SAVE THE DATE - Hypoport AG

Hypoport AG
Germany/Financial Services Analyser
Hypoport AG (Hold)
Hold
from Buy
Share price: EUR
closing price as of 07/05/2012
Target price: EUR
from Target Price: EUR
Reuters/Bloomberg
10.75
11.50
13.00
HYQGn.DE/HYQ GR
Market capitalisation (EURm) 67
Current N° of shares (m) 6
Free float 43%
Daily avg. no. trad. sh. 12 mth 3,338
Daily avg. trad. vol. 12 mth (m) 0
Price high 12 mth (EUR) 11.49
Price low 12 mth (EUR) 6.95
Abs. perf. 1 mth 24.26%
Abs. perf. 3 mth 36.54%
Abs. perf. 12 mth 2.38%
Key financials (EUR) 12/11 12/12e 12/13e
Sales (m) 84 97 109
EBITDA (m) 11 13 16
EBITDA margin 13.1% 13.8% 14.5%
EBIT (m) 6 8 10
EBIT margin 7.0% 7.8% 8.8%
Net Profit (adj.)(m) 4 5 6
ROCE 9.6% 11.7% 14.0%
Net debt/(cash) (m) 16 13 9
Net Debt/Equity 0.5 0.4 0.2
Debt/EBITDA 1.4 1.0 0.6
Int. cover(EBITDA/Fin. int) 13.7 16.6 19.5
EV/Sales 0.7 0.8 0.7
EV/EBITDA 5.4 5.9 4.8
EV/EBITDA (adj.) 5.4 5.9 4.8
EV/EBIT 10.2 10.5 7.9
P/E (adj.) 12.0 14.0 10.9
P/BV 1.4 1.9 1.6
OpFCF yield -2.5% 3.7% 5.8%
Dividend yield 0.0% 0.0% 0.0%
EPS (adj.) 0.60 0.77 0.98
BVPS 5.01 5.78 6.76
DPS 0.00 0.00 0.00
12.0 vvdsvdvsdy
11.5
11.0
10.5
10.0
9.5
9.0
8.5
8.0
7.5
7.0
6.5
Apr 11 Mai 11 Jun 11 Jul 11 Aug 11 Sep 11 Okt 11 Nov 11 Dez 11 Jan 12 Feb 12 Mrz 12 Apr 12 Mai 12
Source: Factset
HYPOPORT AG CDAX (Rebased)
Shareholders: Slabke 35%; Kretschmar 13%; Deutsche
Bank 10%;
Analyst(s):
Philipp Häßler, CFA, Equinet Bank
philipp.haessler@equinet-ag.de
+49 69 58997 414
Q1 results expectations, downgrade to Hold
The facts: Hypoport reported Q1 results slightly below expectations on an EBIT
level but in line with expectations on a net profit level due to a positive tax effect.
Having reached an EBIT of EUR 0.7m in Q1 our full-year EBIT estimate of EUR
9.0m has become too aggressive. Hence, we reduce our EPS estimate from EUR
0.86 to EUR 0.77 and from EUR 1.10 to EUR 0.98 for 2012e and 2013e,
respectively. We lower our TP to EUR 11.50 (EUR 13) & d/g the shares to Hold.
Our analysis:
Q1 results below expectations on an EBIT level: While sales came in fully in
line with our forecast with EUR 20.7m (+16% yoy, -20% qoq) gross profit was with
EUR 11.5m (+11% yoy, -6% qoq) below our expectation of EUR 12.1m. Hence,
the gross margin declined by 2.6%-pts. yoy to 56.0%. EBIT declined by 30% yoy
to EUR 0.7m which was well below our forecast of EUR 1.1m. This is equivalent to
an EBIT margin of 3.3% (-2.2%-pts. yoy) and an adj. (for own work capitalized)
EBIT margin of -1.5%. Net profit declined by only 13% yoy to EUR 0.5m due to the
activation of tax loss carry-forwards.
Institutional clients with disappointing performance: In Institutional Clients
EBIT declined by 81% yoy to EUR 0.2m as Hypoport signed fewer large ticket
transactions than in Q1 2011. As Hypoport has a full pipeline EBIT should improve
in the coming quarters, i.e. the weak Q1 performance is due to normal quarterly
fluctuation. In contrast Europace delivered a strong Q1 performance with a sales
increase of 75% yoy and a strong EBIT margin of 15.6%.
Sales growth over-delivered...: With average sales growth of 26% p.a. between
2006 and 2011 Hypoport has proven that its business model works and has
gained significant market share during this time. In Q1 sales growth was with 16%
once again impressive. Main driver was the Europace business. We expect
Hypoport to continue to grow double-digit in the coming years.
...margin expansion – still some homework to do: Negatively, Hypoport‟s EBIT
margin has declined between 2006 and 2011 from 17.6% to 7.0%, adj. for own
work capitalized the EBIT margin declined from 7.5% to 2.2%. We understand that
Hypoport has focused in recent years on market share gains and not on
maximizing its EBIT margin. This was clearly the right strategy to win additional
customers for Europace and to improve Dr. Klein‟s market position. Currently we
are somewhat confused about Hypoport‟s sustainable EBIT margin going forward.
Although we remain convinced that Hypoport should be able to reach a doubledigit
EBIT margin we are not so sure that this will happen in the short term.
EPS revisions for 2012e and 2013e: We reduce our EPS estimate from EUR
0.86 to EUR 0.77 and from EUR 1.10 to EUR 0.98 for 2012e and 2013e,
respectively. Reason for the earnings adjustment is that we have become less
optimistic regarding future margin expansion. We now calculate with an EBIT
margin of 8.8% for 201e (before: 11.2%).
Conclusion & Action: We reduce our earnings estimates for 2012e and 2013e as
they have become too ambitious to meet. On the back of this revised target price
and the strong share price performance since early April we see only limited share
price upside potential and hence downgrade the shares Hold (Buy) with a new TP
of EUR 11.50 (EUR 13.00). We still believe in the growth story of Hypo but want to
see more proof of Hypo being able to increase its EBIT margin before turning
more positive again.
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