Finans og forsikring

17.07.2020 kl 11:28 4017

DNB med oppdatert analyse i dag, kursmål opprettholdes kr 10

Scaling back
While the operating environment in certain geographies
seems to have improved gradually during the quarter,
we still forecast material portfolio impairments in Q2,
pushing net profit into negative territory. The risk of
covenant breaches is imminent, and we believe the
ability to scale down investments is important to obtain
the needed flexibility for its lenders. We have tweaked
our 2021–2022e EPS, while cutting 2020e EPS due to
lowered collections and investments. We reiterate our
BUY and NOK10 target price.
Q2 earnings expected to be red. We acknowledge the high degree of uncertainty
regarding the magnitude and timing of potential portfolio revaluations. While more time
may be required for Axactor to make a qualified assessment of the asset value
deterioration of its ROE assets post Covid-19, we have assumed a write-down of
NPLs and REOs in Q2. The combined EUR37m write-down is expected to leave Q2
EPS in negative territory. However, we expect some mitigation from expected costsavings measures to its cost base. The Q2 report is due at 07:00 CET on 23 July.
Scaling back on capex. We assume no discretionary capex beyond forward-flow
commitments in Q2, leaving our capex estimate just north of EUR60m for the quarter.
We find the announced 3PC element on a renewed Norwegian forward-flow contract
important to limited near-term capex and safequard liquidity, and we have trimmed our
capex assumptions for H2 to EUR66m to reflect this. We believe its banks will be
accommodating with waivers as long as Axactor is able demonstrate the ability to
improve cash generation and scale down investments.
Risk high; visibility low. We continue to expect the Northern European collection
environment to prove rather robust, but still see a risk of material portfolio impairments
being required, leading to sequential covenant breaches. While the macroeconomic
outlook has gradually picked up since Q1, we still consider the investment case risk
elevated. Last week, Intrum issued a business update announcing stronger Q2 results
than expected, further noting a swifter return towards normality across its 24 European
markets than previously expected.
BUY and NOK10 target price reiterated. While the near-term earnings profile
remains challenging with covenant breaches, impairment risk, and collection
uncertainties, we find this more than reflected in the stock price. Our EPS estimates
for 2021–2022 are largely unchanged, while we have lowered our 2020e EPS
reflecting the challenging outlook. We reiterate our BUY and NOK10 target price.

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