Original-Research: UmweltBank AG (von GBC AG): BUY

Classification of GBC AG to UmweltBank AG

Company Name:	UmweltBank AG
ISIN:	DE0005570808
Reason for the research:	Research Note
Recommendation:	BUY
Target price:	9.63 EUR
Target price on sight of:	31.12.2025
Last rating change:
Analyst:	Cosmin Filker, Marcel Goldmann

1st HY 2024: Negative valuation effect brought forward to 2023, forecast adjusted, target price: €9.63, rating: BUY

UmweltBank AG's total income rose significantly in the first six months to € 38.16 million (previous year: € 31.20 million). In particular, the jump in the financial result to € 17.95 million (previous year: € 1.19 million) contributed to this visible increase. This is related to the planned implementation of the corporate strategy, which envisages the sale of the investment portfolio within the next three financial years also in order to release equity and regulatory capital. In the first six months of 2024, a total of four wind farm investments and two property investments were sold, thereby significantly increasing the financial result. When the Q1 figures were published, Umweltbank AG had still reported a loss on disposal of around € 10 million. However, as part of an audit by the auditor, the carrying amount of the securities sold as at 31 December 2023 was subsequently changed, meaning that the valuation loss was carried forward in full to the 2023 financial year.

The significant increase in total income is also reflected in the significant increase in earnings before taxes to € 8.53 million (previous year: € 3.11 million) and the profit for the period to € 5.62 million (previous year: € 1.49 million). The increase in income more than compensated for the rise in personnel and administrative expenses to € 29.37 million (previous year: € 26.63 million). The higher expenses reflect an increase in salary levels as well as higher expenses in the areas of IT and marketing. The completion of the migration of the core banking system (Q2 2024) and the transformation of the organisational structure should eliminate significant cost drivers in the future.

The management of UmweltBank AG has confirmed the previously communicated guidance with the publication of the half-year figures for 2024. However, the guidance was raised by the valuation effect of around € 10 million. As the loss from the sale of the securities will not be recognised in the current financial year as previously expected, but retroactively in the 2023 financial year, the figures for the 2023 financial year have been adjusted and the pre-tax guidance has been raised to between € -5 million and € -10 million (previously: € -15 million to € -20 million).

According to the company's planning, total income in the range of € 60 million and € 65 million will be offset by total expenses of around € 70 million at the end of the 2024 financial year. Based on the figures achieved in the first six months, total income of € 38.16 million and total expenses of € 29.68 million, this assumption is reasonable.

Total income in the second half of 2024 should be characterised in particular by an increase in net interest income, which should be slightly above the previous year's figure by the end of the year. On the one hand, the increase in new lending business, which should rise significantly to € 250 million by the end of the 2024 financial year, should contribute to this. However, the reinvestment of funds released from the sale of treasury portfolios is likely to be of key importance. In view of the general rise in interest rates, these should be invested at better conditions. In addition, the investment of customer funds should also contribute to the increase in net interest income.

As previously forecast, the current financial year 2024 will initially be characterised by an increase in total expenses before these decline in the following financial years. After that, costs are only expected to develop at a disproportionately low rate. On the one hand, the costs for the now completed migration of the core banking system will no longer apply in the coming financial years. These are expected to amount to € 4 million in the first half of 2024. In addition, UmweltBank AG will make further investments in efficient and digital processes in 2024 and report higher marketing expenses to acquire private customers. Following completion of the investments and the transformation currently underway (digitalisation, efficiency enhancement, organisational structure), the cost-income ratio is expected to fall in the coming financial years. UmweltBank AG is aiming for a cost-income ratio of less than 60 % by 2028. For the 2026 financial year, our last forecast period, we expect a cost-income ratio of 75.7 %.

The sum of the discounted residual earnings results in a value of € 343.35 million (previously: € 342.18 million). With 35.66 million shares outstanding, this results in a fair enterprise value per share of € 9.63 (previously: € 9.60), which corresponds to a marginal increase in the target price. Based on the current share we continue to assign a BUY rating.

 

You can download the research here: http://www.more-ir.de/d/30423.pdf

Contact for questions:
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
++++++++++++++++
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (1,4,5a,6a,7,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter:
https://www.gbc-ag.de/de/Offenlegung
+++++++++++++++
Date and time of completion of the study: 07.08.24 (2:16 pm)
Date and time of the first dissemination of the study: 12.08.24 (9:30 am)