Q4’21: books EUR 43m in negative revaluations

Cash EBITDA on the weak side vs. consensus for Q4

Collection performance should normalize in H1’22

Q4 revaluations: EUR -37m NPLs and EUR -6m on REOs
Although collection performance improved q-o-q from the performance in Q3 (89%), Q4 performance was still weak at 91%, but we note that this improved to 97% in December. Given that the company has seen more than a 5% deviation vs. active forecast the last six months, Axactor must revise its collection curves and make revaluation accordingly. In sum, the negative revaluations amount to EUR 43m, of which 37m relate to NPLs and 6m to REOs (runoff segment). According to the company, the majority of the revaluation relates to portfolios acquired during the start-up phase of Axactor. The NPL revaluation significantly blurs the picture for net revenues which comes in at EUR 22m or EUR 59m adj. for the revaluation, which is ~1% shy of IR consensus. EBITDA came in at EUR -26m, negatively affected by the EUR 43m in revaluations and one-off settlement cost of EUR 2.2m (terminated forward flow agreement Axactor deemed to be violated). Adj. for these items, EBITDA was EUR 19.2m, +2% ahead of consensus.

Cash EBITDA 12% below IR consensus for Q4’21
Prelim. cash EBITDA came in at EUR 55m in Q4, which is 12% below IR consensus for the quarter. The deviation is primarily driven by gross revenue which was ~EUR 9m lower than consensus expected for Q4, most likely driven by lower gross collection on NPLs. Gross revenue from 3PC was better than expected, while REOs seem to be as expected for the quarter, this goes for both us and consensus. In brief, an underlying weaker than expect quarter in cash terms.

Performance to normalize, but cons. likely to lower estimates
Despite the collection shortfall the last two quarters and the sizable Q4 revaluations, Axactor is still well within its financial debt covenants. Given that collection performance picked up in December and the sizable revaluation in Q4 to a
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