HYPOPORT (+) : Non material data changes

Research evidence excerpt

HYPOPORT (+) : Non material data changes

Investment case, valuation and risks

HYPOPORT (Outperform, Target Price EUR210)

Investment case

Hypoport is a conglomerate aiming to digitalise the credit, housing and insurance

industry. Its major asset is Europace, the leading B2B marketplace for German

mortgages. We expect 1) rising earnings on the back of higher mortgage volumes,

higher revenues from its ERP system and lower losses at Value as well as 2)

increasing market share at Europace to support valuation multiples.

Valuation methodology

We value Hypoport based on the blended average of a) multiple-based and b) DCF-

based valuation approach.

Risks

To the upside:

1) Successful new products (e.g. OneClick); 2) changes in tax regime: restriction of

tax-free capital gains from a property sale could result in a boost of property

transactions in the short term but make the asset class less attractive in the long term;

3) declining interest rates; 4) larger client wins: the migration of one of the larger

German private banks such as Deutsche Bank, Commerzbank or HypoVereinsbank

would strongly increase transaction volumes; 5) Europace could become market

standard for public sector banks: Fiducia IT and Finanz Informatik, the two central IT

providers for co-operative and savings banks in Germany, might stop providing an IT

solution for mortgages, incentivising all public sector banks to migrate to Europace.

To the downside:

1) A further step-up in interest rates: rising rates are likely to result in declining property

prices, eventually declining loan volumes and consequently lower fees for Europace; 2)

weak consumer sentiment: lower consumer sentiment for longer could result in lower

consumer appetite for making larger investments.