Mavriq And BPO Divisions Will Expand Global Reach

Key Takeaways

• New product launches and market entries, along with acquisitions, are set to drive revenue growth in the coming years.
  
• Regulatory changes could offer significant revenue opportunities for the E-Commerce Price Comparison business in a fairer online market landscape.
  
• Heavy reliance on Google and operational challenges across key sectors could pressure margins and earnings, with regulatory and economic factors posing additional risks.

Catalysts

Through its subsidiaries, operates comparison platforms, and provides outsourcing services for credit processes, and asset and insurance claims management in Italy.

• The launch of new products and entry into new markets in the Mavriq Division, such as the Switcho and Pricewise acquisitions, are expected to drive revenue growth in 2025.
  
• The improvement in the Moltiply BPO Division’s EBITDA margin from 22.2% to 24% in 2024, attributed to operational efficiencies, indicates a potential increase in net margins going forward.
  
• Regulatory changes, such as the Digital Markets Act potentially impacting Google, could provide an opportunity for significant revenue growth in the E-Commerce Price Comparison business if they lead to a fairer online comparison market.
  
• The expansion of Moltiply's international markets, including the integration of new acquisitions, is expected to contribute to revenue and profit growth, driven by insurance comparison businesses' growth in various countries.
  
• The anticipated increase in organic growth for several business lines, including Mortgages and Claims in the BPO Division, suggests a strong potential for earnings growth, supported by a positive market outlook and internal efficiencies.

Moltiply Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Moltiply Group's revenue will grow by 18.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 9.1% today to 12.4% in 3 years time.
• Analysts expect earnings to reach €95.6 million (and earnings per share of €2.6) by about April 2028, up from €42.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 27.3x on those 2028 earnings, down from 36.0x today. This future PE is lower than the current PE for the GB Consumer Finance industry at 47.1x.
• Analysts expect the number of shares outstanding to decline by 0.06% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.3%, as per the Simply Wall St company report.

Moltiply Group Future Earnings Per Share Growth

Risks

• The company's reliance on Google for traffic acquisition has led to increased costs due to changes in Google's practices, negatively affecting EBITDA margins for the E-Commerce Price Comparison business. This could impact overall earnings if not resolved favorably.
  
• The uncertainty surrounding the enforcement of the Digital Markets Act and potential regulatory impacts on Google might delay any benefits for Moltiply Group's E-Commerce Price Comparison segment, affecting future revenue projections.
  
• Recent increases in mortgage rates, despite being manageable currently, could pose a risk if consumer confidence is affected, potentially slowing down growth in the BPO mortgage division, thereby impacting revenue and net margins.
  
• The potential impact of mergers, such as the one involving significant clients like Mediobanca and MPS, could affect service contracts and revenue streams for the BPO division, which may put pressure on earnings.
  
• Operational headwinds in the automotive leasing sector, due to changes in fringe benefit tax treatments, could reduce new leasing contracts, affecting Moltiply Lease's revenue and net margins.

Valuation

• The analysts have a consensus price target of €52.533 for Moltiply Group based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €770.2 million, earnings will come to €95.6 million, and it would be trading on a PE ratio of 27.3x, assuming you use a discount rate of 10.3%.
• Given the current share price of €41.0, the analyst price target of €52.53 is 22.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.