"krohts"
Kuulasin nii nädalavahetuse puhul järele 25. septembri investoresitlust. Igati sorav esitus Elevingi juhtide poolt – kõlab veenvalt, kui otsida põhjuseid, miks Elevingi IPOl osaleda. Lugesin kõrvale prospekti eestikeelset lühikokkuvõtet, sirvisin aruandeid ning uurisin Fitch Ratings’i reitinguraporti. Toon siinkohal välja põhilised riskid ja küsimuse kohad, seda täienduseks prospekti üldsõnalisele riskide kirjeldusele ning juba eespool läbi käinud ühe ettevõtte suuromaniku kasusaaja võimalik et liiga lähedasele suhtele vene oligarhiaga.
1. Likviidsuse ja rahastamise profiil peegeldab varade kõrget koormatust: üsna kõik varad on võlakirjade jm finantskohustuste tagatisteks pandud; see võib rahastuse olukorra pingeliseks muuta, eriti kui makro keskkonnas peaksid olud keerulisemaks minema ja tagatisvarade hinnad kukkuma hakkama; kui asjad peaks allavett minema, siis väikeaktsionäridele jääavad ilmselt tühjad pihud.
2. Kapitaliseerituse suhtarvuks näidatud ja kommunikeeritud 26% on optimistlikult kalkuleeritud (loe: sisaldab omajagu õhku). Omakapitalist, sh Equity ja allutatud laenud (30. juuni 2024 seisuga 74.98 EURm + 12.42 EURm) ei ole maha lahutatud immateriaalset põhivara (mis ei ole loss absorbing ja mistõttu peaks selle maha lahutama), mida Q2 lõpu seisuga on bilansis 23.27 EURm-i. Fitch on teinud korrigeeritud arvutused ning leidnud, et IPO eel on õhk-välja-lastud kapitali suhtarv <15%.
3. Fitchi raporti järgi on finantseeritud autod tehingupäeval keskmiselt 13 aastat vanad ning neil on madal jääkväärtus.
4. Krediidikahju provisjone võidakse 2024 Q2 auditeerimata aruandes raporteerida optimistlikult (loe: näidata väiksematena). Torkab silma, et võrreldes 2023 Q2-ga on laenukahju provisjonide rida kasumiaruandes jäänud suhteliselt samale tasemele sel ajal kui neto krediidiportfell on kasvanud 283.8 EURm-lt 342.5 EURm-le ehk 21%. Nagu ei ole makrokeskkonnas märkimisväärset paranemist täheldanud…
5. Mittetöötava portfelli suur osakaal: tarbimislaenude portfellist on defaultis 33% ja liisingutest sõltuvalt riigist 6-28%; 2023. aasta lõpu seisuga oli bruto krediidiportfellist 22% hapu. Ehkki kasumiaruandes ja bilansis sellega arvestatakse (on tehtud vastavad laenukahju provisjonid), võib see siiski saada pommiks jala küljes / viitab, et puudub efektiivne protsess hapuks läinud varadest vabanemiseks või nende tagasi elule toomiseks.
6. Riskijuhi (CRO) puudumine Elevingi suguse ettevõtte juhtkonnas tekitab küsimusi ettevõtte riskijuhtimise koha pealt: kas see ikkagi toimib nii, nagu peaks toimima või baseeruvad otsused lühinägelikel ärilistel kaalutlustel? Superhoogne laienemine uutesse riikidesse ja ka tootekategooriatesse paneb kulme kergitama: kas tõesti suudetakse seda kõike mõistlikult hallata või maskeerib kiire kasv kahjusid?
7. Efektiivsed intressimäärad Elevingi klientide jaoks on kõrged või ülikõrged: tarbimislaenude portfellilt teenitakse kusagil 80% aastas, põhiliselt autoärilt 40%. Tulusid võivad edaspidi oluliselt piirama hakata vastutustundliku laenamise reeglid jms (nt: kehtestatakse tänasest oluliselt madalamad intressimäära laed).
8. See äri / need ärid on juba olemuslikult väga tsükliline, finantsmajanduslike tingimuste halvenemine võib üsna kergesti lõppeda defaultiga. Tegutsetakse väikestes avatud majandustes ja/või arenevates riikides, mis on volatiilsed ja kust kapital üldiste likviidsusolude halvenedes ära põgenema kipub. Esiteks saab Eleving pihta suure avatuse tõttu valuutariskile (kohustused olulises osas ’kõvas’ valuutas, äri ja varad märkimisväärses osas ’nõrga’ valuutaga riikides), teiseks valdavalt sub-prime kliendidete maksevõimelisus tööpuuduse kasvades halveneks järsult, kolmandaks tagatisvarade väärtus kukub.
9. IPO ajastus on väga hea, tehtud siis kui finantsturgudel valitseb eufooria (S&P teeb all-time-high’sid ja nii). Kui nüüd peaks selguma mõni faktor, mis seda eufooriat jahutab (nt et Fed-i 0.5% baasintressi langetuse taga olid suuremad mõrad majanduses, kui välja paista lastakse), siis saab ka Elevingi aktsia turult varsti märksa odavamalt kätte.
NB! Ülaltoodud loetelu riskidest ja küsimuse kohtadest pole ammendav. Elevingi investorsuhete lehel on Fitchi reitingu raport käesoleva aasta juunist kenasti olemas, nime ja meiliaadressi vastu saab tutvuda. Näiteks tuuakse seal välja veel organisatsiooni keerukust: valdusettevõte Luxemburgis ja raha teenivad ’jupid’ mööda Ida-Euroopat, Aafrikat ja Kesk-Aasiat laiali. Tuuakse ka välja oportunistlikku strateegiat ning strateegiate sagedast ülevaatamist. Positiivse poole pealt: reitingut tõsteti B- (Highly speculative / peaaegu et Substantial credit risk) pealt B-le (Highly speculative) ning kui pärast IPOt kapitali positsioon tugevam, võidakse veelgi tõsta.
Kokkuvõttes tundub mõistlik olemasolevate aktsionäride seisukohast, et nad IPO käigus osa oma raha laualt ära korjata plaanivad. Selle ettevõtte puhul sõltub palju makrofinantskeskkonna edasisest arengust, ja mida investor selle kohta usub või ei usu.
Hello,
We truly appreciate such a thorough analysis, and it is rare to see such an in-depth analysis from investors to be posted on forums. You touched on several interesting and also valid points. For the sake of a healthy discussion, I want to share our position and additional facts that might be useful when evaluating our investment opportunity..
The profile of liquidity and financing reflects a high load on assetsIndeed, much of Eleving Group’s assets are pledged for debt facilities such as bonds, Mintos, or bank loans. Generally, any debt, secured or unsecured, would always rank before common shareholders—for Eleving Group or any other company. This is characteristic of any capital-intensive (i.e., balance sheet) business model where comparably more debt is used, such as manufacturing, financial sector, etc.
We also want to highlight that in this hypothetical situation, majority shareholders would have the same priority of recovery and would not have any advantage over minority shareholders.
The 26% indicated and communicated as the capitalization ratio is optimistically calculatedIn practice, half of our intangible assets consist of internally developed software that has been built over the years and is being amortized on a monthly basis. The assets are ones that provide long-term value to the company as we generate cash flows from business based on our IT systems. Also, please note that subordinated debt can be considered part of the equity (as per Fitch rating agency methodology) and is correctly reflected in quarterly reports.
Further, part of the IPO proceeds are planned to be used to retire subordinated debt, which will strengthen equity and, accordingly, improve the capitalization ratio substantially.
According to the Fitch report, financed cars are on average 13 years old on the transaction dateThe fact that we finance used vehicles (average-age vehicles that drive every day on streets of the markets where we operate) means that most of their initial value has already depreciated, hence actually limiting our collateral value risk or residual value risk because further depreciation is limited. Also, customers must provide a downpayment of 25% of the car value on average, leaving a decent cushion for recovery value in case of car repossession. As a result of the above, the company historically recovers 86% of principal even from terminated loans, and this does not count in revenue/principal repayment generated before loan termination.
Credit loss provisions may be optimistically reported in the 2024 Q2 unaudited reportSignificant improvements in the general cost of risk are a direct result of the company’s implemented strategy of tightening the underwriting policy across most of the product groups and markets. In most of the markets, Eleving Group has been operating for 5+ years and has effectively working credit underwriting and debt collection processes. Just a reminder that the company is using the IFRS 9 methodology while calculating its provisions. That means that even for not overdue loans company books a certain level of provisions based on the historic last 12 months' performance.
High share of the non-performing portfolioAs per our impairment policy, in most markets, loans that reach 365 days of DPD are fully provisioned. What does that mean - the impairment expense for those loans becomes equal to the outstanding principle. After this is done, we either write off the loan if we see that there is no chance to get back anything (there is no negative PnL effect from that), we sell the loan to 3rd party (positive PnLl effect), or we outsource the loan to the debt collection company. In markets where there are active overdue portfolio buyers, we tend to sell loans at an earlier stage, typically when they reach 180-day dpd; however, not in all markets is this segment well developed.
The absence of a Chief Risk Officer (CRO) in the management of a company like Eleving raises questions about the place of risk management in the companyEleving Group has more than 70 employees working in positions related to risk management.
Eleving Group organization framework is built around a hub structure - Vehicle Finance Europe, Vehicle Finance Africa & Asia, and Consumer Finance. Each of these business segments has experienced and knowledgeable risk management teams supported by certain centralized risk management functions at the headquarters level. These teams are led by:
Aleksandra Galahina (Linkedin: https://www.linkedin.com/in/aleksandra-galahina-b74aaa121/ ) manages risk for Eleving Vehicle Finance Europe
Aurimas Povilonis (Linkedin: https://www.linkedin.com/in/aurimas-povilonis-4ba2736/ ) for Eleving Vehicle Finance Africa & Asia
Veronika Plotnikova (Linkedin: https://www.linkedin.com/in/veronica-plotnikova-phd-5a325a/ ) for Consumer Finance.
These highly experienced leaders work closely with senior management to ensure a comprehensive risk management framework is in place across the organization. This framework ensures that all risk-related activities are carefully monitored and aligned with Eleving Group's strategic objectives, even as we rapidly expand into new markets and product categories.
The management team is deeply involved in overseeing risk mitigation, ensuring that business decisions are both strategically sound and responsible. This structure provides the flexibility to support our growth while maintaining a disciplined approach to risk, ensuring sustainable long-term success and organizational resilience.
Effective interest rates and responsible lendingPlease note that in 14 out of 16 operational countries, we have received applicable lending licenses and are regulated by the local regulatory authority, where, among other things, interest rate caps and responsible lending frameworks are being adhered to. It is worth mentioning that we are successfully operating in markets with very strict regulatory environments such as the Baltics, and markets with still developing regulatory frameworks, for example, Uzbekistan or Uganda.
Regarding pricing, we are typically somewhere between banks and short-term lenders. It is worth noting that in markets like Africa or Uzbekistan, due to less stable currencies, even banks tend to charge for consumer loans of up to 30 %+ IR and also offer these products to a very limited part of the population. We need to price such costs in our business model as well.
This business / these businesses are inherently very cyclic and its high exposure to currency riskOur group has sustained the first shock of capital fleeing from emerging markets in 2020 during the Covid outbreak, and additionally, we have a very diversified loan portfolio in general that allows us to downscale operations in certain markets efficiently with no dramatic impact on the group’s overall results, For instance, we have successfully exited such markets as Ukraine and Belarus when capital fled them. Diversification, efficient operations, and experience play crucial roles in that.
We actively monitor open foreign currency positions as part of our comprehensive risk management framework. We mitigate exposure through a combination of strategic borrowing in local currencies, wherever feasible, and the use of economically viable financial instruments, such as foreign exchange (FX) hedge agreements, enabling us to manage risks in a controlled and cost-effective manner.
Lastly, historically we see that used vehicle prices typically don't go down much even in economic downturns, because often people from newer cars switch to cheaper, more used vehicles.
More about the IPOThe founders’ motivation for the IPO is the company’s further growth and the increasing value of all shareholders—therefore, they have a strict 24-month lock-up period.
Also, one should look not only at the market situation but also at company valuation, such as PE multiple. Eleving offers both an attractive dividend yield and a growth company potential.