Focus on AuM recovery.
Our focus in the H1 result will be on AuM recovery, which is the key driver for Taaleri's continuing earnings. We estimate Taaleri's AuM decreased only 4% h/h from EUR7.1bn to EUR6.8bn, supported by market recovery.
We cut our operating profit estimate for 2020E by 52% from EUR26.1m to EUR12.4m because of 1) Garantia's investment income due to financial market turmoil 2) Fellow Finance's mark-to-market loss (share -37% in H1), 3) lower management fee estimates and 4) deferral of the capital gain from the sale of the Texas wind farm from 2020E to 2022E. We expect earnings to recover in 2021E to EUR24.9m, driven by normalising performance and management fees, as well as Garantia's investment operations.
Taaleri's shares are down 20% YTD and are trading at a 22% discount to Finnish asset management peers at a 2021E P/E of 9.8x on our estimates. We set our fair value range at EUR7.5-9.0 (EUR9.0-11.0). The lower end of the range implies a 2021E P/E of 11.2x, which is 14% below Taaleri's five-year average P/E 13x. The upper end of the range, on the other hand, implies a 2021E P/E of 14.2x, 9% above the historical average.