Fra DNB engelske analyser

AXACTOR Ramping up We expect Q3 net profit of NOK0.6m (results due at 07:00 on 30 October). Management has guided broadly flat results QOQ, with underlying growth in operations offset by seasonality due to the annual August getaway in southern Europe. We have reduced our 2019–2020e EPS by ~10% to reflect lower investments in Q3 than previously forecast, as well as raising our amortisation estimates somewhat. The 2018 Net profit estimate is reduced by EUR9m. We believe the investment case is gradually being de-risked as Axactor emerges from its start-up phase; we reiterate our BUY recommendation and NOK50 target price.
Underlying growth likely to be offset by seasonality. We expect Axactor’s Q3 P&L to show much of the same as in Q2, with gross collections of EUR53m, EBITDA of EUR10m and a bottom line of around EUR0. We see seasonality affecting underlying growth from its ramp-up due to the annual summer holidays in southern Europe in August. We forecast interest expenses remaining at EUR9m, as the EUR80m downpayment of the mezzanine loan to Geveran is largely offset by the interest costs on the EUR150m bond taking full effect in the quarter.
We have cut our 2019–2020e EPS by 10% to reflect an increase in amortisation, partly a function of the REO acquisition announced in Q3. In addition, our Q3 capex estimate of EUR110m, based on the size of the portfolio acquisitions announced, reduces our estimate of gross collections somewhat in the coming years. In addition, we have made some housekeeping forecast changes. The 2018e net profit estimate is reduced by EUR9m to EUR11m, where we expect most of the profits to come in Q4.
BUY recommendation and NOK50 target price reiterated. We find Axactor attractively valued at a 2020e EV/EBIT of ~8.0x, in combination with our expectation of strong earnings growth and a healthy revenue mix with a relatively high share of Debt Collection earnings. We expect the bottom line to improve significantly as the end-Q2 capex capacity of around NOK450m is put to use (we see this close to doubling the current book value of portfolios of EUR539m), increasing revenues, while costs are relatively unchanged. We also expect a significant improvement in the quarterly results over the course of 2019 as the platform established in recent years sees higher margins from better utilisation, and economies of scale materialise due to high NPL investments.
BUY