We hosted Axactor’s head of Strategy & IR, Kyrre Svae, at today’s ABGSC investor day seminar. Mr. Svae gave a confident presentation of the company’s prospected growth plans, cost efficiency trends and why they needed to take revaluation measures for their NPL-books after two years of poorer earnings momentum. They have now cleaned its books by almost being done with the REOs (real estate owned) in Spain (~90% done, and put into run-offs) and what they state was poor investment calculations in some Swedish NPL portfolios from its inception years. The poor NPL portfolios led to revaluations of EUR 44.1m and EUR 36.9m in ’20 and ’21, respectively, reducing downside risk of future collection performance and an expectation that collections now will return to 100%.
New business are taken on at more attractive levels
Axactor’s backbook as of YE’21 (of EUR 1.1bn) holds a gross IRR of 16.3%, while they during 2021 and YTD in 2022 has attracted gross IRR at 23.4% and 21.9%, respectively. Their aim is to continue to acquire attractive NPLs going forwards, but guide for a range of 18-22% gross IRR as their best assessment of the current markets. The company guide then that 1pp increase in gross IRR for the whole book will improve its ROE by 2pp. If they could manage these, we could see an uplift and increased ROE of 3.5-10pp, depending on decay and re-investments levels. The NPL investments and 3PC revenue have been negatively affected by the COVID-19 pandemic but is now expected to pick up to normal levels towards ’23. For the 3PCs, the operational efficiency program has contributed to an uptick in its EBITDA margin to 47%. Sees limited impact of the ongoing war in Ukraine on its collection but expect high energy prices to potentially to reduce disposable income for debtors
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