Lucror Analytics - Morning Views Europe

In today's Morning Views publication we comment on developments of the following high yield issuers: Odigeo, Engineering Group, Teva, Versuni (formerly Philips Domestic Appliances), Alain Afflelou, Eircom, Iliad, Borr Drilling, Ithaca Energy, Tullow Oil, Victoria, TUI Cruises, Axactor, McLaren, EVOCA, Flos B&B Italia (formerly International Design Group)

Sell NPLs and reduce debt

Sell EUR 83m of NPLs (6% of total NPLs) to safeguard covenants. Negative revaluation of EUR 12m (Oct) from under collection (90%). Stock to tumble 3-10%; cons. cash-EBITDA cut by 5-10%% (ERC)

Lucror Analytics - Morning Views Europe

In today's Morning Views publication we comment on developments of the following high yield issuers: Air Baltic, Aggreko, PHM Group, Rekeep, Hapag-Lloyd, Bite, Applus, Iliad, Digi Communications, Kem One, Axactor, Nomad Foods (Iglo), Premier Foods, CBR Fashion, Telecom Italia, Boparan, Altice France (SFR), Ineos, Ineos Quattro, Casino Guichard-Perrachon

Expect under-collection to continue

Lucror Analytics - Morning Views Europe

In today's Morning Views publication we comment on developments of the following high yield issuers: SPIE, Teva, Digi Communications, Altice France (SFR), Telenet, Sunrise, Air France-KLM, Axactor, Victoria, Ineos, Stada, Oriflame, Casino Guichard-Perrachon, Boparan, Synthomer, NewDay

Axactor (Hold, TP: NOK3.80) - Still-weak collection performance

Q3 cash EBITDA was up 5% YOY due to lower opex and the sale of NPL portfolios in Spain. The macroeconomic backdrop continues to put pressure on collections and investments, with the limited headroom to bond covenants adding to the funding risk. We have cut our 2025–2026e EPS by 3-4%, and our target price to NOK3.8 (4.4), but reiterate our HOLD.

Undercollection drives low 3x interest coverage

Cash EBITDA +2%/+1 vs. ABG/consenus; ...while EBIT weak from high amortisation; Expect Cash EBITDA down 4-7% and stock to follow

Lucror Analytics - Morning Views Europe

In today's Morning Views publication we comment on developments of the following high yield issuers: Liberty Global, SPIE, Nexans, Techem, McLaren, Axactor, CABB, Codere, Takko

Axactor (Hold, TP: NOK4.40) - Easing pressure from interest rates

We forecast Q3 EBITDA of EUR30m, 12% lower YOY as soft collections should offset reduced funding costs. We expect the weak trend to continue into Q3, partly offset by higher growth from 3PC. As European interest rates continue to decline, we see pressure on earnings easing with the gradual fall in funding costs. We have raised our 2025–2026e EPS by c3–4% and our target price to NOK4.40 (4.30), while we reiterate our HOLD. The report is due at 07:00 CET on 31 October.

Axactor (Hold, TP: NOK4.30) - Investing through the trough

Despite a still-challenging collection environment, Q2 cash EBITDA was EUR61m, up 3% YOY as cost-efficiency measures again reduced opex. Investment activity surged during the quarter, as EUR70m in NPL portfolio acquisitions (the highest since Q4 2022) contributed to another increase in the portfolio gross IRR. Since 2021, the gross IRR has risen from 15.7% to 18.9%. We have tweaked our 2025-2026e EPS after the report, and reiterate our HOLD and NOK4.3 target price.

Solid investments help ERC

Up investments, better cash EBITDA

Cash EBITDA +10%/+8 vs. ABG/consenus, margins 68.4%...; ...while EBIT still just on the softer side vs us and cons, but...; ERC back to growth +4% q-o-q = cons +5-10% = stock +2-10%

Axactor (Hold, TP: NOK4.30) - Modest collection environment

We forecast Q2 EBITDA of EUR33m, 2% higher YOY, as we expect a continued modest collection trend. Despite strong profitability on recent portfolio investments, NPL volumes are likely to remain at the low end of the guidance for 2024. Market interest rates continued to stabilise during the quarter, with forward curves pointing further downwards, providing relief from the high funding costs in recent quarters. We have cut our 2025–2026e EPS by ~4% and our target price to NOK4.3 (4.6). However, we ...

BNP Paribas: BNP Paribas' acquisition of AXA's investment management b...

The transaction will strengthen BNPP’s asset management business and drive long-term revenue growth, while strain on capital will be limited.

In need of higher collection performance

Q1: Weaker -than-expected cash EBITDA from tough collection. Cash EBITDA down ~20% on lower curves & NPL investments. Valuation not demanding, but collection needs to improve.

Axactor (Hold, TP: NOK4.60) - Challenging collection climate

Soft collections in the Nordic and German markets, and corresponding portfolio revaluations, led to a 9% YOY drop in total income in Q1. Although the EUR100m–200m annual investment target was reiterated, we expect modest activity short-term due to limited NPL volumes at attractive prices. We have cut our 2025–2026e EPS by 10–14%, primarily reflecting lower collections, lowered our target price to NOK4.6 (6.8), and downgraded the stock to HOLD (BUY).

Tougher to collect in Northern Europe

Cash EBITDA -20%/-15% vs. ABG/consenus, margins 62% which filter into poor EBIT -25%/-22% vs ABG/cons. ERC down 2% q-o-q = cons down 3-10% = stock down -7-13%.

Axactor (Buy, TP: NOK6.80) - Abating interest rate pressure

We forecast Q1 pre-tax profit of EUR7m, down YOY, due to higher financing costs, although interest rates have stabilised since end-Q4. Somewhat softer collections from non-performing loans (NPL) and third-party (3PC) should lead to total income 3% lower YOY. We expect gradually increasing investments, with total volumes above replacement in 2024. We have made limited estimate revisions for 2025, and we reiterate our BUY and NOK6.80 target price.

Axactor (Buy, TP: NOK6.80) - Aiming high for 2026

Axactor reported strong Q4 EBIT of EUR32m, up 11% YOY driven by higher income from the NPL and 3PC segments, in addition to improved opex. As part of its new financial targets for 2026, Axactor is aiming for an ROE of 12% while maintaining an ambition of a 20–50% dividend payout. As NPL portfolio prices have yet to fully reflect the rising interest rates, Axactor aims for EUR100m–200m in annual investments. We have cut our 2024–2025e EPS by 3–5% on the outlook for somewhat lower collections, but...

Axactor (Buy, TP: NOK6.80) - Expecting solid 2023 performance

We expect a continued solid NPL collection performance to result in Q4 EBIT of EUR31m, up 9% YOY. In line with the guidance, we forecast 2023 NPL investments of EUR122m, enough to keep ERC stable going into Q4. We expect improved margins after having exited the third-party collections (3PC) segment in Sweden and Finland, offsetting lost volumes. We have raised our 2024–2025e EPS by 1–5% following the improved outlook for lower market interest rates, and reiterate our BUY and NOK6.80 target price...