Catella - Putting the strong balance sheet to use

• Q1 lower than expected
• Estimates down given a lower AUM base
• Capital repatriation will help to drive the share

Q1 softer than expected

Catella's Q1 results were below both ABGSC and FactSet consensus expectations, with EBIT at SEK -45m (-43m) compared to ABGSCe of SEK +18m, where both the Corporate Finance and Investment Management segment came in softer than expected, burdened by the sluggish transaction market at the start of 2026. We expect underlying activity to remain soft in the short term, but to gradually improve. As market activity picks up, we foresee variable fees within Investment Management to gradually follow suit, which should drive both improved margins and bottom-line earnings growth in the coming years.

Lower AUM base cuts our 2026–28 forecasts

As AUM in Q1 came in 2% below our forecast, we have cut our AUM estimates, which lowers our earnings forecasts within Investment Management. In addition, we have tweaked our assumption of a pick-up in variable fees and pushed it further out in time, given the macro back-drop. The newly announced buyback of SEK 100m offsets part of these negative revisions. In sum, our EPS estimates are reduced by 20% for 2027 and 9% for 2028 following the report. Our 2026e EBIT is cut more given the soft Q1 report.

2027-28e P/E of 6-8x with cash yield of 6-10% p.a.

Despite Q1 falling short of our expectations, we think the company has some attractive fundamentals, including a strong balance sheet. It's encouraging to see that the company has already started putting it to good use with both bond buybacks and the newly announced share buybacks of SEK 100m, which we view as very welcome. Given the free-float level of ~50%, this could potentially have a material positive impact on the shares over the coming quarters. When applying our latest revisions, Catella is trading at an P/E of 6-8x for 2027-28e and a cash yield (dividend and buybacks) of ~6-10% p.a. throughout our forecast horizon.