FRA DNB Engelske rapporter

AXACTOR Set for growth in REO collections We expect Axactor to report Q2 EBIT of NOK9.1m, on increasing collections of unsecured and REO portfolios. It signed a considerable amount of forward flow contracts in Q2, requiring future capex of close to ~EUR200m. Reported Q2 capex was however modest at EUR10m versus our EUR110m estimate, due to delayed collection versus our previous forecasts. This is the main reason we have cut our 2018e EPS by 29% and 2019e EPS by 16%. For 2020e, the timing effect is less important and our EPS is unchanged. We reiterate BUY and our NOK50 target price ahead of the report, due on 25 July at 07:00 CET.
Strong capex prospects from forward flow contracts signed in Q2. Axactor has entered into forward flow contracts in Norway, Germany, Italy and Sweden with a total value of close to EUR~200m during Q2. For the second quarter in isolation, there were no large portfolio purchases. We had previously modelled EUR110m in capex through Q2, and the forward flow level thus exceeds this. However the capex will be booked through the coming years rather than immediately, which reduced the expected collection near-term, while it should increase collections at a later stage. This, in combination with an increase in amortisations due to a higher share of REO collection, contributes to us cutting our 2018e EPS by 29%, 2019 by 16%. Our 2020 EPS estimate is unchanged. Collection of REOs likely to have picked up considerably in Q2. We estimate the gross collections of REOs to have come up from EUR9m in Q1 to EUR25m in Q2. The INE (Spannish Statistics Institute) Spanish house price statistics show continued appreciation of 1.3% QoQ in Q1, and prices are now up 21% from the trough. Much of this underlying growth in revenues is however offset by costs relating to Axactor ramping up, with increased debt facilities and higher costs, meaning that we expect net profit to be only slightly positive, at NOK1.4m.
BUY recommendation and NOK50 target price reiterated. We find Axactor attractively valued at a 2019e EV/EBIT of 7.4x on our estimates, in combination with high expected earnings growth and a healthy revenue mix with a relatively high share of Debt Collection earnings. We expect a significant improvement in quarterly results over the course of 2018 as the platform established in 2016 and 2017 sees higher margins from better utilisation, and scale benefits materialise due to high NPL investments