Otovo (Buy, TP: NOK16.00) - Proving monetisation strategy
We consider Otovo’s first subscription portfolio sale proof of its portfolio monetisation strategy and the WACC of 6.4% strong in today’s high interest rate environment. Despite the sale improving liquidity, we still see a funding need in Q2 2024e unless further portfolios are sold, but this is likely to be easier to bridge with a proven subscription portfolio monetisation strategy. We have reduced the discount applied to our SOTP to 35% (50%) as we now see less risk associated with the company’s business model, offset by somewhat weaker market growth. We reiterate our BUY and NOK16 target price.
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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