ProSiebenSat.1 Media revealed a set of solid results for its Q3 trading earlier this month, but, in the words of analysts at investment bank Berenberg, the broadcaster’s numbers were overshadowed by concerns about the lack of growth in the company’s dating business.

“This dating assets (Parship, Meet), which is set to be listed in 2022, is viewed by many as the jewel in the crown for ProSiebenSat.1, so the lower growth has triggered worries about the quality of that business and the potential multiple it might attract as a standalone operation,” stated Berenberg. “Our view on the asset has not changed, though – we had already assumed it would attract a meaningful discount to the US-listed dating peers given lower growth, so this is not an incremental concern to us. We believe the stock is modestly undervalued and note that management was buying shares on the day of results.”

“Trying to unpack the growth rates between the old Parship business and the newer Meet assets, we note that organic growth for the group was -2 per cent in each of the three quarters of 2021. In Q1 and Q2, organic growth relates only to the old Parship business (including eHarmony), but in Q3 2020, the Meet Group was consolidated from September, so the -2 per cent includes a month of growth (or otherwise) of that business. Given that we know that pro forma growth (with a full three months of the Meet Group included in the comparative base for 2020) was -5 percent, it is clear that the acquired business declined at a faster rate than that,” added the bank.

“Our forecasts for ParshipMeet for the full year imply a 9 percent growth rate Q4, which is equivalent to a 35 per cent two-year stack, consistent with the Q3 development. Given concerns about the slowdown in the growth rate of ParshipMeet, this ought to allay fears somewhat. However, it is worth noting that the one-year growth rates of US listed peers Bumble and Match remain much higher than those of ParshipMeet, and this is why we believe that an IPO will afford the latter company multiples that are at a discount to its US peers. It is true that on a two-year stack ParshipMeet is growing faster than Match. However, the reality is that investors will most likely pay greatest attention to the 2021 growth rate and the prognosis for 2022. If growth versus 2021 is slow, we think that will likely drive a more cautious outlook for FY 2022,” advised the bank.

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Tags: berenberg, Covid-19, germany, ProSiebenSat.1