Skarbiec Holding Reports 4Q22/23 Net Loss Higher Than Expected Due to Goodwill Write-Off
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4Q22/23 net loss much higher than expected due to goodwill write-off
Skarbiec Holding released 4Q22/23 (calendar 2Q23) figures with the following highlights:
- In 4Q2022/23 (calendar 2Q23) Skarbiec Holding reported net loss of PLN -16.5m vs. our expectations at PLN -0.9m (and vs. net loss of PLN -1.2m in calendar 1Q23 and PLN -3.0m in 2Q22). Deep net loss was driven by goodwill write-off (PLN 15.6m). Revenues came broadly in line with our expectations and slightly higher costs were offset by slightly better net financial income. Excluding write-off, net loss came broadly in line with our expectations.
- Fixed fee decreased -3% y/y, but improved 12% q/q with margin on average AUM at 1.08% (vs. 1.02% in 1Q23 and 1.07% in 2Q22). Quarterly growth of fixed fee was driven by rising AUM (5% y/y, 2% q/q) coupled with rising share of equity funds in AUM (41% in 2Q23 vs. 39% in 1Q23 and 40% in 2Q22).
- Success fee in 2Q23 came in at PLN 0.7m (vs. PLN 0.4m in 1Q23 and PLN 0m in 2Q22).
- Distribution costs came in at PLN 5.8m (-4% y/y, 6% q/q) and represented 41% of fixed fee (vs. 43% in 1Q23 and 41% in 2Q22). Total HR costs increased 11% y/y (7% q/q) and other costs declined -10% y/y (7% q/q).
- At the end of 2Q23 AUM of Skarbiec TFI came in at PLN 5,340m (5% y/y, 2% q/q). Y/y growth was driven by rising assets of equity&mixed funds (9% y/y) and debt funds (6% y/y). AUM of portfolios were broadly flat (1% y/y) and dedicated funds saw -11% y/y drop. On a q/q basis rising AUM of equity (9% q/q), debt (3% q/q) and dedicated funds (4% q/q) were only partly offset by declining assets of portfolios (-6% q/q).
- In 2Q23 net flows to Skarbiec TFI came in at PLN -7m vs. PLN 45m in 1Q23.
Our view:
NEUTRAL 2Q23 (calendar) was another quarter in a row with net loss of Skarbiec Holding. While loss was much higher than expected, it was driven by write-off of goodwill (of Skarbiec TFI), that we perceive as one-off. Revenues came broadly in line with our expectations and slightly higher costs were offset by slightly better net financial income. Excluding write-off, net loss came broadly in line with our expectations. Quarterly improvement was driven by improvement in fixed fee (12% q/q), that was only partly offset by higher costs. Fixed fee was supported by rising AUM (5% q/q, 2% q/q) coupled with rising share of equity funds in total AUM.
We find the calendar 2Q23 numbers of Skarbiec Holding as neutral. In our earnings estimate we had assumed, that Skarbiec Holding would be able to generate positive quarterly results more permanently not earlier than in mid-2024 (apart from calendar 4Q23 supported by success fee). Fund managers are being helped by declining interest rates and neutral or supportive market environment. We point at rising AUM of Skarbiec TFI also in calendar 3Q23 (13% y/y, 1% q/q) and positive net flows (PLN 28m). We assume Skarbiec Holding to report PLN 4.1m net profit in 2023/24e. At the end of 2Q23 Skarbiec had PLN 103m of cash on the balance sheet (vs. PLN 110m in 1Q23) vs. current MCAP of PLN 139m.
