Letter to the Saver

Moltiply (formerly MutuiOnline): goal is to increase revenues generated abroad

The group, also with M&A, wants to consolidate business across borders Focus on net working capital. The risk associated with artificial intelligence

class="dinomecognome_R21"> Vittorio Carlini

29 July 2024

6' min read

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Continuing to expand abroad, increasing revenues within the business division called Mavriq. It is among the focuses of Moltiply, formerly MutuiOnline, to support the company's business.

The group, whose top management the Letter to the Saver heard from, recently entered the Dutch market. The landing took place with the acquisition of Pricewise, which is a company active in the online comparison and brokerage of energy, Tlc and insurance contracts. A move, precisely, aimed at greater internationalisation of the business. True! Moltiply, at the beginning of July, went shopping - again within the Mavriq division - for the Italian Switcho. That is to say: a digital platform that searches for and selects the best offers in the world of energy. This latest move, however, does not contradict the stated strategy. The former MutuiOnline in fact, on the one hand, aims to expand - also in the local market - in the growing business of customer support in the energy sector; and, on the other hand, wants to articulate the business more across borders.

TRIMESTRI A CONFRONTO

The Strategy

An expansion abroad that, on closer inspection, follows certain guidelines. The group is present in Mexico, France, Spain and Holland. The plan, to date, is to consolidate in the markets indicated. Of course! Should the right opportunity for M&A arise, with the right quality/price ratio, Moltiply also says it is ready to look at other countries. Essentially Western Europe. In general, however, the priority remains - precisely - to gain market share in those states where it has already planted the 'flag' of its presence. This is an expansion which, while not disdaining further acquisitions, should be achieved more through internal lines. That is to say: the group is intent on - for example by transferring its own skills where they are needed - making the acquired companies grow. So much so that, if to date about one third of the revenues of the Mavriq division come from abroad, the aim - in the medium term - is to increase the share to at least half (again of Mavriq's revenues). A target which, as Mavriq itself is expected to accelerate, should increase the incidence of revenues generated abroad on the consolidated turnover.

LA REDDITIVITÀ DELLE DIVISIONI

The dynamics of divisions

Yes, the consolidated turnover. But how are the divisions of the company performing? The company recently renamed its business. Moltiply, the name of the parent group, is also the name used for the former Business Process Outsourcing (Bpo) area. That is, essentially the outsourcing of processes (from managing a mortgage or personal loan to insurance claims) for banks, companies, brokers and asset management companies. The second division, on the other hand - formerly the Broking division - is attributable to Mavriq. It is responsible, among other things, for the distribution, usually remotely, and online price comparison of credit and insurance products. As well as the entire price comparison business: from e-commerce to utilities and telecommunications.

LA DINAMICA DELLE DIVISIONI

Well: over the years, Mavriq has seen its incidence increase both in terms of revenue and Ebitda. On the first line of the income statement, this division was worth 39% of revenue in 2019 and Moltply the remaining 61%. Subsequently, Mavriq rose to 43% (2021) and reached 47% last year. With regard to profitability, on the other hand, the dynamic - also in the wake of the higher margins of Mavriq compared to Moltiply - is even more pronounced. In 2019, the former Broking division accounted for 47% of all Mol. In 2021, the incidence rose to 55%, and in the past year it has settled at 56%. In short: the trend - also confirmed in the first quarter of 2024 - is clear. Is this dynamic continuing in the medium term? The answer is positive. The former MutuiOnline, while emphasising that it wants to maintain a balanced breakdown and forecasting the growth of both divisions, indicates that Mavriq is likely to assume a greater weight. Thus, it makes sense to assume that - in the medium term - at the level of Mol, between Mavriq and Moltiply, the ratio consisting of 60% for Mavriq and 40% for Moltiply may be reached.

I MARGINI NEL TEMPO

Marginality

Everything smooth as silk, then? The reality is more complicated. In the first quarter of 2024, the company reported rising revenues (+13.2%) and profitability (+15% for net profit). The Ebitda margin itself rose to 25.5% (it was 25% a year ago). However, if we broaden the time span considered, one thing stands out: the ratio of Ebitda to revenue has fallen. In 2020 it was worth 29.5%. Then it dropped to 28.5% (2022) to settle at 26.8 in 2023. Faced with such dynamics, the saver turns up his nose. The company, not sharing the disappointment, invites a more detailed analysis. Firstly, it points out, the current value of the indicator is in any case satisfactory. Moreover," says Moltiply, "the expected increase in the weight of Mavriq, characterised by a higher Ebitda margin (32.3% in 2023) compared to Moltiply (22%), will allow the consolidated ratio between Mol and revenues to increase. Finally, the group concludes, the operational efficiency measures of the various entities acquired - which may have diluted margins - will also support the indicator.

The business areas

So far, some considerations on internationalisation and profitability. The saver, however, also looks at the strategies in the individual divisions.

In this respect, compared to Moltiply (formerly Bpo), the group indicates that it wants to understand, and then exploit, the full potential of Artificial Intelligence (AI). That AI, however, could put precisely part of Moltiply's business at risk. The new technology, in fact, could be used by the group's customers to bring back in-house activities that are now outsourced. Moltiply, although aware of the issue, does not say it is worried. Firstly - is the indication - because it seems unlikely that Artificial Intelligence is a lever that would allow customers to replace the entire value chain offered by Montiply. Then because - it is explained - the group is itself aiming to exploit the new technology. As a result, on the one hand, its offers - thanks to the know-how acquired over time - will become even more efficient and effective; and on the other hand, the company will be able to reach more users, the company concludes.

From Moltiply to Mavriq. Here one focus is on the energy sector. That is: there is room for product innovation - for example in comparison - and for making the services offered to customers more efficient and of higher quality. Especially, says the company, in the face of a market where the opacity of many improvised players is unfortunately on the rise. Not only that. Another priority - again within Mavriq - is the comparison of prices in e-commerce. In particular,' says Moltiply, 'thanks to the implementation of the Digital Market Act and its effects against unfair competition.

Net working capital

But it is not only a question of strategies. Savers also look at net working capital. Here one should note the increase in trade receivables, whose stock, as at 31/3/2024, came to 155.1 million (+14.9% compared to 31/12/2023). A high figure that induces some concern, also on the credit quality front. Multiply, with respect to the topic at hand, articulates the comment. With regard to possible credit risk,' is the statement, 'there is no real problem. With reference, however, to the amount of trade receivables, the company points out that it is committed to reducing them. In what way? On the one hand, by trying to reduce the reconciliation period between the time when the activity is carried out and the time when the invoice is issued. On the other hand, by pushing for payment to be made in the right timeframe. Beyond that, Multiply concludes, this is not an urgency, but rather an opportunity to further optimise net working capital and thus absorb less cash flow.

Against this backdrop, what then is the outlook for 2024? With regard to the Mavriq division, the group, among other things, indicates that: in Credit Broking, the upturn in mortgage business since the beginning of the year should lead to a recovery in margins and revenues with respect to 2023; the comparison in Tlc and energy, on the other hand, after a first quarter of significant growth, sees a cooling of business in the wake of the dynamics of energy prices (although, the start of the free market in Italy, could stimulate demand). With reference to the Moltiply division, on the other hand: the company in the mortgage sector, after a negative first quarter, indicates that the business remains under pressure, although a slow improvement is materialising; on the other hand, with regard to insurance claims, the company estimates a double-digit percentage increase for the entire year.

More generally, at the consolidated level, Moltiply estimates revenues and profitability to be up in 2024 compared to 2023.

Further reading

Stock technical analysis

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Vittorio CarliniRedattore
Luogo: Milano
Lingue parlate: Italiano, Inglese
Argomenti: Finanza, Tecnologia, Analisi fondamentale
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