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Further buy recommendation for DBAG shares

Kepler Cheuvreux initiates coverage - Target price 48.50 euros

Kepler Cheuvreux today initiated coverage of DBAG shares with a clear buy recommendation. Sven Sauer, analyst at the independent pan-European brokerage house, has set a target price of 48.50 euros. DBAG shares opened this morning at 38.25 euros. So there is an upside potential of around 30 per cent. “With the strong reputation of its brand, an excellent network in the German ‘Mittelstand’, its extensive expertise, and the expected acceleration of its investment activity in the coming years, DBAG is in an excellent position to participate in significant growth in the private equity mid-market,” says the report published today.

The analyst values DBAG on a sum-of-the-parts basis to derive the price target. For the Private Equity Investments segment, Sven Sauer discounts the expected equity over the next five years with the cost of capital, which he sets at
9.9 per cent. Against the background of DBAG's growth plans and the portfolio's potential to increase in value, he assumes equity growth of ten per cent per annum over this period.

The value of the second segment, Fund Investment Services, is determined using a DCF model. The model takes into account the expected income from fund consulting and the segment's expenses. It is assumed that income will grow by around four per cent annually from the 2023/2024 financial year onwards, while the ratio of income to expenses remains almost constant. The fair value of the segment is thus eleven euros per share. From the sum of the values for the two segments, Kepler Cheuvreux calculates a fair value and thus a target price of 48.50 euros.

According to the analyst, DBAG's risk profile is rather conservative compared to other private equity companies, but should not be neglected. The analyst points to the comparatively high equity ratio and a stable financial structure: DBAG finances its activities on a long-term basis via the stock exchange and only takes on bank liabilities on a short-term basis to compensate for irregular cash inflows from disposals and cash outflows for new investments.

The study is aimed at professional investors and is therefore not freely available. We provide information on all current analyst ratings of our share here.