JDC Group AG

06.09.2018 - Equity Research Report (english) // buy

Research Note - JDC Group AG - english

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Unternehmen: JDC Group AG
ISIN: DE000A0B9N37
Branche: Finanzen-Beteiligungen
Rating: buy
Kurs bei Erstellung in €: 9,00
Kursziel in €: 12,10
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 5a;7;11

In the first six months of 2018, JDC Group AG saw revenue increase by 9.6% to €44.47 million (previous year: €40.58 million), continuing the positive trend of prior reporting periods. Most recently, JDC Group AG completed a series of acquisitions, which enabled the company to increase market shares in a consolidation-driven industry. Against this backdrop, the general increase in revenue levels should be highlighted.

Higher revenues, combined with the above-average gross profit figure, caused EBITDA to increase to €2.01 million (previous year: €1.71 million). Here, the company could have generated an even higher earnings figure, if not for personnel and IT expenses relating to the start-up of the wholesale customer business, which will only begin to yield significant revenue contributions in the second half of the year. Overall, JDC Group AG reported a slight net loss for the period of €-0.21 million, which was nevertheless significantly higher than in the prior-year period (previous year: €-0.58 million).

With the half-year report, JDC Group AG confirmed the forecasts for the current 2018 financial year. It still expects €100 million in revenues and at least €6 million in EBITDA. Based on the revenue and earnings figures for the first half of 2018, it is clear that the company’s guidance is realistic – especially considering that the second half of the year is stronger at JDC Group AG, as is typical in the industry. Moreover, the major projects acquired in 2017 are not expected to have any significant business volume until the second half of 2018. Accordingly, we continue to stand by our previous revenue and earnings estimates for the current and future financial years.

Our estimates are based on the corporate strategy, which focuses on inorganic growth and emphasis on the promotion of the wholesale customer business. The financial basis for this was laid with the current capital increase (gross proceeds from the issue: €10.38 million). We plan to attract several wholesale customers for the IT platform by the end of this financial year. Potential wholesale customers include banks and major companies. The contractual partners benefit here from the use of the established IT of JDC Group AG and can therefore achieve timely savings. In addition, wholesale customers can benefit from the purchasing power of JDC and thus access very attractive conditions with respect to the product providers. The wholesale customer business is accompanied by low investment requirements for JDC Group AG, as there is no portfolio acquisition in the case of a transfer.

Under this strategy, the volume of revenue should skyrocket in future financial years and the company’s profitability should increase significantly, as such revenue typically requires no brokers. Combined with a disproportionately low increase in overhead costs, the rising gross profit should lead to an EBITDA margin in excess of 10.0% (FY 2020e). At the same time, this assumption serves as a basis for the continuity phase of our DCF valuation model.

The resulting fair value per share at the end of the 2019 financial year corresponds to the stock price target of €12.10 (previously: €12.40). The slight reduction in the stock price target was attributable to the recent capital increase, which had a dilutive effect on the target price. We confirm our BUY-Rating.


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