Catella - Q1 on the weak side, but PIM was solid

Q1 weaker than expected; Q2 will be burdened by a one-off Small positive revisions in the PIM segment for 2022-23e Catella trades at 38% below our peer group Q1 below expectations, Q2e burdened by one-off cost Catella’s Q1’21 report was on the weaker side, where all the different reporting segments showed decreasing operating profit y-o-y. The reported pre-tax profit was, however, up by 107% y-o-y, driven by the Property Asset Management (PAM) divestment in France, where Catella sold 50. 1% of its French subsidiary, which added SEK 130m to net financial items. The Property Investment Management (PIM) segment showed a solid result in Q1, slightly ahead of ABGSC’s forecast.

The shrinking operating profit y-o-y was driven by a specific transaction in UK last year, which boosted the result. Overall, we continue to see positive signals from the PIM segment, where the development of new products in several niche areas seems to be progressing and the AUM continues to rise, up 6% q-o-q adjusted for PAM divestment and 3% above our estimate. For Q2’21e, we assess that the Catella European Residential Fund has achieved a level where it attracts performance-based fees.

We now factor in performance fees of SEK 57m. Q2’21 will, however, also be burdened by the cost of winding down PIM, which is expected to lead to significant negative impact on Catella, hurting net profit by ~SEK 103m. Small positive revisions in the PIM segment Assets under management (AUM) in PIM beat our estimates by 3%; we subsequently raised our AUM base within the segment, hence increasing our 2022 and 2023 estimates.

For the Corporate Finance segment, we make minor tweaks to our 2021 estimates and our forecast scenario remains intact: we expect a gradual return of transaction volumes during 2021. Our estimates for 2022 and 2023 in the Equity, Hedge and Fixed Income Funds segment are unchanged as Catella has announced it will cease operations within the segment in Q2’21. Catella trades at 38% below.