Alternative Investment Strategies And Bolt-On Acquisitions Will Drive Resilience

Key Takeaways

• Expansion in assets, new client growth, and specialist investment offerings diversify revenue and reinforce future earnings potential despite market volatility.
  
• Acquisitions, digital platform investments, and a focus on ESG solutions enhance efficiency, strengthen margins, and attract high-net-worth clients for long-term growth.
  
• Margin compression, regional concentration, cost pressures, fintech disruption, and interest rate volatility threaten Van Lanschot Kempen's revenue stability and long-term profit growth.

Catalysts

Provides various financial services in the Netherlands, Belgium, and internationally.

• Strong organic growth in assets under management, driven by robust net inflows across all segments and a growing new client base (notably in the Netherlands and Belgium) positions the company to deliver higher commission and recurring fee income, supporting future revenue and earnings growth.
  
• Expansion of specialist and alternative investment strategies (such as fiduciary management and private markets solutions) aligns with growing client demand for niche and alternative products, diversifying and strengthening the fee pool and underpinning improved margin resilience.
  
• Bolt-on acquisitions (e.g., Wilton Family Office) and successful platform integrations (Evi and Robeco's online investment platform) enhance Van Lanschot Kempen's footprint among high-net-worth clients and open cross-selling opportunities, potentially accelerating AUM and net margin growth.
  
• Heightened client focus on sustainable investment solutions and ESG integration keeps the company well positioned to capture mandate growth, resulting in more stable, recurring revenue streams and supporting long-term earnings potential.
  
• Persistent operating leverage from cost discipline and investment in digital infrastructure (platforms, technology, efficiency improvements) is expected to yield a structurally lower cost/income ratio over time, providing upside to net margins and overall profitability.

Van Lanschot Kempen Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Van Lanschot Kempen's revenue will grow by 4.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 17.2% today to 20.1% in 3 years time.
• Analysts expect earnings to reach €168.2 million (and earnings per share of €3.95) by about September 2028, up from €126.4 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €146.5 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.3x on those 2028 earnings, down from 16.6x today. This future PE is greater than the current PE for the NL Capital Markets industry at 16.1x.
• Analysts expect the number of shares outstanding to grow by 0.08% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.73%, as per the Simply Wall St company report.

Van Lanschot Kempen Future Earnings Per Share Growth

Risks

• Persistent margin pressure and consolidation in investment management: Outflows from high-margin strategies, sector-wide margin compression, and ongoing industry consolidation raise the risk that Van Lanschot Kempen could face shrinking fee income and potentially lose scale in key growth segments, negatively impacting revenue and net margins.
  
• Heavy reliance on Dutch and Belgian markets: Limited geographic diversification means Van Lanschot Kempen's earnings remain closely tied to the economic and competitive environment of these regions; regional downturns or intensified fintech competition could lead to pronounced revenue volatility and slower long-term earnings growth.
  
• Sustained cost inflation and operational inefficiency risk: Costs rose by 5% due to staffing and ongoing investment in technology, which, combined with a high current cost/income ratio (71.8%, above target levels), threatens net margin improvement and could dampen earnings growth if cost increases are not matched by scalable revenue gains.
  
• Digital/Fintech disruption and evolving client preferences: The rise of digital platforms and robo-advisors may make client acquisition and retention more challenging, especially among younger, tech-savvy demographics-pressuring fee-based revenues and potentially eroding traditional wealth management market share.
  
• Continued pressure on interest income and yield curve unpredictability: The company's net interest income declined due to ECB rate cuts and may remain volatile depending on future rate movements; inability to quickly adjust pricing and asset-liability management could further constrain interest margins and overall profitability.

Valuation

• The analysts have a consensus price target of €50.75 for Van Lanschot Kempen based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €57.0, and the most bearish reporting a price target of just €44.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €838.6 million, earnings will come to €168.2 million, and it would be trading on a PE ratio of 16.3x, assuming you use a discount rate of 8.7%.
  
• Given the current share price of €49.65, the analyst price target of €50.75 is 2.2% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• 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.