Ori­gi­nal-Re­se­arch: Um­welt­Bank AG (von Um­welt­Bank Ak­ti­en­ge­sell­schaft): BUY

Ori­gi­nal-Re­se­arch: Um­welt­Bank AG – from GBC AG­Clas­si­fi­ca­ti­on of GBC AG to Um­welt­Bank AG

Com­pa­ny Name: Um­welt­Bank AG
ISIN: DE0005570808

Re­ason for the re­se­arch: Re­se­arch Note
Re­com­men­da­ti­on: BUY
Tar­get pri­ce: 9.60 EUR
Tar­get pri­ce on sight of: 31.12.2024
Last ra­ting ch­an­ge:
Ana­lyst: Cos­min Fil­ker, Mar­cel Gold­mann

Trans­for­ma­ti­on year 2023 in line with ex­pec­ta­ti­ons; fur­ther in­vest­ments in di­gi­ta­li­sa­ti­on and cus­to­mer growth ex­pec­ted; re­turn to pro­fi­ta­bi­li­ty af­ter an­o­ther trans­for­ma­ti­on year 2024; pri­ce tar­get: € 9.60; ra­ting: BUY

Um­welt­Bank AG pu­blished its preli­mi­na­ry fi­gu­res for the past fi­nan­cial year 2023 on 18 March 2024. As ex­pec­ted, the past fi­nan­cial year was cha­rac­te­ri­sed by both a de­cli­ne in ear­nings and an in­crease in to­tal cos­ts. On the in­co­me side, net in­te­rest re­sult in par­ti­cu­lar de­cli­ned to € 41.10 mil­li­on (pre­vious year: € 58.79 mil­li­on). At the same time, the fi­nan­cial re­sult fell si­gni­fi­cant­ly to € 7.17 mil­li­on (pre­vious year: € 24.83 mil­li­on).

The main re­ason for the de­cli­ne in net in­te­rest re­sult, which we had an­ti­ci­pa­ted in our pre­vious fo­re­casts, but had as­su­med a smal­ler de­cli­ne, was once again li­kely the in­crease in in­te­rest ex­pen­ses. The ge­ne­ral rise in in­te­rest ra­tes has led to grea­ter ad­jus­t­ments to the con­di­ti­ons for cus­to­mer de­po­sits. The­se re­act more stron­gly to in­te­rest rate ad­jus­t­ments due to the lower du­ra­ti­on. In ad­di­ti­on, the in­crease in in­te­rest ex­pen­ses is due to ch­an­ges in the con­di­ti­ons for TLTRO funds, i.e. the low-in­te­rest re­fi­nan­cing funds pro­vi­ded by the ECB.

The de­cli­ning ear­nings trend de­scri­bed abo­ve is off­set by a si­gni­fi­cant in­crease in per­son­nel and ad­mi­nis­tra­ti­ve ex­pen­ses. Per­son­nel ex­pen­ses rose vi­si­bly by al­most 30% to € 25.62 mil­li­on (pre­vious year: € 19.88 mil­li­on). The main dri­vers of this de­ve­lo­p­ment were new hi­res in are­as re­le­vant to re­gu­la­to­ry re­qui­re­ments and the ge­ne­ral rise in sala­ry le­vels. As at the ba­lan­ce sheet date of 31 De­cem­ber 2023, Um­welt­Bank AG had re­a­ched a new high in the num­ber of em­ployees with 354 (31 De­cem­ber 2022: 332). In ad­di­ti­on, the suc­cessful­ly im­ple­men­ted ch­an­ge to the core ban­king sys­tem led to an in­crease in ad­mi­nis­tra­ti­ve ex­pen­ses of around € 10 mil­li­on to € 31.51 mil­li­on (pre­vious year: € 21.57 mil­li­on), as an­noun­ced.

The preli­mi­na­ry ear­nings be­fo­re ta­xes of € 1.12 mil­li­on (pre­vious year: € 39.21 mil­li­on) re­sul­ting from the de­ve­lo­p­ment de­scri­bed abo­ve are in line with the company’s gui­dance pu­blished in Au­gust 2023, which had fo­re­cast ear­nings be­fo­re ta­xes of around € 1 mil­li­on. Ba­sed on this, we had fo­re­cast EBT of € 0.97 mil­li­on in our most re­cent­ly pu­blished re­se­arch stu­dy.

At the be­gin­ning of March 2024, UmweltBank’s ma­nage­ment in­for­med the ca­pi­tal mar­ket about their stra­te­gic rea­lignment. At the same time, the com­pa­ny an­noun­ced a pre-tax re­sult of bet­ween € ‑15 mil­li­on and € ‑20 mil­li­on as part of their in­iti­al gui­dance for the cur­rent 2024 fi­nan­cial year. At the in­ves­tor and press con­fe­rence held on 18 March 2024, the new CEO Diet­mar von Blü­cher pre­sen­ted the back­ground to this gui­dance and stra­te­gic rea­lignment.

Our ear­nings and pro­fit esti­ma­tes are ba­sed on the company’s gui­dance, which was ad­jus­ted in March 2024. For the co­ming fi­nan­cial ye­ars, Um­welt­Bank AG pre­sen­ted a gra­phic gui­dance for ear­nings be­fo­re ta­xes as part of the in­ves­tor pre­sen­ta­ti­on, which we are also fol­lo­wing. For the cur­rent fi­nan­cial year, we ex­pect a slight in­crease in net in­te­rest in­co­me, which is ba­sed on slight im­pro­ve­ments in terms and con­di­ti­ons with an al­most un­ch­an­ged vo­lu­me of out­stan­ding en­vi­ron­men­tal lo­ans. In the fol­lo­wing two fi­nan­cial ye­ars, 2025 and 2026, net in­te­rest in­co­me should gain mo­men­tum again. This is ba­sed on im­pro­ved con­di­ti­ons on the len­ding side and the as­sump­ti­on that in­te­rest cos­ts will sta­bi­li­se at the le­vel of cus­to­mer de­po­sits. We also an­ti­ci­pa­te a strong in­crease in cus­to­mer de­po­sits, which can be in­ves­ted pro­fi­ta­b­ly as part of the tre­asu­ry ac­ti­vi­ties. The fi­nan­cial re­sult, which in­cludes a small amount of pro­fi­ta­ble sa­les of in­vest­ments, should in­crease slight­ly ac­cor­ding to our esti­ma­tes. Net com­mis­si­on and tra­ding in­co­me should also be­ne­fit from the rise in cus­to­mer de­po­sits and also in­crease slight­ly.

In con­trast, in­vest­ments in di­gi­tal pro­ces­ses and the ex­pan­si­on of cus­to­mer de­po­sits are li­kely to lead to si­gni­fi­cant cost in­crea­ses, which we esti­ma­te will re­sult in a ne­ga­ti­ve EBT of € ‑15.90 mil­li­on. We an­ti­ci­pa­te a re­turn to pro­fi­ta­bi­li­ty for the two sub­se­quent esti­ma­ti­on pe­ri­ods. Both the in­crease in to­tal re­ve­nue that we ex­pect and – fol­lo­wing the com­ple­ti­on of their di­gi­tal trans­for­ma­ti­on – the an­ti­ci­pa­ted de­cli­ne in to­tal cos­ts should con­tri­bu­te to this.

For the va­lua­ti­on of Um­welt­Bank AG, we have used a re­si­du­al in­co­me mo­del, wher­eby the dif­fe­rence bet­ween the re­turn on equi­ty and the cost of equi­ty is used to de­ter­mi­ne the sur­plus re­turn of the esti­ma­ti­on pe­ri­ods. The sum of the dis­coun­ted re­si­du­al ear­nings re­sults in a va­lue of € 342.47 mil­li­on (pre­vious­ly: € 488.93 mil­li­on). With 35.66 mil­li­on shares out­stan­ding, this re­sults in a fair va­lue per share of € 9.60 (pre­vious­ly: € 13.80).

The sharp re­duc­tion in the fair va­lue is pri­ma­ri­ly due to the lower fo­re­casts for the 2024 and 2025 fi­nan­cial ye­ars, which also form a low ba­sis for our in­iti­al fo­re­casts for the 2026 fi­nan­cial year. In ad­di­ti­on, the in­crease in the WACC to 5.35% (pre­vious­ly: 4.97%) re­sul­ting from the in­crease in the risk-free in­te­rest rate also has a pri­ce-tar­get-re­du­cing ef­fect. Fol­lo­wing the sharp fall in the Um­welt­Bank share pri­ce, the up­si­de po­ten­ti­al re­mains high de­spi­te the re­duc­tion in the pri­ce tar­get and we con­ti­nue to as­sign a BUY ra­ting.

You can down­load the re­se­arch here:
http://​www​.more​-ir​.de/​d​/​2​9​2​5​7​.​pdf

Cont­act for ques­ti­ons
GBC AG
Hal­der­stra­ße 27
86150 Augs­burg
⁰⁸²¹⁄₂₄₁₁₃₃ 0
research@​gbc-​ag.​de
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Of­fen­le­gung mög­li­cher In­ter­es­sens­kon­flik­te nach § 85 WpHG und Art. 20 MAR Beim oben ana­ly­sier­ten Un­ter­neh­men ist fol­gen­der mög­li­cher In­ter­es­sen­kon­flikt ge­ge­ben: (1,4,5a,6a,7,11); Ei­nen Ka­ta­log mög­li­cher In­ter­es­sen­kon­flik­te fin­den Sie un­ter:
https://​www​.gbc​-ag​.de/​d​e​/​O​f​f​e​n​l​e​g​ung
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Date (time) com­ple­ti­on of the stu­dy: 26.03.24 (1:25 pm)
Date (time) first pu­bli­ca­ti­on: 26.03.24 (2:30 pm)

——————-trans­mit­ted by EQS Group AG.——————-

The is­suer is so­le­ly re­spon­si­ble for the con­tent of this re­se­arch.
The re­sult of this re­se­arch does not con­sti­tu­te in­vest­ment ad­vice
or an in­vi­ta­ti­on to con­clude cer­tain stock ex­ch­an­ge tran­sac­tions.