FinLab AG

17.08.2018 - Equity Research Report (english) // buy

Research Comment - FinLab AG - english

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Unternehmen: FinLab AG
ISIN: DE0001218063
Branche: Finanzen-Beteiligungen
Rating: buy
Kurs bei Erstellung in €: 22,20
Kursziel in €: 33,75
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 5a;6a;11

Financing round for the FinLab portfolio-company Deposit Solutions enhancing its valuation to over USD 500 million; Strong NAV increase for FinLab AG; Target price rose to € 33.75, Rating BUY maintained

The Deposit Solutions GmbH, one of FinLab AG’s most important investments, has successfully closed a new financing round in the amount of USD 100m. With this new financing round, the value of the FinLab participation climbed to around $ 500 million. The new achieved value is very impressive, especially compared to the the Deposit-valuation at the time of the first financing through FinLab AG. At the entry valuation in September 2015, the value of Deposit Solutions was just about € 20 million and thus has risen by a factor of 20 in about 3 years.

The basis for this development can be found in the extraordinarily dynamic operative development of the FinLab investment. Deposit Solutions GmbH functions as a fintech company, which means it can use its own open-banking platform to offer customers attractive daily and fixed-term offers from other banks, without having to enter into a new customer relationship. While at the end of 2016 the brokered volume was only € 1.0 billion, this value has meantime risen to more than € 9 billion. In addition, the B2B business was reinforced with the acquisition of renowned partners such as Deutsche Bank or Fidelity’s FFB.

As part of the current financing round, through disinvestment, FinLab AG has reduced its participation in Deposit Solutions from 12% to 7.7%. As part of this transaction, FinLab AG will show a liquidity inflow in the amount of USD 11.5 million (around EUR 10.0 million), which will be wholly reflected in the current financial year cash flows. Despite the reduction in the shareholding, the Deposit-NAV has risen sharply following the new valuation. With a total enterprise value of USD 500.0 million, it represents a valuation of USD 38.5 million or € 33.8 million.

As with the inclusion of this higher value in our NAV-based valuation for FinLab AG, it results in an increase in the fair value per share to € 33.75 (previous: € 30.65). Based on the current share price of € 22.20, this means a price potential of over 50% and therefore we confirm our BUY rating.


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