Taaleri: Strong recurring revenue growth while costs were above our expectations in Private asset management - Nordea

Taaleri reported Q1 EBIT of EUR 1.6m, coming 6% below Refinitiv consensus at EUR 1.7m. We note Taaleri’s adoption of IFRS 17 which consensus might not fully reflect (visible mainly in top line). Based on segment reporting, Q1 total income was EUR 9.3m, bang in line with Nordea estimate. Recurring revenues were EUR 9.8m in Q1, beating our estimate by 11% driven strong performance in Garantia. Fair value changes of investments were EUR -0.6m in Q1, while we had anticipated EUR 1.0m. Investment operations income of EUR -0.6m came clearly below our estimate of EUR 0.4m. There were no carry in Q1 (in line with our assumption). Private asset management EBIT came clearly below our estimate due to higher personnel and direct costs in Renewable energy. Private asset management recurring revenues came 1% above our estimate while due to negative fair value changes, total income came 5% below our estimate (driven by negative FX impact from US wind power project). Garantia’s loan losses continued at a low level (2.5%) while insurance service revenue was up 44% y/y, while we had anticipated 20% y/y increase. Insurance revenue were up 13% y/y, while insurance service expenses were down 33% y/y. Combined ratio continued to strengthen and was 24.3% in Q1. Solvency was at 235%. Private asset management AuM was flat q/q at EUR 2.5bn (EUR 2.3bn in Q1 2022). SolarWind III is expected to reach first closing in Q2 2023 with final target of EUR 700m of commitments. On initial take, we expect consensus to make neutral to slightly negative underlying estimate revision due to higher costs in Renewable energy. We have a fair value range of EUR 9.9-11.4 per Taaleri share.