Taaleri - Opportunities but also concerns ahead

Market volatility impacted on segment results

Taaleri’s group income in H2/2018 amounted to EUR 37.3m (Evli 37.9m) and EBIT to EUR 11.5m (Evli EUR 10.7m). Wealth Management’s profitability declined to EUR 2.7m (H2/17: EUR 8.8m) mainly due to lower performance fees and investment income but lower costs mitigated part of the impact. Profitability in Financing also fell due to lower investment income while the insurance operations continued to report solid results. The group results were aided by the impact of the listing of Fellow Finance.

Fundraising for second SolarWind fund started

Taaleri has started fundraising for its second SolarWind fund, seeking to raise investment capital of EUR 300m. Taaleri will most likely seek to sell the Truscott-Gilliland wind project to the fund during 2019, which would significantly boost Energy’s profitability. New product launches are also to be expected in Wealth Managements PE funds and Financing. The market turbulence has increased concerns relating to the performance of Wealth Management and AUM development was somewhat dissatisfactory, partly due to the write down of the geothermal fund. We have revised our estimates and now expect group income and revenue of EUR 74.8m and 23.4m respectively. We have not yet included estimates for the likely sale of the Truscott-Gilliland wind project but include it through our SOTP.

BUY with a TP of EUR 8.5 (11.4)

On our estimates and revised valuation metrics, with the multiples for Wealth Management lowered due to the increased uncertainty, our SOTP-value is EUR 8.9 per share while peer EV/EBIT valuation suggests an implied price of EUR 8.0. We retain our BUY rating with a target price of EUR 8.5 (11.4).