A leading Nordic private asset manager
CapMan showed good progress across the board in Q2. The Services business is showing signs of bringing the growth pace up a notch and the overall expectations remain favourable. We retain our BUY-rating and TP of EUR 3.4.
Q2 results slightly better than expected
CapMan reported slightly better than expected Q2 results. Turnover amounted to EUR 17.7m (EUR 16.5m/17.8m Evli/cons.) while operating profit amounted to EUR 14.1m (11.5m/11.9m Evli/cons.). The Management company business performance was in line with expectations (EBIT 6.1m/6.1m act./Evli), with 3.2m in carried interest (Evli EUR 3.0m) mainly from CapMan’s growth Equity fund. The Services business growth pace increased, and the business area exceeded our expectations on growth and profitability. The main deviations to our estimates came from fair value changes (EUR 9.8m/6.0m act./Evli) aided by the Picosun exit, CapMan’s largest exit measured by exit value. A one-off cost of EUR 1.4m due to the early vesting of CapMan’s 2020 performance share plan had a negative impact on costs.
Good overall expectations for H2/2022
Our 2022 estimates revisions roughly correspond to the deviation in our Q2 estimates and actual figures, now expecting an operating profit of EUR 65.1m (2021: 44.6m). The carry potential remains in place, noting however the uncertainty relating to timing and magnitude. On-going and completed deals post-Q2 provide additional support for continued solid investment returns. AUM growth is supported by the Infra II fund (recent first close) and the new Social Real Estate strategy fund (first close H2/22e) along with other on-going fund raisings and open-ended products. We expect the net AUM growth pace to slightly slow down following increased exits.
BUY-rating with a TP of EUR 3.4
Without larger changes to our estimates or views we retain our TP of EUR 3.4. Valuation remains favourable, with 2022e P/E at just below 10x. The high share of uncertain earnings from carry and investment returns remains a limiting factor for valuation upside, support is provided by growing dividend payments.
CapMan's net sales in Q2 amounted to EUR 17.7m, slightly above our estimates and in line with consensus (EUR 16.5m/17.8m Evli/cons.). EBIT amounted to EUR 14.1m, above our and consensus estimates (EUR 11.5m/11.9m Evli/cons.).
CapMan reported Q1 earnings clearly above our and consensus estimates. Despite current market uncertainty, we still see a good outlook for continued earnings growth. We retain our BUY-rating with a TP of EUR 3.4 (3.2).
Record-level earnings in Q1 driven by investment returns
CapMan reported record-level Q1 earnings aided by strong investment returns. Turnover amounted to EUR 14.2m (EUR 19.6m/17.2m Evli/cons.) and EBIT to EUR 18.9m (EUR 10.7m/4.1m Evli/cons.). Despite the market uncertainty FV changes were at EUR 14.7m (Evli EUR 4.0m). No notable weakness was seen in any of the operating segments. Capital under management grew well to EUR 4.75bn, up some 5.2% q/q and 22.1% y/y. CapMan reported carried interest from the NRE I -fund.
Expectations for 2022 remain good across the board
We have revised our estimates upwards based on the strong Q1 and better than expected outlook for investment returns. We now expect an operating profit of EUR 61.8m (51.6m) in 2022. Headwind from the on-going war in Russia does not appear to have materialized in any notable way for CapMan apart from the write-downs of the remaining fund holdings and receivables in Q1. In the short-term investment returns are still under some uncertainty, while a deterioration of investor sentiment could have a longer-term impact through current fundraising projects. With the catch-up in NRE I our carry expectations are more strongly set for H2, with the Growth Equity fund also approaching carry. Growth in capital under management is providing good support for the recurring fee-based revenues and we expect CapMan to reach a EUR 10m+ quarterly management fee level in 2022.
BUY with a target price of EUR 3.4 (3.2)
Although there clearly is some market uncertainty present, the expected impact currently does not appear too be considerable. With our raised estimates, in no way challenging earnings multiples, and healthy dividend yields, CapMan in our view remains an attractive investment case. We raise our TP to EUR 3.4 (3.2) and retain our BUY-rating.
CapMan's turnover in Q1 amounted to EUR 14.2m, below our estimates and below consensus (EUR 19.6m/17.2m Evli/cons.). EBIT amounted to EUR 18.9m, clearly above our estimates and consensus estimates (EUR 10.7m/4.1m Evli/cons.). Pre-Q1 concerns relating to investment returns were unwarranted, with stellar FV changes of EUR +14.7m
CapMan reports its Q1 results on April 28th. We expect rather good results but have lowered our profitability estimates due to some expected softness in investment returns and potential write-downs relating to Russia. We retain our BUY-rating with a target price of EUR 3.2 (3.4)
Market environment seen to impact Q1
CapMan will report Q1 earnings on April 28th. With the on-going Ukraine crisis and the impact on the market environment we expect some softness in the earnings. We anticipate seeing lower investment returns q/q given the weaker stock market development and resulting impact on valuation multiples. The direct impacts on investment objects however appear to be limited. As a reminder, CapMan has divested its market portfolio, which was a source of earnings weakness in the early stages of the pandemic. CapMan wrote-down the goodwill relating to its Russia business but still has some investments, commitments and receivables relating to the operations. We have pre-emptively assumed that some write-downs will be made. Our Q1 operating profit estimate is now EUR 10.7m (prev. EUR 16.7m).
Still set for clear earnings improvements y/y
Our 2022e estimates are down by 14% following the aforementioned adjustments and some further downward tweaks to our investment return estimates. Earnings are still set to improve considerably y/y, aided by carried interest, with the NRE I -fund expected to have entered carry during Q1. The uncertainty relating to the amount of carry is very high and the Q1 report should add needed visibility. We still see that CapMan is in a good position to achieve quarterly average earnings levels of EUR 10m+ in the near-term.
BUY with a target price of EUR 3.2 (3.4)
We have as mentioned made some adjustments to our estimates and accordingly finetune our target price to EUR 3.2 (prev. EUR 3.4). We retain our BUY-rating. Valuation based on multiples is still not challenging (2022e P/E <10x) and dividends continue to support the investment case.
CapMan’s Q4 profitability beat expectations to finish an overall solid year. Earnings are set to pick up further in 2022 driven by carried interest and our views on CapMan remain clearly positive.
2021 was a solid year overall
CapMan reported solid Q4 results, rounding of a year of clear earnings improvement. The operating profit amounted to EUR 12.2m, beating both our and consensus estimates (EUR 10.7m/9.4m Evli/cons.). Y/y the operating profit improved by 262%. The Management Company business saw good continued growth, aided by a ~EUR 700m net increase in AUM during 2021, with management fees surpassing EUR 10m during the last quarter. The Services business also continued good growth, with CaPS showing profitable growth and JAY Solutions profitability seen to start to pick up. The Investment business returns were strong also in the final quarter and the main driver behind CapMan’s 2021 earnings. CapMan as expected proposes a dividend of EUR 0.15 per share (0.15 Evli/cons.).
Carried interest expected to boost earnings further
We have not made any substantial revisions to our estimates post-Q4. We expect continued growth in the Management Company and Service businesses, with the former expected to pick up clearly in earnings due to carried interest as the NRE-I fund is set to enter carry and the outlook for further funds entering carry also appearing to be quite favourable. We are still somewhat cautious to investment returns compared with the strong 2021 figures but still expect to see a good level. Should the pace continue CapMan would be well set to continue on an over EUR 40m annual operating profit track excluding carry. In 2022 we expect a y/y increase in operating profit of some 30% driven largely by the expected carried interest.
BUY with a target price of EUR 3.4
Absolute valuation on our estimates is very affordable and even excl. the highly unpredictable carried interest is not too challenging. Dividend yields also continue to support the investment case. We retain our BUY-rating and TP of EUR 3.4.
CapMan's net sales in Q4 amounted to EUR 14.7m (EUR 14.5m/15.0m Evli/cons.) and EBIT to EUR 12.2m (EUR 10.7m/9.4m Evli/cons.). CapMan proposes a dividend of EUR 0.15 per share (EUR 0.15/0.15 Evli/Cons.).
CapMan is set to finish a year of solid performance. With the news on CapMan’s NRE fund we have shifted our end of the year carry expectations to 2022 but our views on CapMan remain unchanged.
CapMan’s NRE fund set to enter carry early 2022
CapMan will report its Q4 results on February 3rd. We expect to see a steady q/q earnings trend and overall good finish to a year of solid performance. CapMan announced in early January that the CapMan Nordic Real Estate fund had made exits in several properties, with the fund set to start distributing carry after the completion of those transactions. After the transactions the fund will have four assets remaining in Denmark and Sweden. As such, we have shifted most of the carry we had estimated in Q4/21 to Q1/22. Apart from that, our estimates remain essentially intact. We expect an operating profit of EUR 10.7m. During 2021 CapMan has seen y/y comparable earnings improvement across the board, most notably within Investment services due to the weak comparison year. We expect a dividend proposal or EUR 0.15 per share (2020: EUR 0.14), for an implied dividend yield of 5.1%..
Room for further earnings improvement in 2022
CapMan does not give a numeric guidance and we do not expect one to be given for 2022. We expect carried interest to be a key driver in further earnings improvement, with the NRE fund moving into carry. Growth in AUM is expected to contribute to continued growth in fee-based earnings, with several on-going and planned fundraising projects. Investment returns have been strong during 2021, and we remain more modest in our expectations for 2022.
BUY with a target price of EUR 3.4
Apart from the shift in carried interest we have made no notable changes to our estimates ahead of the Q4 results. The recent market uncertainty potentially presents some headwind but at the same time the news on carried interest provides an additional confidence factor. We retain our BUY-rating and target price of EUR 3.4.
CapMan reported solid quarterly figures once again. Our estimates remain largely intact, with expected near-term carry set to boost profit levels further.
A strong quarter
CapMan reported its Q3 results, which on group level were slightly better than expected. Revenue grew 67% to EUR 14.9m (EUR 12.2m/12.6m Evli/cons.). Operating profit amounted to EUR 10.9m (EUR 10.7m/8.9m Evli/cons.). Business area figures corresponded rather well with our estimates, the largest differences deriving from the EUR 2.2m carried interest from CapMan’s Mezzanine V fund and the Investment business operating profit coming in below our estimates (EUR 5.9m/7.9m act./Evli). Capital under management remained on par with previous quarter levels at EUR 4.3bn, but with EUR 250m raised in October and on-going fundraising growth is well set to pick up. In terms of new products CapMan launched the CWS Investment Partners investment programme in co-operation with AlpInvest, with some USD 90m committed to the first programme and more scheduled for 2022.
Small estimate tweaks
Our estimates have seen only small tweaks post-Q3, for FY 21 a slight increase in management fees in light of the good fundraising progress, seeing >EUR 10m quarterly levels within grasp. Based on management comments we remain fairly confident in a clear increase in carry during the coming quarters, as multiple funds are expected to enter carry in the next six months. For 2022 we expect to see continued growth in management fees and Management company operating profit through carry and >10% growth in the Services business. The fair value changes of own funds (1-9/2021: 26%) has been exceptionally good, and as such we expect a smaller profit contribution in 2022.
BUY-rating with a target price of EUR 3.4
With only smaller estimates revision we retain our target price of EUR 3.4, BUY-rating intact. Q3 in our view continued to prove CapMan’s potential and the outlook remains very promising.
CapMan's net sales in Q3 amounted to EUR 14.9m, above our estimates and above consensus estimates (EUR 12.2m/12.6m Evli/cons.). EBIT amounted to EUR 10.9m, in line with our estimates and above consensus estimates (EUR 10.7m/8.9m Evli/cons.).
CapMan reported higher than expected profitability figures due to solid investment returns. Operating profit remains well on track towards a whole new level. We raise our TP to EUR 3.4 (3.1) with our BUY-rating intact.
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.
CapMan's net sales in Q2 amounted to EUR 11.9m, in line with our estimates and consensus (EUR 11.7m/11.8m Evli/cons.). EBIT amounted to EUR 11.4m, above our estimates and above consensus estimates (EUR 9.4m/7.5m Evli/cons.). Capital under management grew strongly to EUR 4.3bn, up 1.2bn y/y.
CapMan reported better than expected Q1 results. Q1 EBIT was clearly above our estimates driven by investment returns. We have raised our 2021 EBIT estimate to EUR 46.8m (prev. 38.2m). Improvement is being seen across the board but 2021 earnings look to be driven less by recurring profits and more by investment returns and carry. We raise our TP to EUR 3.1 (2.7) and upgrade to BUY (HOLD).
Estimates beat on profitability figures
CapMan posted better than expected Q1 results. Revenue was slightly below expectations at EUR 11.3m (EUR 12.5m/11.9m Evli/cons.) but the EBIT of EUR 10.1m clearly beat expectations (EUR 7.8m/7.6m Evli/cons.). The EBIT beat was driven by higher that expected fair value changes (EUR 8.2m/3.5m Act./Evli) while the Management Company business EBIT was lower than expected (EUR2.5m/3.9m Act./Evli). Capital under management stood at EUR 3.9bn, up 20% y/y. The Buyout XI fund held a final close at EUR 190m, with a new Real Estate product of for CapMan significant size in the pipeline.
Expect clear earnings improvement in 2021
CapMan’s development continues to look bright after the challenges faced in the previous year. In terms of absolute profits, the Investment business has in the near past been the clear driver, but good progress can be seen more or less across the board. The performance of the own funds has during the start of the year surpassed the collective return target. We have raised our 2021 operating profit estimate to EUR 46.8m (prev. 38.2m), noting that some two-thirds consists of the more unpredictable investment returns and carried interest.
BUY (HOLD) with a target price of EUR 3.1 (2.7)
Following adjustments to our estimates we raise our target price to EUR 3.1. Compared with the Finnish peers the 2021e P/E is certainly not challenging, but on our estimates a high share of the profit is from more uncertain sources and thus remain somewhat on the cautious side.
CapMan's net sales in Q1 amounted to EUR 11.3m, below our and consensus estimates (EUR 12.5m/11.9m Evli/cons.). EBIT amounted to EUR 10.1m, clearly above our estimates and above consensus estimates (EUR 7.8m/7.6m Evli/cons.).
CapMan posted strong and clearly better than expected Q4 results, ending the slightly challenging year on a clear positive note. In our view most importantly management fees increased clearly, providing good support for fee-based profitability in 2021. We have raised our 2021-2022E EBIT estimates by some 20%.
Strong fourth quarter beating our expectations
CapMan’s Q4 results were strong and clearly better than expected. Revenue amounted to EUR 13.4m (Evli/cons. EUR 10.6m/10.7m) and the operating profit to EUR 9.7m (Evli/cons. 4.4m/5.1m). The earnings beat was mainly attributable to higher than expected fair value changes (act./Evli EUR 7.0m/3.4m). More importantly and frankly also quite surprisingly management fees also grew clearly from previous quarters. Management fees grew to EUR 9.7m (Evli EUR 7.5m) and the Management Company business EBIT as such beat our expectations (act./Evli EUR 3.6m/2.0m). CapMan expectedly proposed a dividend distribution of EUR 0.14 per share, to be paid in two instalments.
2021-2022E EBIT estimates raised by some 20%
We have made larger revisions to our estimates and raised our 2021-2022E EBIT estimates by some 20%. We have clearly raised our estimates for management fees, with clear momentum being gained, and as such also fee-based profitability. Our investment business return estimates remain somewhat conservative given the solid Q4 returns (without larger exits), as we are not yet convinced of a clear level shift. We still assume that carried interest will be earned during 2021E, although COVID-19 has had a dent on the progress and timing is still highly uncertain. On Group level in 2021 we expect CapMan to post much stronger results than in 2020 with across the board improvements. Our 2021 EBIT estimate is at EUR 38.2m (2019: EUR 12.3m).
HOLD with a target price of EUR 2.70 (2.40)
Based on our estimates revisions we adjust our target price to EUR 2.70 (2.40). Current valuation still leaves some upside potential, but we still see some need for more evidence on higher earnings levels. We retain our HOLD-rating.
CapMan's net sales in Q4 amounted to EUR 13.4m, above our consensus estimates (EUR 10.6m/10.7m Evli/cons.). EBIT amounted to EUR 9.7m, above our and consensus estimates (EUR 4.4m/5.1m Evli/cons.). Dividend proposal: CapMan proposes a dividend of EUR 0.14 per share (EUR 0.14/0.14 Evli/Cons.).
We expect CapMan to report rather good Q4 results, with our previous slight concerns of investment returns having been alleviated since Q3. We expect CapMan to propose a dividend distribution of EUR 0.14 per share, implying a dividend yield of 5.6% (1.2.2021 closing price).
Expecting a rather good last quarter
CapMan will report Q4 results on February 4th. Post-Q3 we saw slight concerns in fair value changes of investments mainly in real estate due to the revaluation time frames. These concerns now do not appear to be substantial and we have as such raised our Q4/2020 estimates for the Investment Business. The lack of significant success fees and carried interest will limit the earnings but with a lower share of bonuses in personnel expenses (vs. Q4/2019) CapMan should still post rather good earnings figures. We have adjusted our EBIT estimate to EUR 4.4m (prev. 2.9m) mainly due to the raised fair value change estimate.
Continued DPS growth expected
We expect CapMan to propose a dividend of EUR 0.14 per share, in line with the target of paying an annually increasing dividend (2019: EUR 0.13 per share). With the financing decisions made during Q4 the liquidity situation will remain healthy despite the weaker earnings this year. We expect earnings figures to improve clearly in 2021 driven by higher fee-based profitability from the growth in AUM, higher investment returns after the weak 2020 and growth in the services business. We expect 2021E EBIT of EUR 32.0m compared with EUR 7.0m 2020E.
HOLD (BUY) with a target price of EUR 2.40 (2.20)
Current valuation is after the share price increase since on our previous update (+~28%) on our estimates somewhat higher than that implied by our SOTP-model and peer multiples, but the anticipated dividend yield is still clearly supportive. Following our estimates and multiples adjustments we raise our target price to EUR 2.40 (EUR 2.20) but downgrade our rating to HOLD (BUY).
CapMan’s Q3 was slightly below expectations but still overall neutral. Newly raised capital pushed AUM to ATH levels and the outlook for fee-based growth is favourable. Although market uncertainty is on the rise, with the dividend story intact we retain our BUY-rating and TP of EUR 2.2.
Slightly below expectations, AUM at all-time high
CapMan’s Q3 results came in slightly below expectations, with turnover of EUR 8.9m (EUR 9.6m/9.9m Evli/cons.) and EBIT of EUR 4.5m (EUR 5.0m Evli/cons.). The report in our view was all in all rather neutral. Low transaction-based fee volumes still caused weakness in the Services business while the Management Company business saw a boost from recent fundraising projects, albeit not quite as much as we had anticipated. AUM grew to an all-time high mainly through the first closing of the NRE III fund, having raised EUR 313m, with the target of EUR 500m still seen to be reached in the not too distant future. No major carried interest was received, and fair value changes were as expected.
Outlook for fee-based growth still favourable
CapMan’s recurring turnover continued to grow but at a slower pace. With the newly raised funds and on-going fundraising as well as the overall relatively new AUM the outlook for accelerating growth again is promising. The new CapMan Wealth Services model was also launched recently, aiming to further boost fee-based growth. The clear weakness currently continues to be the transaction-based fees, where volumes have declined due to the pandemic and with the recent increased uncertainty the near-term continues to look challenging. Realization of carried interest is still looking more distant and we no longer expect significant carry in 2020.
BUY with a target price of EUR 2.2
The market uncertainty is causing some stir to the near-term development and justifying upside potential in relation to current valuation seems more challenging, but the dividend yield and healthy financial position continue to speak for CapMan. We retain our BUY-rating and target price of EUR 2.2.
CapMan's turnover in Q3 amounted to EUR 8.9m, below our and consensus estimates (EUR 9.6m/9.9m Evli/cons.). Profitability was slightly below expectations and EBIT amounted to EUR 4.5m, (EUR 5.0m Evli/cons.).
CapMan’s Q2 results were better than expected on bottom-line figures. AUM growth is seen to pick up with the establishment of the NRE III (target EUR 500m) and Growth II funds (target EUR 85m). We have revised our 2020 EBIT estimate to EUR 9.4m (prev. 1.2m), with the solid 2021 earnings prospects intact.
EBIT beat from higher investment returns
CapMan’s delivered an upbeat Q2 earnings report. Q2 EBIT of EUR 4.1m beat our expectations (Evli EUR 2.6m) following a clear recovery in investment returns. Revenue amounted to EUR 8.7m, short of our expectations (Evli EUR 10.4m) due to continued weaker Services business sales and somewhat soft management fees given no new fund closings. AUM (EUR 3.2bn) continued to stall at near previous quarter levels. AUM is seen to grow during H2 following the establishment of the NRE III and Growth II funds, which combined could bring in near EUR 600m in equity commitments. Investor demand for the new funds has according to CapMan been strong.
Solid 2021 earnings prospects despite weak 2020
We continue to expect 2020 to be somewhat of a gap-year due to the weak start but have raised our EBIT estimate to EUR 9.4m (prev. EUR 1.2m) mainly due to higher expectations for investment returns. We expect a clear increase in fee-based profitability in 2021 due to an increase in management fees from fundraising during H2/20. Investment returns are also set to pick up clearly after the challenging 2020. CapMan will re-organize its Service business (no changes to CaPS) and Scala’s private placement business will be discontinued, but the earnings impact is not seen to be notable. All in all, we see a clear improvement in 2021 and expect an EBIT of EUR 33.7m.
BUY with a target price of EUR 2.20 (1.95)
The Q2 report in our view served to prove that CapMan remains on a healthy track despite the elevated uncertainty of Q1 and with the solid earnings outlook 2021E P/E of ~11x is not particularly challenging. We retain our BUY-rating with a TP of EUR 2.20 (1.95).
CapMan's net sales in Q2 amounted to EUR 8.7m, below our and consensus estimates (EUR 10.4m/10.6m Evli/cons.). Profitability was better than expected due to larger fair value changes and EBIT amounted to EUR 4.1m, above our estimates and above consensus estimates (EUR 2.6m/2.5m Evli/cons.).
CapMan’s Q1 results were slightly better than expected and underlying performance remained good, although EBIT as a result of negative fair value changes as expected fell clearly, to EUR -6.0m (Evli/cons. -7.5m/-3.9m). Fundraising projects continue but delays of 0-6 months are seen. Cost savings of up 10% of the cost base are sought without affecting growth ambitions. We retain our BUY-rating and TP of EUR 1.95.
Negative FV changes spoiled otherwise good profitability
CapMan’s Q1 results came in slightly better than we had expected, with revenue of EUR 11.9m (Evli/cons. 10.7m) and EBIT of EUR -6.0m (Evli/cons -7.5m/-3.9m). Termination of the 2018 share plan caused a one-off cost of approx. EUR 1.4m. Unrealized FV changes amounted to EUR -10.5m. Profitability of the Management company and Service businesses improved clearly y/y, the latter aided by success fees from Scala but also seeing good development overall.
2020 an unfortunate dent to solid progress
With the significant negative FV changes in Q1 and assuming a cautionary view on carry and success fees in the current market environment we expect adj. EBIT to decline in 2020 to EUR 1.2m (25.0m). We expect the fee-based profitability to continue to improve through growth in AUM. Fundraising projects are seen to be delayed by 0-6 months but are continuing nonetheless, and CapMan also flashed a second Growth fund. CapMan is seeking to achieve cost savings of up to 10% of its cost base, which are sought to be achieved without affecting growth ambitions.
BUY with a target price of EUR 1.95
The expected weak earnings in 2020, mainly due to the negative unrealized FV changes, makes valuation on near-term figures more challenging. Upside potential can be seen on 2021E peer multiples and dividend yields but with the weakened visibility due to the Coronavirus we assume a near-term uncertainty discount and retain our target price of EUR 1.95 and BUY-rating.
CapMan's net sales in Q1 amounted to EUR 11.9m, above our and consensus estimates (EUR 10.7m/10.7m Evli/cons.). EBIT amounted to EUR -6.0m, above our estimates and below consensus (EUR -7.5m/-3.9m Evli/cons.). Profitability burdened by fair value changes amounting to EUR -8.4m (Evli -9.7m).
CapMan will report Q1 results on April 23rd. We expect weak earnings on paper due to negative fair value changes (non-cash) as a result of implications of the Coronavirus pandemic. CapMan was heading into a year of major AUM growth potential, which is now put at some risk due to plausible fundraising challenges. We adjust our target price to EUR 1.95 (2.50) following revised estimates and upgrade to BUY (HOLD).
Negative fair value changes to burden Q1 results
We expect CapMan to report weak Q1 results due to negative fair value changes, although these are non-cash items. The largest relative hit will come from portfolio companies due to peer valuation declines. We currently estimate fair value changes of EUR -14.2m in 2020. We estimate a Q1 adj. EBIT of EUR -7.5m. Apart from the fair value changes, the Coronavirus pandemic will not yet have had a significant impact on other business areas and we expect decent results from the Management Company and Service businesses, not expecting significant carry or success fees in the quarter.
2020 growth outlook more challenging
CapMan was heading into a year of major AUM growth potential with on-going projects as well as significant new fundraising projects announced in late 2019. COVID-19 will in our view have a detrimental effect on fundraising and we will be looking for any comments implying the magnitude of the impact from the Q1 results. Although growth expectations are pointing downwards, the Management Company business enjoys a healthy base of recurring fees that for now remain unaffected. We expect the Services business revenue and profits to decline in 2020, as Scala in particular would be affected by any possible dry-up of new fundraising projects.
(BUY) HOLD with a target price of EUR 1.95 (2.50)
Following estimates revisions and the increased uncertainty we adjust our TP to EUR 1.95 (2.50) based on our SOTP and peer multiples and upgrade to BUY (HOLD) due to share price declines.
CapMan posted strong Q4 results and the operating profit adjusted for the EUR 4.2m goodwill amortization related to CapMan’s operations in Russia improved clearly to EUR 7.7m, aided by significant carried interest. On-going fundraising projects, with the NRE III and NC III funds as new projects, provide major AUM growth potential. The Q4 report overall provided clear support for continued solid earnings growth in coming years. We raise our target price to EUR 2.5 (2.1) ex-div and retain our HOLD-rating.
Carried interest boosted Q4 profitability
CapMan’s Q4 results beat expectations. Revenue grew to EUR 16.6m, aided by EUR 5.4m carried interest mainly from the Hotels fund. The operating profit amounted to EUR 3.4m but was affected by a non-cash amortization of goodwill relating to CapMan’s business in Russia and the adj. operating profit was at EUR 7.7m. A clear positive sign was the growth in management fees during Q4, up to EUR 7.3m. CapMan proposed a dividend of EUR 0.13 per share.
Major AUM growth potential in coming years
CapMan has begun the fundraising for the NRE III and NC III funds, which should add new AUM north of EUR 500m upon close. Together with other on-going fundraising projects we see major AUM growth potential in the coming years. We have post Q4 raised our estimates, with our 2020-2021E adj. operating profit estimates up some 20%. We expect a 140% increase in the Management Company business adj. operating profit (excl. carry) in 2020 driven by fee growth and limited cost increases.
HOLD with an ex-div TP of EUR 2.5 (2.1)
CapMan’s share price has seen larger increases and on peer multiples the expected major profitability improvement in 2020 appears to have been largely accounted for. On our revised estimates we raise our target price to EUR 2.5 (2.1) ex-div and retain our HOLD-rating.
CapMan's net sales in Q4 amounted to EUR 16.6m, above our estimates and above consensus estimates (EUR 12.5m/11.4m Evli/cons.) following clearly higher carried interest. EBIT amounted to EUR 3.4m, below our and consensus estimates (EUR 4.7m/5.0m Evli/cons.). Adj. EBIT was EUR 7.7m. CapMan proposes a dividend of EUR 0.13 per share (EUR 0.13/0.13 Evli/Cons.).
CapMan will report Q4 results on January 30th. We expect the operating profit to remain on par with the quarterly average earnings during 2019 and expect and operating profit of EUR 4.7m. CapMan should record higher carried interest (Evli est. EUR 2.0m) in Q4, aided by the Hotels I fund, while we expect higher personnel costs and lower investment returns to offset the positive impact. Our DPS estimate is at EUR 0.13 (2018: EUR 0.12). We retain our HOLD-rating and TP of EUR 2.1 intact ahead of the results.
Q4 operating profit estimate at EUR 4.7m
We expect Q4 revenue of EUR 12.5m (Q4/18: 8.9m) and an operating profit of EUR 4.7m (Q4/18: -2.9m). Pre-Q4 we have made downward adjustments to our estimates mainly due to increases in personnel expenses relating to expected bonuses and minor downward adjustments to revenue estimates. We have also lowered our investment return estimates based on the news flow on exits during Q4. We expect carried interest to increase clearly q/q (Evli est. EUR 2.0m) due to continuation of the Hotels fund and thereto related realization of carried interest.
Expect continued solid earnings growth in 2020
Our estimates imply a y/y improvement of 73% in operating profit during 2019. CapMan has not given any guidance for 2020 but expects significant growth in capital under management and we expect continued solid growth in operating profit of around 40% in 2020 driven by earnings growth across the board. The continuation of the Hotels I fund during Q4 will have a clear positive impact on both management fees and operating profit following an expected limited impact on costs.
HOLD with a target price of EUR 2.1
We expect CapMan to propose a dividend of EUR 0.13 per share, translating into a dividend yield of 5.6% on previous closing price. We keep our HOLD-rating and target price of EUR 2.1 intact ahead of the Q4 results.
CapMan posted solid Q3 results, largely in line with our estimates, with Q3 revenue amounting to EUR 9.7m (Evli 9.9m) and EBIT of EUR 5.5m (Evli 5.3m). CapMan is showing good development across all business segments and in the light of a good fundraising outlook we have slightly raised our AUM estimates and for 2020-2021 and made corresponding changes to the Management company business EBIT. Following adjustments to expenses of Other operations our Group estimates are largely intact. We retain our HOLD-rating with a TP of EUR 2.1 (1.95)
Solid results, carry contribution minor
CapMan continued to post solid results, on Group level largely in line with our estimates. Q3 revenue amounted to EUR 9.7m (Evli 9.9m) and EBIT of EUR 5.5m (Evli 5.3m). AUM development compared to Q2 was flattish given no new fund closings but up 21% y/y. The Mezzanine V -fund entered carry but with a limited impact and total carry was at Q2 levels of EUR 0.7m. The Investment business contributed to a larger part of EBIT, aided by Buyouts exit from Kämp Collection Hotels. Q3 in general in our view showed little signs of weakness.
Positive fundraising outlook
CapMan is currently raising capital more or less across the board and management sees significant growth in AUM during 2020. Investment returns so far during 2019 surpassed the lower end of the 10-15% target return and all three service businesses are reportedly performing well, with 1-9/2019 Services business growth of over 90%. We have slightly increased our views on 2020-2021 AUM development and as a result raised our Management company EBIT estimates by some 12%. Following an offsetting impact of revised Other operations expense estimates our Group estimates remain largely unchanged.
HOLD with a target price of EUR 2.1 (1.95)
On Group level our coming year estimates remain largely unchanged. With the outlook for the core business looking yet more favourable we adjust our target price to EUR 2.1 (1.95) and retain our hold rating.
CapMan's net sales in Q3 amounted to EUR 9.7m, in line with our estimates and slightly below consensus (EUR 9.9m/10.1m Evli/cons.). EBIT amounted to EUR 5.5m, slightly above our estimates and in line with consensus (EUR 5.3m/5.6m Evli/cons.).
CapMan will report Q3 results on October 31st. With our expectation of only a limited impact of carried interest and success fees on the quarter, for group results remaining on par with H1/19 levels investment returns will need to be at a good level. In general, the news flow during Q3 implies little out of the ordinary and as such our interest will mainly be on the development of recently launched products and fundraising projects. We retain our target price of EUR 1.95 but downgrade to HOLD (BUY) following a share price increase since our previous update.
Estimates revisions ahead of Q3
We expect a Q3 revenue of 9.9m (prev. 11.5m) and operating profit of EUR 5.3m (prev. EUR 7.2m). We have lowered our estimates mainly to reflect lower expectations for carried interest from newer funds, now mainly from Access Capital funds, and lower our management fee estimates given no new fund closings. The first closing of the Buyout XI-fund in 6/2019 will however support management fees and we expect to see continued growth. Investment returns pose the biggest uncertainty risk to our estimates and would need to be at a good level for group results remaining on par with H1/19 levels.
Development of newer products of interest
The news flow during Q3 in our view in general does not imply anything out of the ordinary during the quarter. We will be looking for more information regarding on-going fundraising projects and newly launched products as well as any potential remarks on near-term carried interest outlook from the interim report.
HOLD (BUY) with a target price of EUR 1.95
We have made minor downward revisions to our estimates ahead of Q3 and retain our target price of EUR 1.95. With the share price having enjoyed clear increases since our previous update we downgrade to HOLD (BUY).
CapMan’s Q2 results were above estimates, largely due to Scala’s success fees. The Buyout XI fund held a first closing at EUR 160m, to aid management fees during H2/19 and onwards. The Q2 report gave little reason to change our views on CapMan’s development; on the contrary, we have made upward revisions to our estimates. We retain our BUY-rating with a target price of EUR 1.95 (1.85).
Earnings boosted by significant Scala success fees
CapMan’s Q2 results beat both our and consensus expectations, with revenue at EUR 13.4m (Evli/cons. 10.8m/11.0m) and EBIT at EUR 5.8m (Evli/cons. 4.5m/4.2m). The stronger earnings were in our view largely due to stronger than expected Scala success fees. The solid Services business operating profit (Act./Evli 4.9m/2.1m) was slightly offset by weaker investment returns, due to weaker performance of certain portfolio companies, according to management of a more temporary nature. The Buyout XI fund held a first closing at EUR 160m, with management fees expected to kick in during Q3.
Solid Services business development
We have revised our 2019 estimates slightly upwards, mainly due to the strong Q2 earnings. We have further raised our estimates for the coming years, with our 2020 operating profit estimate up 10%, reflected mainly through the Services business. Our estimates continue to rely on more rapid accumulation of carried interest starting from H2/19, the timing and materialization of which remains the biggest near-term uncertainty. For 2019 we expect an operating profit of EUR 24.7m, with a diversified contribution split from all business areas.
BUY with a target price of EUR 1.95 (1.85)
Our SOTP implies a fair value of EUR 1.82 per share, which together with peer multiple valuation implies a limited valuation upside. However, when considering the top-class dividend yield and expected ~35% improvement in operating profit in 2020, CapMan in our view remains an attractive case. Following our estimates revisions, we lift our target price to EUR 1.95 (1.85) and retain our BUY-rating.
CapMan's net sales in Q2 amounted to EUR 13.4m, above our estimates (Evli EUR 10.8m), with EBIT also above our estimates (Evli EUR 4.5m), at EUR 5.8m. Scala recorded significant success fees in the quarter, larger than we had anticipated, contributing strongly to the earnings beat.
CapMan posted solid Q1 results, although slightly below our estimates. Of particular interest were comments relating to carried interest, with potential materialization from H2/19 onwards. The fundraising of the newest Buyout fund is progressing well, while Infra has also seen positive development, with AUM now at EUR 270m. We retain our BUY-rating with a target price of EUR 1.85 (1.80)
Comparable operating profit at a solid EUR 5.6m
CapMan’s Q1 results fell slightly below our estimates, with group turnover at EUR 9.3m (Evli 10.7m) and operating profit of EUR 4.7m (Evli 5.5m). The comparable operating profit, excluding one-off costs relating mainly to the acquisition of JAM Advisors, amounted to EUR 5.6m. The combined revenue of the Management Company business and Services business grew 27% y/y. No significant carried interest was booked during the quarter, but Scala success fees aided the Services business turnover. The operating profit was aided by a EUR 1.5m fair value change of the company’s market portfolio, with EUR 20m of the portfolio remaining at the end of the quarter.
Positive comments on carried interest outlook
Management comments regarding the carried interest outlook were positive. Carried interest materialization already during H2/19 appears plausible and potential in the coming years remains solid in both private equity funds and real estate. Near-term interest also remains on the progress of fundraising of the new Buyout fund and development of the first Infra fund, with total AUM in Infra already at EUR 270m, while management also hinted on new projects in the pipeline.
BUY with a TP of EUR 1.85 (1.80)
We have made no major revisions to our estimates post-Q1. We expect an operating profit of EUR 23.4m, supported by carried interest during the latter half of the year. Although uncertainties with carried interest are always present, the encouraging management comments alleviate some uncertainty concerns. We retain our BUY-rating with a target price of EUR 1.85 (1.80).
CapMan’s Q1 results were slightly below our estimates. Group turnover amounted to EUR 9.3m (Evli EUR 10.7m) and the operating profit amounted to EUR 4.7m (Evli 5.5m), while the comparable operating profit was at EUR 5.6m. CapMan continued reallocation of its market portfolio capital, with EUR 20.0m remaining. Capital under management rose to EUR 3.2bn.
CapMan has been continuing to show signs of its business moving in the right direction, having successfully launched several important funds and signed new and additional mandates and recently seen AUM again passing the EUR 3bn mark. 2018 saw earnings fall due to negative returns on the non-core market portfolio but the earnings outlook for 2019 onwards remains attractive with core business area earnings picking up pace. We retain our BUY rating with an ex-div target price of EUR 1.80 (1.75).
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).
CapMan’s Q4 results were as expected weaker and in line with our expectations, despite our underestimation of the negative impact on the market portfolio. The acquisition of JAM Advisors (60%) is seen by CapMan as a means to expanding its customer base but we expect CapMan to also seek to rapidly grow the business. We retain our BUY rating with an ex-div TP of EUR 1.75 (1.80).
Weaker results, raises dividend
CapMan’s Q4 results were quite in line with our expectations, with revenue of EUR 8.9m (Evli 8.2m) and EBIT of EUR -2.9m (Evli -2.8m). Despite having underestimated the market portfolio decline positive fair value changes in especially Real estate and Infra aided Investment business returns. The dividend proposal is EUR 0.12 per share as expected (2017: 0.11).
Acquisition of the majority of JAM Advisors
CapMan announced the acquisition of 60% of JAM Advisors, to be paid for with 5.11m CapMan shares. The company, established in 2012, had EUR 3.3m revenue in 2018 and EBITDA was barely positive. Valuation appears reasonable as it is to be expected that CapMan will seek for rapid expansion of the business, likely also internationally. CapMan will also use JAM Advisor’s customer network to expand its own offering towards tier 2 and 3 investors.
BUY-rating with an ex-div target price of EUR 1.75 (1.80)
CapMan has during Q4, through among other things the additional BVK mandate and second Infra mandate, seen AUM growth of EUR over 400m, that will contribute with over EUR 4m annual fee income. Together with the acquisition of JAM Advisors this will boost revenue and profitability in 2019 and we have raised our 2019 estimates for revenue and operating profit by 13% and 5% respectively. We expect management fee growth of 23% in 2019. Despite the negative Q4 earnings from the impact of the non-core market portfolio CapMan is in our view continuing to show solid progress. With valuation still looking attractive we retain our BUY rating with an ex-div target price of EUR 1.75 (1.80).
CapMan’s Q4 results were weaker as expected due to the market volatility. A dividend of EUR 0.12 per share is proposed (Evli EUR 0.12). AUM grew to over EUR 3bn driven by the additional BVK mandate. CapMan further announced the acquisition of 60% of analysis and wealth management company JAM Advisors.
CapMan will report Q4 results on January 31st. We expect Q4 to based on earnings be a weaker end to an otherwise solid year, driven by the impact of the market volatility on CapMan’s trading portfolio. Our revised Q4 estimates for revenue and operating profit are at EUR 8.2m and EUR -2.8m respectively. We expect a dividend of EUR 0.12 per share. We retain our BUY-rating with a target price of EUR 1.80 (1.75).
Market volatility to weigh on Q4
We expect CapMan to report weaker Q4 earnings due to the effect of market volatility on the trading portfolio during the quarter. CapMan has been shifting funds from the trading portfolio to own funds, with some EUR 20m transferred during H1/18, but was still at near EUR 60m at the end of Q3. As to our understanding some 60% of the portfolio is hedged, we expect an EUR 3m fair value loss. We also do not expect any notable carried interest or success fees for the quarter. We have revised our Q4 revenue and operating profit estimates to EUR 8.2m (10.0m) and EUR -2.8m (5.0m) respectively. Although we anticipate a weaker result in 2018 compared to 2017, we expect CapMan to increase dividends to EUR 0.12 (2017: 0.11) per share.
BVK mandate addition to support management fee growth
During Q4 CapMan reported the increase of the BVK mandate to EUR 820m (prev. 500m), which we expect to have an additional earnings contribution of around EUR 1.5m p.a. The whole mandate is to our understanding close to being fully invested and will boost management fees from 2019 forward.
BUY-rating with a target price of EUR 1.80 (1.75)
Looking at 2019E and 2020E P/E multiples, coupled with the high dividend yield, valuation in our view does not yet appear challenging, with a ~15% discount to peers on P/E. We retain our BUY-rating with a target price of EUR 1.80 (1.75).
CapMan’s CMD revolved around the strategic changes that have taken place during the past few years and CapMan’s position going forward. Key emphasis will, based on our take on the CMD, lie on earnings stability, asset diversification, and broadening of the investor base.
CapMan’s CMD clearly signaled the continued strive towards an increasing Nordic presence and to a larger extent becoming a multi-asset manager. In our view key areas of interest will be the fairly recently established areas of Growth equity and Infra. The presented performance metrics for exits in CapMan Growth are impressive, with significant further potential going forward. The Infra fund has had a good start and a second mandate, still subject to approval, has been signed.
Broadening of investor base
Another strategic area of focus lies in the broadening of the investor base. Currently some 85 % of AUM stems from local tier 1 investors. CapMan is seeking to increase the share of tier 2 and 3 investors along with international tier 1 investors. Targeting investors with smaller ticket sizes could likely be reflected in new product launches similar to the open-ended NPI fund.
Seeking earnings stability, carry potential remains
CapMan’s financial objective remain unchanged. Currently the average ROE of 20 % in our view remains the most challenging. Realization of mid- to long-term carry potential remains a key factor but CapMan is also seeking to increase the share of fee income to achieve more stability in earnings.
BUY with a target price of EUR 1.75
Our estimates remain unchanged, with earnings expected to improve in the coming years. The effect of recent market uncertainty on CapMan is in our view currently mostly neutral. We expect several new products to be launched during 2019 and the uncertainty could impact on fundraising, although fund track records remain supportive. We retain our BUY-rating and target price of EUR 1.75.
CapMan’s Q3 results were good and the EBIT of EUR 4.8m beat our estimates (Evli EUR 4.1m). In our view the Q3 progress continued to show a move towards realizing built up long-term potential and developing into a healthier business in terms of earnings stability. We retain our BUY-rating with a target price of EUR 1.75.
Q3 EBIT beat, first closing of Infra fund
CapMan’s Q3 earnings beat our expectations, with EBIT at EUR 4.8m (Evli EUR 4.1m). The earnings were driven by CapMan Growth Fund’s successful exit from Fluido. Revenue in Q3 was EUR 7.2m, below our estimates of EUR 8.6m, as no major carried interest was booked. CapMan further announced the first closing of CapMan Infra’s Nordic midcap infrastructure fund, with committed funds of EUR 115m.
Showing continued healthy development
CapMan in our view is nearing a point were some of the long-term potential is starting to realize and the business is becoming healthier in terms of recurring earnings, as opposed to high quarterly variability witnessed in previous years. Management comments regarding the NRE I-fund were positive, with foreign investor interest remaining good and on-going discussions regarding properties. The BVK mandate is set to reach full utilization in 2019 along with the Infra fund expected to reach the target of raising EUR 300+m, which along with growth in other on-going newer ventures will benefit fee income. The NPI-fund saw slower growth amid internal sales focus on the Infra-Fund, with investor demand still remaining good. Although predictability of materialization of carried interest is low, we continue to see good potential for 2019.
BUY with a target price of EUR 1.75
It is worth noting that the recent stock market uncertainty, were it to increase further, would undoubtedly also affect CapMan. In our view the risks due to the PE exposure are smaller and mainly long-term, as market uncertainty could affect ability to raise funds and exit timing and valuations. We retain our BUY-rating with a target price of EUR 1.75.
CapMan’s posted good Q3 results. EBIT was EUR 4.8m vs. Evli EUR 4.1m. The exit from Fluido significantly contributed to earnings. Net sales were EUR 7.2m (Evli 8.6m) and no larger carried interest was booked. CapMan held the first closing of its Nordic mid cap infrastructure fund, receiving commitments of EUR 115m.
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Over 10% average annual growth of Mangement Company and Services business. Return on equity over 20%. Equity ratio over 60%. Annually increasing dividend.
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