JDC Group — On track for a strong FY23

JDC Group (SCALE: JDC)

Last close As at 04/11/2024

EUR21.30

0.30 (1.43%)

Market capitalisation

EUR288m

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Research: Financials

JDC Group — On track for a strong FY23

JDC Group (JDC) reported Q123 results in line with management’s expectations. Despite the relatively low year-on-year revenue growth of 1.4% in Q1, JDC reiterated its FY23 guidance for revenue of €175–190m based on cooperation agreements that have been signed. This translates to 17% top-line growth at the midpoint of guidance. EBITDA is still expected to be in the range of €11.5–13.0m. We have made no changes to our estimates, which are more or less at the midpoint of guidance. JDC trades at an FY24e EV/EBITDA multiple of 12.0x on our estimates, which we believe is undemanding for what is essentially a fast-scaling platform business.

Edwin de Jong

Written by

Edwin De Jong

Analyst

Financials

JDC Group

Q123 results

Insurance

15 May 2023

Price

€16.05

Market cap

€219m

Net debt (€m) at 31 March 2023

0.3

Shares in issue

13.7m

Free float

52%

Code

JDC

Primary exchange

Deutsche Börse Scale

Secondary exchange

N/A

Share price performance

Business description

JDC Group is a leading German insurance platform, providing advice and financial services to professional intermediaries and banks but also directly to end-customers. JDC also provides its digital platform for end-clients and for the administration and processing of insurance products as a white-label product.

Analyst

Edwin De Jong

+44 (0)20 3077 5700

JDC Group is a research client of Edison Investment Research Limited

JDC Group (JDC) reported Q123 results in line with management’s expectations. Despite the relatively low year-on-year revenue growth of 1.4% in Q1, JDC reiterated its FY23 guidance for revenue of €175–190m based on cooperation agreements that have been signed. This translates to 17% top-line growth at the midpoint of guidance. EBITDA is still expected to be in the range of €11.5–13.0m. We have made no changes to our estimates, which are more or less at the midpoint of guidance. JDC trades at an FY24e EV/EBITDA multiple of 12.0x on our estimates, which we believe is undemanding for what is essentially a fast-scaling platform business.

Year
end

Revenue
(€m)

EBITDA
(€m)

PBT*
(€)

EPS*
(€)

EV/EBITDA
(x)

P/E
(x)

12/21 

146.8 

8.3 

1.4

0.07 

40.8 

262.9 

12/22 

156.1 

9.0 

1.1

0.07 

28.4 

267.8 

12/23e 

182.7 

12.3 

3.9

0.23 

17.6 

70.8 

12/24e 

212.2 

17.4 

8.6

0.50 

12.0 

31.9 

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

JDC’s revenues increased 8.9% q-o-q to €43.8m in Q123. This is unusual, as revenues in Q1 are normally somewhat lower than Q4, which is typically the high point in the year. Compared to the very strong first quarter last year, revenues grew 1.4%. Revenues in Advisory (17% of sales) fell 10.3% to €8.2m, driven by continued weakness in investment, real estate and construction financing, while Advisortech revenues (83% of sales) rose 6.5% to €39.4m. EBITDA fell 14.7% to €3.2m, mainly due to a higher cost base anticipating higher growth in the coming quarters, and EBIT decreased 23.8% to €1.5m. Net profit amounted to €1.4m (22.4%).

Advisortech had a very strong Q1 largely driven by the key clients, which showed an increase in revenues of 36% to €9.7m, or 24.7% of the total Advisortech turnover (compared to 16.5% in Q122). This growth was broadly spread across the ~10 key client accounts. Almost 100k insurance contracts (up nearly 60%) were transferred to JDC’s insurtech platform and orders (new contracts that lead to revenues for JDC after the first premium income) grew 25% to an all-time high. New applications in real estate (+60%) and motor vehicle insurance (+30%) had a very positive impact. In the quarter, JDC also closed a five-year contract with cooperative bank R+V Versicherung, for which it was running a trial. JDC’s platform will be rolled out across R+V’s ~800 branches.

JDC announced that board member Stefan Bachmann will step down at the end of this year and a new board member, Marcus Rex, will be appointed. Mr Rex arrives from Hypoport, where he was CSO/CMO for the insurance arm, which is a major competitor for JDC. He will take over marketing and sales and the key account business from Mr Bachmann. This is a very good addition, in our view.

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This report has been commissioned by JDC Group and prepared and issued by Edison, in consideration of a fee payable by JDC Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

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London │ New York │ Frankfurt

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United Kingdom

General disclaimer and copyright

This report has been commissioned by JDC Group and prepared and issued by Edison, in consideration of a fee payable by JDC Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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