FinTech Group AG

15.12.2015 - Equity Research Einzelstudie // kaufen

Research Report (Initial Coverage) –FinTech AG - english - buy

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Unternehmen: FinTech Group AG
ISIN: DE0005249601
Branche: Biotechnologie-Pharma
Rating: kaufen
Kurs bei Erstellung in €: 17,80
Kursziel in €: 26,85
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 5a;5b;11

With the acquisition of XCOM AG, including its wholly-owned subsidiary biw Bank AG, the FinTech Group AG has significantly expanded its business model and can now benefit at various different levels from the strong growth in the FinTech market. ViTrade AG and flatex AG provide established access to end customers (B2C) and the full-service banks biw Bank AG and XCOM AG have a strong IT capability in B2B services to the financial services industry.

Future growth at the company will receive equal support from all sectors. B2C business at flatex should increase its “share of wallet” through the provision of additional services. flatex will also grow through acquiring a few thousand new customers per month due to improved marketing. biw Bank AG is one of the leading enablers in the German fintech sector thanks to its white label banking solutions. XCOM is acquiring customers in both the traditional banking and the financial services sectors and is contributing innovative products to the Group such as "kesh" payment solutions. In addition to organic growth, management is also constantly on the lookout for interesting acquisitions, which would have a synergistic effect on the Group.

Due to the acquisition of XCOM AG and, thus, biw Bank AG, the sale of the Aktionärsbank AG is currently going ahead. This will not only simplify and focus the existing structure but will also have a significant impact on earnings. Aktionärsbank only started operating in late 2013 and is currently contributing significant losses. The sale should improve results significantly starting in 2016. Beyond Aktionärsbank, significant cost synergies across the entire group will result from the XCOM acquisition, which will gradually make a significant improvement
to profitability.

Not least, in FY 2015 FinTech Group AG benefited from a co-operation with Commerzbank AG, in which CFD market making was outsourced to the latter. As part of the process, FinTech AG received a one-off lump sum in the low twodigit millions and will receive a share of profits over future years.

FinTech Group AG will therefore see a significant improvement in net sales (net interest income + net commission income + trading profit) and in EBITDA as soon as FY2015 due to the takeover of XCOM AG, as already illustrated in HY1 2015. Semi-annual EBITDA was €11.7 million. After net sales of €24.6 million in FY 2014, we forecast €84.23 million for the whole of 2015.

Currently the customer deposits at biw Bank AG of more than €1 billion remain completely unused. Starting in 2016, the Executive Board is planning to set up a technology-based consumer lending department (comparable to the listed fintech company Ferratum). Even if regulatory limits prevent all customer deposits from being used for this business, it is realistic to expect interest income of around 1-2% on the entire deposits.

In summary, the FinTech Group AG in its new form, including the synergies from the XCOM acquisition, has high growth and earnings potential which should be able to be gradually increased over future years due to its excellent positioning in both the B2C and B2B sectors, due to its technological leadership and, not least, the very high deposit levels at biw Bank AG. A significant increase in profitability should be seen as early as 2015, with further significant potential for increases over future years.


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