CapMan - Gaining momentum

Additional earnings stability through increased fee income

CapMan is seeking to create a healthier earnings base, with the role of volatile carried interest decreasing and the more stable fee income increasing. CapMan is further seeking to expand its investor base, currently consisting mainly of local tier 1 investors. 2018 in our view was a year of clear signs of the business improving as intended, although profitability fell due to negative returns on the non-core market portfolio. Several important funds have been launched in the past few years along with the signing of new and additional mandates, for instance the additional EUR 320m BVK mandate, that will have a positive impact on growth and earnings in early 2019 and over time.

Dividends an important part of the investment case

CapMan has raised the absolute DPS now six years in a row and revised its dividend policy, targeting to annually increase DPS. We expect CapMan to distribute a dividend of EUR 0.13 per share in 2019E, corresponding to an estimated dividend yield of 7.7%.

BUY with a target price of EUR 1.80 (1.75)

Our sum-of-the-parts approach implies a fair value of EUR 1.75 per share. On earnings-based multiples, primarily P/E, valuation compared to the three by size comparable peers appears fair. The dividend yield on our estimates however shows a clear disparity, with CapMan’s dividend yield on our estimates approx. 20% above the peers. We retain our BUY-rating with an ex-div (post equity repayment of EUR 0.06) target price of EUR 1.80 (1.75).