CapMan - On track towards new profitability levels
Q2 operating profit beat driven by investment returns
CapMan reported better than expected Q2 results mainly due to higher than anticipated operating profit in the Investment business. Revenue was in line with expectations at EUR 11.9m (EUR 11.7m/11.8m Evli/Cons.), growing some 36% y/y. Growth in the Management company business and Services business (excl. Scala) was clearly in the double digits during the first half of the year. The operating profit amounted to EUR 11.3m, clearly beating expectations (EUR 9.4m/7.5m Evli/cons.). Compared with our expectations the clear positive was the Investment business operating profit (EUR 9.4m/5.9m Act./Evli). On the other hand personnel expenses increased clearly more than expected, and Management company business operating profit was lower than expected (EUR 2.4m/3.1m Act./Evli) despite higher revenue (EUR 9.9m/9.1m Act./Evli).
Operating profit pushing towards new levels
Q2 brought further good news in AUM growth, up 1.2bn y/y to EUR 4.3bn driven mainly by Real estate, supporting continued healthy revenue growth in coming years. We expect some EUR 45-50m in operating profit in the coming years, with Investment business returns expected to decline somewhat from the anticipated strong 2021 but operating profit increases in the other segments to largely make up for the expected decrease. We have made some smaller changes to our 2021 estimates to account for cost inflation and higher investment returns, expecting an operating profit of EUR 48.5m and a clear increase in EPS from the weak comparison period to EUR 0.24 (0.03).
BUY-rating with a target price of EUR 3.4 (3.1)
Valuation upside is supported by peer multiples and the dividend yield, with the solid financial performance and financial position potentially enabling faster dividend growth in coming years. We raise our target price to EUR 3.4 (3.1), BUY-rating intact.