Mixed first half due to divestments and growth investments; change estimated.

Sales growth and stable sales margins in the core business areas: Asset Management grew by 6% year-on-year (AuM: +9% year-on-year to €4.4 billion), followed by Wealth Management, which grew by 12% year-on-year (AuM: +3% year-on-year to €1.6 billion) and Digital Wealth (including LAIC and Growney), whose revenue grew by 27% year-on-year (AuM: +20% year-on-year to €0.6 billion). Consequently, LAIQON’s revenue margin on AuM (excluding the “Group” segment) remained stable at 0.42% (+0.01 percentage points year-on-year; annualized). – For details see page 2.

Moderate growth in assets under management in line with market growth: While AuM grew 8% year-on-year, sequential growth in Q2 was only 1.5% qoq (6% annualized) versus 5% qoq in Q1. The slowdown in momentum is partly due to the subdued performance of small and midcap stocks in Q2 (SDAX: +1.1% qoq). Going forward, AuM growth should regain momentum following the launch of “WertAnlage” (product in collaboration with Union Investment) in October 2024 (eNuW: €300m by FY24 and €930m by FY25e).

Profitability dampened due to growth investments: While reported EBITDA was €-2.9m (vs. €-1.9m in H1’23) due to the decline in reported revenues, adjusted EBITDA would have improved by €0.8m (H’1 23: €-3.7m adj. vs. €-1.9m reported). However, excluding the €1m in highly profitable performance fees (vs. none in H1’23), adjusted EBITDA would have decreased by €0.2m, indicating a decline in underlying profitability due to initial start-up costs for the upcoming launch of “Wertanlage”.

– Continued on next page –

Cash consumption continues… As of H1, cash balance was €4.3m (vs €7.1m in FY23), showing a cash burn in H1 of -€8m before financing (-€3m after financing) due to negative WC fluctuations of -€4.7m mainly driven by an increase in deferred tax assets, which will ultimately have a positive impact on cash as pre-tax profitability increases. For FY24, we expect LAIQON to have a cash balance of €8.4m (eNuW) thanks to recent capital measures (see update; €7.2m cash inflow) and a lower cash burn before financing of -€3.5m in H2.

… but sufficient liquidity to implement important growth projects: This should give LAIQON enough leeway until the first half of 2025 to implement the go-live of the “investment”, which will begin in the middle of the fourth quarter of 2024.

Medium-term targets at the lower end: LAIQON’s medium-term growth targets of €8-10 billion in assets under management by the end of 2025 should be achieved at the lower end (eNuW: €8 billion). This requires moderate growth in assets under management of around 7% in Asset and Wealth Management and significant increases of +€1 billion in the Digital Wealth segment, of which €930 million should come from the Union Investment cooperation (eNuW). For the latter, LAIQON expects €1.5 billion by the end of 2025, which indicates an increase in our estimates.

EBITDA break-even likely in FY’25e: Based on (1) average AuMs of €615m from “Value Investment” in FY’25e, (2) an expected sell-side margin of 0.4% on AuMs and (3) an estimated incremental EBITDA margin of 75%, the collaboration should add approximately €1.8m incremental EBITDA for FY’25e. This, together with decreasing OPEX at group level (start-up costs incurred this year), should lead to a group EBITDA breakeven in FY’25e (eNuW: €0.3m).

Despite mixed results, we see Union Investment’s potential as an important catalyst for the share price in the future, as it has the potential to bring LAIQON back to a positive EBITDA level and stop cash burn. The first tangible results of this collaboration are expected with the figures for the 2024 financial year, until then LAIQON has sufficient cash headroom.

Therefore, LAIQON remains a BUY with a new price target of €7.10 (old: €9.10), based on DCF.