a 9.9% stake in Lea Bank ASA with an option to acquire further 8.7%, once having received the approval from the regulatory authorities in Norway and Sweden. Here are our key takeaways:

• Complementary risk profile as good strategic fit. Lea Bank is active in the consumer lending space with a strong regional footprint across Nordic countries and Spain. As Lea Bank is offering prime loans to consumers, the risk profile is significantly lower compared to Multitude´s consumer lending segment “ferratum” and is hence diversifying the business. Thanks to a business model that is similar (consumer lending) but different (risk profiles), we see certain synergy potentials, especially in the field of (1) referrals/product cooperations, (2) joint development projects and (3) cross-selling. Still, for now the acquisition is only a financial investment that is not being consolidated.
• Attractive financial profile. With a loan book of c. € 587m (as of H1´24 mainly financed with customer deposits at moderate interest rates), Lea Bank should generate some € 48m in net interest income and € 55m in total income in FY24e (assuming similar sequential growth as in H1), while provision for loan losses should amount to only c. € 30m, due to the relatively low risk profile, with low default rates. The lean cost structure, should allow Lea Bank to achieve an EBT of € 7-8m that could result in a nice dividend. In light of the profitable, growing business model with a lower risk profile, the paid valuation of c. 13x PE´24e is appropriate in our view.

Apart from that, Multitude is seen to be fully on track to come close to its EBIT guidance of € 67.5m (vs eNuW: € 61.4m), thanks to moderate growth especially in the SME and Wholesale banking segment, further improved risk management visible in declining impairments and ongoing tight cost control resulting in stable OPEX.

As the stock still is undebatable cheap for a growing, highly profitable, resilient and dividend paying company, trading at only 4x PE´25, we reiterate BUY with an unchanged PT of € 12 PT, based on our residual income model. With that, Multitude remains one of our NuWays Alpha picks.

You can download the research here: http://www.more-ir.de/d/31041.pdf
For additional information visit our website: www.nuways-ag.com/research

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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