Deutsche Boerse Keeps Delivering Toward 2023 Targets; Fair Value Estimate Maintained

Wide-moat Deutsche Boerse reported earnings per share for full-year 2021 of EUR 6.59, 4% ahead of our estimates. Net revenue increased 9% to EUR 3,510 million, a good performance given the normalization of trading activity in 2021 and difficult comparable base of 2020. The slowdown was felt primarily in Eurex (down 10%) and Xetra (down 7%), which declined from a strong 2020 as was to be expected. As measured by the VSTOXX Index, activity declined about 31% from elevated levels in 2020, putting net revenue declines at Eurex and Xetra into a more positive light. Other good takeaways in the year were strong growth at EEX (up 13%) and investment fund services (up 64%) with the former benefitting from higher commodities trading activity in the fourth quarter, adding to what already shaped up to be a good year for the segment. The Investment fund services business is expected to remain a growth driver for Deutsche Boerse in future; we model 15% revenue CAGR over the next five years. EBITDA rose 9% to EUR 2,043 million, putting the group well on track to meet its 2023 targets. Operating expenses increased 13% to EUR 1,552 million, albeit entirely owed to recent acquisitions adding to the cost base. On an organic basis, costs were flat. Revenue and EBITDA guidance for 2022 of about EUR 3,800 million and EUR 2,200 million is in line with our assumptions in our latest model. We maintain our fair value estimate of EUR 168 per share.