Axactor - Growing pipeline in third-party collection
Q4’20: reported EBIT flattish y-o-y A growing pipeline in third-party collection ~20% valuation uplift from “big-fix” transaction Q4’20: reported EBIT flattish y-o-y to EUR 20. 5m We estimate EBIT of EUR 20. 5m in Q4’20, flattish y-o-y and down 26% q-o-q. This is mainly due to higher amortisation, slightly higher opex and the assumed NPL revaluations in Q4.
Given a new round of lockdowns in Q4 and general macro uncertainty, we assume that Axactor will make some moderate negative revaluations in the quarter to reflect this (EUR 4m), while the third-party review of the REO book is likely to trigger a slight positive write-back (due to overly strict initial revaluations). Gross revenue is estimated to be flattish q-o-q, but down 5% y-o-y in Q4. Growing third-party collection demand and pipeline We expect that there will still be some temporarily negative effects from moratoria in Spain and Italy, as banks seek to avoid reputational risk from sending claims to collection during lockdowns; this should reverse in the coming months.
However, we believe that the record-high new signings of customers within third-party collection seen in Intrum during Q4 will to some extent been seen in Axactor as well, given its market exposure. Hence, we see a strong pipeline within this segment, on top of a “buyer’s market” within the purchase debt part of the NPL market, but that this will be somewhat back-end loaded in ’21e with a rebound from COVID-19. In sum, we estimate ~27% y-o-y growth in third-party collections revenue in ’21e, 25% growth in gross collections (NPLs + REO sales) and an investment level of EUR 300m in ’21e (up from EUR 211m ’20e).
The EPS chg. largely reflects the 50m new consideration shares in connection with the roll-up of Axactor Invest (in Q1’21). ~20% DCF valuation uplift from the “big-fix” transaction Following the comprehensive refinancing transaction (where Axactor also acquires Geveran’s 50% stake in the Axactor Invest JV), the company has signif.
