DnB Markets - B2Holding ASA (B2H) Solidifying the investment case

Report

DnB Markets

Niclas Gehin

Solidifying the investment case

B2 holding reported a solid Q2, on track with our investment case. The company continued to report an over-collection of 7%+ and reported total NPL investment of more than NOK1.1bn in the quarter. The EPS of NOK0.29 came in line with both our and consensus estimate. We have made only smaller increases to our estimates and reiterate our BUY recommendation and NOK21 target price as we believe B2 is attractively priced at an EV/EBITDA of 10.3x.

28/08/2017 12 EN

Underlying

B2Holding ASA

B2holding ASA. B2holding ASA is a Norway-based company, which is primarily focused on the financial services industry. The Company operates as a provider of debt solutions for banks and institutional vendors. The Company operates in five segments, namely: Debt Purchase, Debt Collection, Credit Information, Third Party Debt Collection, Consumer Lending. The Debt Purchase segment is involved in the purchasing debt portfolios, in particular Non-performing loans (NPLs). The Debt Collection segment provides optimal collections through amicable solutions or legal processes. The Credit Information segment offers credit information as a service through Creditreform in Latvia. The Third Party Debt Collection offers collection of debt on behalf of customers. The Consumer Lending segment provides lending services. The Company operates on Danish market through Nordic Debt Collection A/S (Nodeco), as well as owns a majority stake in Spanish entity Confirmacionde Solicitudes de Credito Verifica.

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NO0010633951 Oslo Bors Norway

Provider

DnB Markets

DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.

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Analysts

Niclas Gehin

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The Q4 report was strong, yet mostly pre-announced, with cash metrics significantly affected by the closing of a ~NOK500m secured claim in Croatia. PTP was 5% stronger YOY, as increased unsecured ERC and collections offset the strong YOY increase in financial expenses. Having reduced overall funding costs by 0.5%-points after a series of market actions, management aims to reduce overall interest expenses further in 2024, prompting us to raise our 2024–2025e EPS by 1–3%. We reiterate our BUY and NOK10.5 target price.

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B2Impact (Buy, TP: NOK10.50) - Well positioned for growth

We forecast Q4 PTP of NOK86m, 8% higher YOY, helped by higher investment levels and solid collection performance, offsetting increased funding costs. Several key items for Q4 have been reported, including a ~NOK500m impact from a large recovery in Croatia. We have raised our 2025e EPS by ~5% on improved funding costs following the recent bond issue. We reiterate our BUY and NOK10.5 target price ahead of the Q4 results due at 07:00 CET on 2 February.

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B2Impact (Buy, TP: NOK10.50) - Strong cash generation

Increased funding costs and non-recurring items offset much of the positive collection momentum in Q3, as PTP was meaningfully lower YOY. Although invested and committed volumes YTD are approaching the 2023 guidance of NOK2.5bn–3bn, portfolio prices have yet to reflect the sharp rise in market interest rates, limiting the investment pace somewhat. We have reduced our 2024–2025e EPS by ~1–4%, but reiterate our BUY and NOK10.5 target price, as we continue to find the investment case attractive at a 2024e P/E just below 7x.

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November 10, 2023 November 10, 2023 1 EN

Holmen (Sell, TP: SEK370.00) - Weak earnings momentum

We consider Holmen a quality company and continue to like its shareholder-friendly strategy. However, as c50% of the 2023 EBIT was derived from the traditional paper business (for which addressable markets are shrinking), and with still-tough markets for the paperboard business and lower spot prices for electricity affecting the renewable power business, we expect earnings to decline for 2024. Given relatively rich earnings multiples, we reiterate our SELL and SEK370 target price.

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Linus Sigurdson

VEF (Buy, TP: SEK3.50) - Positive momentum continues

VEF wrote up its portfolio by 1% QOQ in Q1 (in USD terms). We believe the underlying portfolio performance remains healthy, and the USD10m up round in TransferGo strengthens our conviction in VEF’s NAV valuations as VC dealmaking continues to pick up after a lacklustre 2023. In light of these developments, we find the 56% discount to NAV excessive and expect a positive re-rating as VEF looks to make an exit this year. We reiterate our BUY and have raised our target price to SEK3.5 (3.4).

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Volvo (Buy, TP: SEK340.00) - Beat in softer markets

The Q1 report supported our view that underlying profitability has improved structurally (now also evident in a weaker market), and that consensus will have to come up as 2024 progresses. We reiterate our BUY and have increased our target price to SEK340 (335), having raised our 2024–2026e adj. EBIT by 7–4% – we are now 8–10% above consensus.

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Solidifying the investment case

B2Impact (Buy, TP: NOK10.50) - Strong cash quarter

B2Impact (Buy, TP: NOK10.50) - Well positioned for growth

B2Impact (Buy, TP: NOK10.50) - Strong cash generation

Holmen (Sell, TP: SEK370.00) - Weak earnings momentum

VEF (Buy, TP: SEK3.50) - Positive momentum continues

Volvo (Buy, TP: SEK340.00) - Beat in softer markets

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