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Original-Research: MLP SE - from NuWays AG

23.09.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.

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Classification of NuWays AG to MLP SE

Company Name: MLP SE
ISIN: DE0006569908

Reason for the research: Update
Recommendation: BUY
Target price: EUR 11.50
Last rating change:
Analyst: Henry Wendisch

Banking business is no one-hit wonder

Despite declining interest rates, MLP's banking business looks set to remain
strong. In detail:

Generation of interest income: MLP's banking business comprises EUR 3bn of
interest receiving assets with an average interest rate of 3% from three
different pillars: (1) Loans given out to MLP customers (43%), mainly for
real estate and medical practice financing, (2) Deposits at commercial banks
(25%) held as investment purposes as part of the banking business and (3)
deposits at central banks (32%).

Interest payments to customers: MLP's customers have deposited EUR 2.9bn, for
which MLP currently pays 1.2% interest on average (per H1; annualized), in
three types of accounts: (1) checking accounts for 0% interest p.a., (2)
overnight deposits for currently 1.5% interest p.a., and (3) time deposits
for currently 2.75% interest p.a. Here, the mix of deposits is undisclosed,
but our ballpark estimate would be 40% in checking accounts, 30% in
overnight deposits and 30% in time deposits (eNuW).

What changes with falling ECB rates: With a decline of ECB rates (as
expected by the ECB Survey of Professional Forecasters and us respectively),
we expect a proportionate decline in average interest rate received, but
only for short-term maturity commercial and central bank deposits (57% of
int. receiving assets). On the other hand, the longer-term maturity
fixed-rate loans given to MLP's customers should show stable or slightly
rising interest rates, as here the change in ECB rate drop comes into effect
with a substantial delay and the loan book should gradually shift towards
higher rate loans as old loans from the low interest rate are running out.
For interest expenses, we also expect MLP to reduce interest rates on
short-term maturity deposits proportionately to the ECB rate decline, in
order to protect the net interest margin of currently 61% (H1'24). As the
changes of interest receiving assets and customer deposits are
unpredictable, we model no changes here.

Net interest income to peak now, but to remain at solid levels going
forward: In our base case scenario, reflecting current market expectation
for rate declines and assuming changes at neither int. receiving assets nor
customer deposits, we expect a net interest income of EUR 46m in FY'25e (EUR 41m
in FY'26e), both at solid levels, reflecting a 'new normal' after years of
low interest rates.

Furthermore, we conduct a sensitiviy analysis (for FY'26e) in order to
assess the impact of deviations from our assumptions (see below), showing
net interest incomes in the range of EUR 23m to EUR 65m.

Against this backdrop, we remain confident that MLP remains on track to
reach its guidance and continue to grow earnings and thus reiterate our BUY
recommendation with unchanged PT of EUR 11.50, based on FCFY'24e and SOTP

You can download the research here: http://www.more-ir.de/d/30829.pdf
For additional information visit our website: www.nuways-ag.com/research

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
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1992871 23.09.2024 CET/CEST

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