Taaleri |

Agile and visionary Finnish financial service company

| Finland

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Financial overview

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Taaleri - Supportive fee outlook

16.08.2019 | Company update

Taaleri’s H1 earnings were due to the previously given guidance quite unsurprising and segment development corresponded roughly to expectations. A better than anticipated AUM development supports the fee outlook going forward, with 2019 earnings still expected to rely on the Texas wind farm project.

Favourable AUM development improving WM fee outlook

Taaleri’s had pre-H1 announced an H1 EBIT-margin range of 20-25%, with EBIT at EUR 6.4m (Evli 6.8m), at a 20.6% margin. Segment results corresponded roughly to our expectations, with solid investment returns boosting Financing’s earnings, while Wealth Management earnings were weak, as indicated by the guidance revision. Energy’s earnings remained negative as expected. The in our view most positive information of the first half-year was AUM development, with group AUM up 15.6% to EUR 6.6bn. Uncalled commitments along with the accumulation of AUM towards late H1 is expected to benefit Wealth Management’s fees and continuing earnings going into H2.

2019 earnings still dependent on Texas wind farm project

Taaleri has guided for the 2019 EBIT-margin to be slightly below that achieved in 2018. Compared to H1/19 we expected clear improvements in Wealth Managements operating profits, driven by higher AUM and an increase in performance fees (-0.5m in H1). We expect a decline in Financing, both H2/19 and the coming years, due to expected lower investment returns. The deciding factor for 2019 earnings will be Energy, were the divestment of the Texas wind farm project is expected during H2/19, with SolarWind II fees also expected to boost the operating profitability to a positive level. H1 group earnings were also affected by elevated personnel expenses, which we expect to support earnings improvement in H2.

BUY with a target price of EUR 7.6 (8.0)

Based on the H1 report, which given the favourable AUM development and expected cost base decline in H2 was slightly more positive than we had expected, we retain our BUY-rating with a target price of EUR 7.6 (8.0).

Taaleri - Favourable AUM development amid challenging half-year

15.08.2019 | Earnings Flash

Taaleri’s H1 results were quite in line with our expectations, with group income amounting to EUR 30.9m (Evli 31.1m) and EBIT to EUR 6.4m (Evli EUR 6.8m). AUM development better than we had foreseen, increasing 15.6% y/y to EUR 6.6bn.

  • Income in H1 amounted to EUR 30.9m (EUR 35.5m in H1/18), in line with our estimates (Evli EUR 31.1m). The group’s continuing earnings declined some 8.6 per cent y/y.
  • EBIT in H1 amounted to EUR 6.4m (EUR 12.4m in H1/18), slightly below our estimates (Evli EUR 6.8m). Taaleri had pre-announced the EBIT -margin in H1/19 to be between 20-25%
  • The Wealth Management segments income in H1 was EUR 17.2m (H1/18 EUR 29.7m) and EBIT EUR 2.0m (H1/18 EUR 14.1m), with our estimates at EUR 18.0m and EUR 2.2m respectively.
  • The Financing segments income in H1 was EUR 10.4m (H1/18 EUR 6.2m) and EBIT EUR 6.1m (H1/18 EUR 2.4m), with our estimates at EUR 10.6m and EUR 6.5m respectively.
  • The Energy segments income in H1 was EUR 1.4m (H1/18 EUR 1.1m) and EBIT EUR -1.6m (H1/18 EUR -0.9m), with our estimates at EUR 2.0m and EUR -0.8m respectively.
  • Income from other operations in H1 amounted to EUR 1.8m (H1/18 EUR -1.5m) and EBIT EUR -0.1m (H1/18 EUR -3.3m), with our estimates at EUR 0.5m and EUR -1.1m respectively.
  • Assets under management at the end of H1/19 amounted to EUR 6.6bn, up 15.6% y/y.

Taaleri - Eyes on Wealth Management

13.08.2019 | Preview

Taaleri has previously given guidance for an operating profit margin of 20-25% in H1/19, affected by a decline in Wealth Management’s continuing earnings and a postponement of planned projects. We expect the bulk of earnings from Financing following a favourable investment environment during H1. We keep our long-term view intact pre-H1 and retain our BUY-rating, lowering our TP to EUR 8.0 (8.5) to reflect increased Wealth Management uncertainty.

Co’s H1/19 operating profit margin guidance 20-25%

Taaleri will report H1/19 results on August 15th. Taaleri has previously given guidance for a H1 operating profit margin of 20-25%, mainly following a decline in continuing earnings in Wealth Management and the postponement of planned projects to H2/19. The corresponding full year margin is expected to be slightly lower than in 2018 (33.0%).

Financing main earnings contributor in H1/19E

We expect the bulk of Taaleri’s H1 results to be delivered by Financing, following expected solid investment returns from the favourable market environment during H1. Wealth Management’s continuing earnings are as per company guidance expected to be lower y/y, and we further expect performance fees and investment returns to have been only minor. We see reason for viewing AUM development with caution and will focus our attention in the H1/19 report on the development of Wealth Management. We expect the operating profit of Energy to have remained in the red during H1 but the first closing of the SolarWind II -fund at EUR 220m post-Q2 as well as the expected exit from the Truscott-Gilliland East wind farm are expected to significantly boost both Energy’s and group earnings in H2.

BUY with a target price of EUR 8.0 (8.5).

The development of Wealth Management’s continuing earnings gives some reason for concern. However, with the currently limited information we do not see a basis for extrapolating any long-term conclusions before the H1 report. As such we retain our BUY rating but lower our target price to EUR 8.0 (8.5).

Taaleri - Opportunities but also concerns ahead

15.02.2019 | Company update

Taaleri’s H2 results were affected by the impact of market volatility on Financing and Wealth Management. Fundraising has begun for the second SolarWind fund, with target investment capital at EUR 300m. New product launches are expected also in PE funds and Financing. Market turbulence remains a concern for the performance of Wealth Management.

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).

Taaleri - Market volatility visible in segment results

14.02.2019 | Earnings Flash

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). EBIT in Wealth Management declined largely due to declines in performance fees while the market volatility affected investment income in Financing. Group EBIT was aided by the listing of Fellow Finance.

  • Income in H2 amounted to EUR 37.3m (EUR 42.3m in H2/17), in line with our estimates (Evli EUR 37.9m). The group’s continuing earnings grew 5.4 per cent.
  • EBIT in H2 was EUR 11.5m (EUR 11.6m in H2/17), slightly above our estimates (Evli EUR 10.7m). Taaleri had pre-announced the EBIT -margin in 2018 to be at similar levels to 2017.
  • The Wealth Management segments income in H2 was EUR 19m (H2/17 EUR 30.7) and EBIT EUR 2.7m (H2/17 EUR 8.8m). EBIT was affected by declines in performance fees.
  • The Financing segments income in H2 was EUR 6.3m (H2/17 EUR 10.1m) and EBIT EUR 2.5m (H2/17 EUR 6.0m). EBIT was affected by weaker income from investment activities.
  • The Energy segments income in H2 was EUR 1.2m (H2/17 EUR 1.0m) and EBIT EUR -1.4m (H2/17 EUR -0.9m).
  • Income from other operations in H2 amounted to EUR 10.3m (H2/17 EUR 0.9m) and EBIT EUR 7.7m (H2/18 EUR -1.9m). EBIT positively impacted by the listing of Fellow Finance (EUR 13.8m) and negatively impacted by the write-off on a geothermal project (EUR -3.1m)-
  • Assets under management at the end of H2/18 amounted to EUR 5.7bn
  • Dividend: Taaleri’s BoD proposes a dividend of EUR 0.30 per share (Evli EUR 0.29)

Taaleri - Good outlook for 2018

17.08.2018 | Company update

Taaleri’s H1 results exceeded our estimates following higher than expected investment income and performance fees in in Wealth Management, while Financing saw lower profits following weaker investment income. The outlook for 2018E looks promising following the H1 results. We retain our BUY-rating with a target price of EUR 11.4 (11.0)

Wealth Management drives profits

Taaleri’s operating profit in H1 amounted to EUR 12.4m. Wealth Management’s operating profit was EUR 14.1m, driven by performance fees and investment income of EUR 5.6m and EUR 4.9m respectively. Performance fees were higher than anticipated, as the mutual funds continued to contribute significantly despite a weaker first half of the year in comparison to the previous year. Financing’s operating profit was below previous year levels, at EUR 2.4m compared to EUR 7.9m in H1/17. The operating profit was affected by investment income, with return on investment at fair value of -0.1%, as high-yield bonds saw a shaky first half of the year. Energy’s operating profit remained negative as expected, at EUR -0.9m, due to ramp up of the business. A new product launch remains likely in H2/18.

Good 2018E outlook following solid Q2 results

We have revised our full-year estimates upwards following the good H1 results. While our H2 estimates remain mostly without significant changes we have adjusted downward our estimates for Financing to reflect an expected lower investment income also in H2. AUM growth was stronger than expected, despite stagnating PE funds development due to slower commitment calls, and we expect to see AUM growth in PE funds during H2. Our 2018E sales and EBIT estimates are EUR 73.2m and EUR 23.1m respectively.

BUY with a target price of EUR 11.4 (11.0)

Following our revised estimates and a stronger than previously expected result in 2018E we adjust our target price to EUR 11.4 (11.0) and retain our BUY-rating.

Taaleri - Clear earnings beat

16.08.2018 | Earnings Flash

Taaleri’s H1 results clearly beat our estimates, with income of EUR 35.2m vs. 31.9m Evli and EBIT of EUR 12.4m vs. 6.9m Evli. The earnings were attributable to the Wealth Management segment, mainly due to investment income.

  • Net sales in H1 were EUR 35.2m (EUR 38.7m in H1/17), beating our estimates (Evli EUR 31.9m). The group’s continuing earnings grew seven per cent.
  • EBIT in H1 was EUR 12.4m (EUR 15.4m in H1/17), well above our estimates (Evli EUR 6.9m). The higher than expected earnings were attributable to the Wealth Management segment, where performance fees and investment income of EUR 5.6m and EUR 4.9m respectively were recorded, along with growth in fee income.
  • The Wealth Management segments net sales in H1 were EUR 28m vs. EUR 23.2m Evli and EBIT EUR 14.1m vs. EUR 6.1m Evli.
  • The Financing segments net sales in H1 were EUR 6.2m vs. EUR 9m Evli and EBIT EUR 2.4m vs. EUR 4.8m Evli.
  • The Energy segments net sales in H1 were EUR 1.1m vs. EUR 1.4m Evli and EBIT EUR -0.9m vs. EUR -0.5m Evli.
  • Net sales from other operations in H1 were EUR -1.5m vs. EUR -1.7m Evli and EBIT EUR -3.3m vs. EUR -3.5m Evli.
  • Assets under management at the end of H1/18 amounted to EUR 6.0m.

Taaleri - Initiate coverage with BUY

29.05.2018 | Company report

We initiate coverage of Taaleri with a BUY-rating and target price of EUR 11. We expect continued growth in continuing earnings while viewing stronger investment and performance based return potential in the mid- to long-term. Taaleri has seen considerable profitability improvements and we expect profitability to remain at good levels.

Growth in continuing earnings

We expect to see growth in continuing earnings in all three segments. In Wealth Management we expect growth to be supported by increasing AUM, driven by private equity funds, and in Financing from growth in the insurance portfolio. Growth in Energy is supported by the newly completed SolarWind fund. We expect continuing earnings to grow at a CAGR of some 13 % during 2017-2020E. We expect performance and investment returns to decline in 2018 following strong returns in 2017 and expect the returns to increase in the mid- to long-term. Our revenue estimate for 2018 is EUR 72.2m.

Expect continued good profitability

Taaleri’s profitability has seen improvements in recent years, with 2017 being an exceptionally strong year in terms of both revenue and profitability. We expect profitability to remain at good levels but to decline slightly in 2018 due to lower revenue. In 2019-2020 we expect profitability to pick up following higher revenue and cost discipline. We expect to see the largest profitability increases in Wealth Management and Energy, with Energy expected to be profitable from 2019 onwards.

BUY with a target price of EUR 11

We initiate coverage of Taaleri with a BUY-rating and target price of EUR 11, based on our SOTP and DCF valuation. On our estimates Taaleri trades at P/E of 17.9x and 12.3x for 2018E and 2019E respectively. On our estimates relative valuation is somewhat elevated on 2018 multiples following expected weaker earnings. On 2019E multiples valuation is in line. We expect stronger mid and long-term potential.

Taaleri company presentation 19082019

Taaleri - Company presentation

19.08.2019
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Taaleri company presentation 19082019

Video presentation

Company Facts

Guidance

The operating profit margin in 2019 is estimated to be lower than in 2018 but over the long-term target of 20%

Financial targets

The long-term operating profit target is at least 20 per cent of income, the return-on-equity target at least 15 per cent, and the long-term equity ratio target at least 30 per cent

Share price (EUR)


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