#TrustBuddy: Very strong week for #GVK

One week ago, we could report that business is going very well for TrustBuddy’s latest acquisition Geldvoorelkaar (GVK).

GVK, which is active in the field of SME P2P lending, i.e. loans to small and medium-sized enterprises, managed to fund roughly EUR 6.5m in the period between November 13th, 2014 and January 23rd, i.e. within 71 days (on average EUR 91,549 per day). That meant a significant improvement to the fall 2014, when the average was EUR 83,871 per day. In October, GVK had funded EUR 2.6m of SME loans in October 2014 (+47% y-o-y).

Looking at GVK’s  website today, we note that the number of loans funded as increased by another EUR 1m since last week to now EUR 49,503,100:

gvkThis means that the average amount funded was EUR 142,857 per day, over the last week. This is very strong indeed and shows that the P2P SME business was a brilliant investment for TrustBuddy. We look forward to the rollout in the Nordics and across Europe.

Nordic Investor

 

#Thinfilm: Receives significant research grant

Thin Film Electronics ASA

Thinfilm Electronics, one of our current top-picks, is a leader in the development and commercialization of printed electronics and smart systems. The first to commercialize printed, rewritable memory, the company is creating printed systems that include memory, sensing, display, and wireless communication, all at a low cost unmatched by any other electronic technology. Thinfilm’s roadmap integrates technology from a strong and growing ecosystem of partners to enable the Internet of Everything by bringing intelligence to disposable goods.

Today, the company announced that The Research Council of Norway (NFR) has awarded Thinfilm a grant of NOK 12 million (approximately US$1.65 million) for research into novel assembly methods and barrier coatings for printed electronic systems. Thinfilm will partner with SINTEF, the largest independent research institution in Scandinavia, over three years, helping to extend printed electronics research excellence in Norway.

 “We’re excited to collaborate with SINTEF on this important project and we thank The Research Council of Norway for its support,” said Davor Sutija, Thinfilm’s CEO. “As we further develop the building blocks for smart systems and other products, it is critical that we continue to innovate and explore new methods of integration, assembly and manufacturing. This project enables us to do that.

 SINTEF is delighted to work with Thinfilm, a world leader in printed electronics,” said Aage Jostein Thunem, Executive Vice President, SINTEF ICT. “In this project we will use our expertise and advanced scientific instruments to further deepen our understanding of printed electronic systems, which will be critical in the design of future products.”

 Nordic Investor

 

#P2P lending sector overview ($LC, $ONDK, $TBDY:SS)

Europe’s leading P2P lending provider TrustBuddy (TBDY:SS) used to be the only of its kind to be listed on the stock market. This changed in late 2014, when US companies Lending Club (LC) and On Deck Capital (ONDK) made a successful debut as listed companies.

Lending Club’s IPO was met with strong investor demand which led to the IPO pricing at USD 15, above the final indicated range of USD 12 -14. Moreover, shares surged over 50% on the first day of trading on December 11th, 2014. It is widely acknowledged that Lending Club’s IPO is a bellwether of the sector’s growing importance. Industry representatives such as Sam Hodges, co-founder of P2P company Funding Circle consider the IPO a door-opener: “We anticipate seeing other major financings, strategic partnerships, likely including with some major banks, and M&A across the sector over the coming year.”

Lending Club’s IPO was followed by On Deck Capital’s IPO shortly thereafter. Unlike Lending Club and TrustBuddy, On Deck mostly holds loans on its balance sheet and therefore has credit / balance sheet risk.

Here is  a quick comparison of what the three listed alternative financing companies’ operations:

  1. Lending Club is an online alternative platform that offers creditworthy borrowers lower interest rates and investors better returns. Customers with adequate credit score can borrow up to USD 35,000 for 3-5 year loans. Investors can invest in individual loans in increments as low as USD 25. Investors ranging from individuals to institutions select different loans to invest in.The company recently launched a small business loan product as well. Lending Club does not fund the loans itself and therefore has no associated balance sheet risk. Says Lending Club’s CEO Renauld Laplanche: “We operate at 400 to 500 basis points lower than the banks and have customer satisfaction rates that are multiple times greater than the banks. ” According to data provided by Yahoo Finance, Lending Club is expected to report 2014 revenues of USD 210m and an EPS of USD 0.02.
  2. On Deck Capital underwrites and distributes loans to small businesses, assessing applicants based on cash flow, online sentiment and credit history. The company offers loans from 3 to 24 months and USD 5,000 to USD 250,000 with approvals in minutes and funding in as fast as 24 hours with loan size averaging around USD 35,000. On Deck withdraws variable small increments from customers’ bank accounts each day rather than asking for monthly payments. According to data provided by Yahoo Finance, On Deck Capital is expected to report 2014 revenues of USD 155m and an EPS of USD -0.16.
  3. Following the recent acquisitions of Geldvoorelkaar (Netherlands) and Prestiamoci (Italy), TrustBuddy is probably the most diversified P2P actor in the world. The company offers short-term and longer-term consumer loans, as well as P2P loan products for small and mid-sized companies.  Within the short-term consumer loans segment, TrustBuddy has an average loan size of EUR 350 and an average loan duration of 3.2 months. Within the longer-term consumer loans segment TrustBuddy has an average loan size of EUR 5,000 with an average loan duration of 34 months. The company’s SME business has an average loan size of EUR 65,000 with an average duration of 48 months. There is currently no analyst coverage for TrustBuddy but we know that For the first 9-months of 2014, TrustBuddy itself reported revenues of SEK 87m. In a trading update in November, the company also said that October revenues came in at SEK 10m, so we believe it is a conservative guess that FY 2014 revenues for TrustBuddy will be at least SEK 120m, which would mark an increase of 48% y-o-y.

The P2P lending sector is very hot right now and many US brokers are following Lending Club and also On Deck Capital. Here is what a few of them have to say:

  • William Blair: “…With a combined USD 2.3 trillion of student loans and automobile loans currently outstanding, entering these market segments (or others) could drive future growth, in our view.”
  • Morgan Stanley: “The marketplace lending market is still young, and we expect significant developments on the technology and regulatory front in the coming months and years, with a wide range of expected outcomes possible (for LC). Additionally, it remains unclear how incumbent financial firms will respond to the growing breed of non-bank alternative financial platforms. Some banks have decided to partner with Lending Club, some are investing in their own online platforms, and some are increasing investments in disruptive technologies.”
  • BMO: “...we believe Lending Club is just beginning to scratch the surface of a nearly USD 400bn market opportunity in the near term.”
  • BTIG:…we believe consumer preference shift is likely to occur that would akin in previous shifts such as those from transitional booksellers like Borders to Amazon…
  • Citi:We believe that the fundamental cost and convenience advantages of internet-based services versus traditional banking services should persist.”

We note that the overall market for P2P loans has enjoyed tremendous growth ever since the financial crisis:

p2plending

Obviously, the enormous potential and strong growth should logically be incorporated in the valuation of the company. Here is a comparison of the valuation of the three listed P2P companies:

  • According to data provided by Yahoo Finance, analysts expect Lending Club to report 2015 revenues of USD 375m. In combination with an enterprise value of USD 9.4bn, this implies a 2015 EV/Sales multiple of 25x.
  • For On Deck Capital, analysts expect 2015 revenues of USD 249m. In combination with an enterprise value of USD 1.45bn, this implies a 2015 EV/Sales multiple of 5.8x.
  • As mentioned above, no analyst estimates are available for TrustBuddy. However, we note that the current market cap of TrustBuddy is SEK 360m and no interesting bearing debt at the end of Q3 2014, imply a 2015 EV/Sales multiple of 2x in a conservative base case and 1.8x in a bull case (according to our back-on-the-envelope calculations).

Conclusion:

TrustBuddy looks tremendously undervalued compared to its listed peers. This is partly due to the fact that it is listed in Sweden and that no analysts are currently covering the company. It is, simply put, still under the radar of most international investors. However, TrustBuddy is actually the most diversified of the three listed companies and we believe that it is only a matter of time until this mispricing will disappear.

Nordic Investor

#TrustBuddy: Steep discount to US peers $LC, $ONDK following #M&A

TrustBuddyLogoOn November 13th, 2014, Europe’s leading P2P lending provider TrustBuddy announced the acquisitions of SME P2P lending provider Geldvoorelkaar and Italian Prestiamoci, focused on long-term consumer credit.

Prestiamoci1As we could report last week, business is going really well for Geldvoorelkaar and the SME business is set to be a major earnings contributor for TrustBuddy in the future.

Today, we take a closer look at Prestiamoci, which focuses on personal lending for such purposes as purchasing an apartment, car, organizing a marriage or paying for educational fees. Prestiamoci has established a licensed P2P platform in the highly regulated Italian market.

There is no FCA-like regulatory body in Italy – instead Prestiamoci is authorized by the Bank of Italy. In fact, it is the only Italian startup having a license, as holding company, released by the Bank of Italy for the management of an online P2P lending platform.  Furthermore, the acquisition is conditional on Prestiamoci obtaining EEA-wide PSD license approval, enabling European roll-out.

Said Prestiamoci’s Stefano Miari in an interview with www.altfi.com: ” (Italy) is a huge market where existing operators are not innovative. There is no one with a real online offer. And usually in Italy, a lot of people are excluded from Credit (more than 50% of households due to low usury rate) and that banks and consumer credit specialists typically do not link rates to credit risk : every customer for a same purpose and duration loan get the same rate (or close to the same rate) and if the customer is risky he is just not given the loan.”

At the end of June 2014, Prestiamoci had reportedly around 450 active lenders and had EUR 1.7 million in capital lent. Looking at Prestiamoci’s website today, we note that the company lists 546 active lenders and EUR 2.1m in capital lent. So the number of active lenders has increased some 21% over the last 6 months and the amount of capital lent is up some 24% over the same period of time.

Prestiamoci2So far, Prestiamoci is only active in Italy but TrustBuddy expects to rollout a consumer instalment loan product in new markets in 2015, and envisages 80% of revenue from this new product from the Nordic markets.  In its presentation material published in connection with the acquisition. TrustBuddy has a base case revenue target for Prestiamoci of EUR 1.7m (SEK 16m) for 2015 and EUR 3.2m (SEK 30m) for 2016:

Prestiamoci3In combination with the base case revenue forecast for Geldvoorelkaar of EUR 5.2m (SEK  49m) for 2016, the recent acquisitions are expected to add roughly SEK 80m to TrustBuddy’s topline by 2016 (base case). Looking at the company’s bull case forecast, this number would be closer to SEK 110m at current exchange rates. For the first 9-months of 2014, TrustBuddy itself reported revenues of SEK 87m. In a trading update in November, the company also said that October revenues came in at SEK 10m, so we believe it is a conservative guess that FY 2014 revenues for TrustBuddy will be at least SEK 120m, which would mark an increase of 48% y-o-y. Prudently assuming annual growth of 20% going forward (which we believe is too conservative) would imply a 2016 revenue scenario of SEK 173m for TrustBuddy (excluding the acquisitions). Including Geldvoorelkaar and Prestiamoci, this would imply 2016 revenues of SEK 253m in a base case and SEK 283m in a bull case scenario. (The numbers for 2015 are SEK 181m and SEK 205m respectively)

Obviously, the enormous potential and strong growth should logically be incorporated in the valuation of the company. For the recently IPOed US alternative financing providers Lending Club (LC) and On  Deck Capital (ONDK), there are analyst consensus expectations available for the year 2015, so in order to compare TrustBuddy with its listed peers, we’ll have a look at their multiples:

According to data provided by Yahoo Finance, analysts expect Lending Club to report 2015 revenues of USD 375m. In combination with an enterprise value of USD 9.4bn, this implies a 2015 EV/Sales multiple of 25x. For On Deck Capital, analysts expect 2015 revenues of USD 249m. In combination with an enterprise value of USD 1.45bn, this implies a 2015 EV/Sales multiple of 5.8x.

In comparison, the current market cap of TrustBuddy is SEK 360m and no interesting bearing debt at the end of Q3 2014, imply a 2015 EV/Sales multiple of 2x in the conservative base case and 1.8x in the bull case (but still with conservative assumptions for TrustBuddy stand-alone). This leaves TrustBuddy tremendously undervalued compared to its listed peers and we believe that it is only a matter of time until this mispricing will disappear. TrustBuddy shares easily have the potential to triple in value, once positive news emerge (e.g. license in Sweden) and the market starts to realise the value of the recent acquisitions.

Nordic Investor

#TrustBuddy: Dutch SME business seems to do very well

TrustBuddyLogoAt Nordic Investor we are strong believers that it pays off to always dig deeper and go the extra mile.

Doing so, we have discovered that things seem to be going rather well for Geldvoorelkaar, the latest acquisition of Europe’s leading P2P platform TrustBuddy. Geldvoorelkaar (GVK) is active in the field of SME P2P lending, i.e. loans to small and medium-sized enterprises. GVK has around 60-65% of the market in the Netherlands and holds a license to conduct SME and consumer lending. In fact, it is the first crowdfunding platform with an integration to Bureau Krediet Registratie (BKR), a credit agency that all retail banks use in Netherlands.

 

 

In the presentation material that TrustBuddy published in connection with the acquisition of GVK and Prestiamoci in late November 2014, it is stated that GVK had funded EUR 42m to date and EUR 20m in 2014 until that point. TrustBuddy and GVK also included a forecast for full-year 2014 with lent out capital to reach around EUR 22m and an EBIT margin of 44%. The profitability of GVK’s SME business is impressive indeed.

GVK1It is also mentioned that GVK had funded EUR 2.6m of SME loans in October 2014 alone, implying y-o-y growth of 47%. What is interesting is that GVK does actually published the amount of loans funded on its website. As of today, the number has gone up to EUR 48,523,100:GVK2That would then imply that GVK has funded roughly EUR 6.5m in the period between November 13th, 2014 and January 23rd, i.e. within 71 days (on average EUR 91,549 per day). Remember, in October (31 days) the company funded EUR 2.6m (average of EUR 83,871 per day). That means that GVK has increased the growth of its funding activity even further. In fact, the average amount funded per day has increased by 9% and that is including the extended holiday period this year, i.e. usually a rather slow period.

Our observation also makes it highly likely that the forecast for FY 2014 has been exceeded. As mentioned above, the forecast was for lent out capital to reach around EUR 22m, implying some EUR 2m for the period November 13th until December 31st (48 days). Using the average loan amount per day, calculated above, the actual total amount of lent out capital is likely to be closer to EUR 24.4m. That’s 11% above guidance.

So there seems to be all reason to be excited about TrustBuddy’s acquisition of GVK, which opens up a European SME market opportunity. TrustBuddy has already stated that it will introduce the product across the Nordic and European market. The market entry into Belgium is already being planned, on a preliminary basis, by GVK. Belgium seems very well suited given that 59% of the population is Dutch speaking. Furthermore, ING bank is present in Belgium and a bank integration with ING is already in place in the Netherlands.

To put it in a nutshell: there is a lot to look forward to for TrustBuddy and its shareholders.

Nordic Investor

#TrustBuddy: Swedish license should enhance confidence

TrustBuddyLogoAs we have reported previously, Europe’s leading P2P lending provider TrustBuddy is currently applying for a Swedish License for Certain Consumer Credit-related Operations issued by Finansinspektionen (“FI”), the Swedish Financial Supervisory Authority, with the goal to operate as an authorised consumer credit institution.

After FI’s decision to reject the Company`s Credit Facilitator license application in the summer 2014, TrustBuddy has decided to exclusively conduct financial intermediation. This means that TrustBuddy is not taking any customer credit in their own book, but simply continue to convey loans between lenders and borrowers. TrustBuddy has during this period undergone extensive operational, financial and organisational changes in order to comply with FI’s rules and guidance, including the appointment of a new CEO. Furthermore, TrustBuddy manage to bring experienced individuals with good reputation in the financial community to its Board of Directors, such as Mr Simon Nathanson, the new Chairman of the Board.

Elsewhere, we note that TrustBuddy was assisted in the application by law firm Setterwalls, which has very good credentials. One of the lawyers involved in the process used to be head of Listing and Surveillance at NASDAQ OMX-Stockholm Stock Exchange and in the course of time also for NASDAQ OMX’s all seven stock exchanges in Scandinavia and Baltic countries between 2001 and 2008. Before that he built up and was responsible for the Compliance function within the SEB Group worldwide. Prior to his time at SEB, he was employed at the Swedish Financial Supervisory Authority as head of licensing and supervision of investment companies, banks and investment funds.

Finally, we note that on December 8th 2014, TrustBuddy’s Swedish competitor JSM Financial Group AB received exactly the license that TrustBuddy has applied for. JSM Financial Group is a privately held company, operating Cashbuddy and Cash2you. Both platforms mediate loans between private individuals, with a maximum amount of SEK 25,000 and duration of 1 – 5 years.

All in all, we believe that chances are high that TrustBuddy will receive the Swedish License for Certain Consumer Credit-related Operations issued by Finansinspektionen. This would be an important acknowledgement of the quality of TrustBuddy. We find it important to note, nevertheless, that even in the unlikely scenario of a rejection, TrustBuddy could still continue to operate in Sweden, similar to the set-ups in Denmark and Norway it is currently running. Moreover, it is important to know that TrustBuddy already has several licenses in place. The recently acquired Dutch company Geldvoorelkaar is the first P2P lending platform with a credit licence issued by the Dutch Financial authority (AFM). Also, the acquisition of the Italian company Prestiamoci is conditional upon Prestiamoci receiving a payment services, PSD, license. Thirdly, TrustBuddy announced in August 2014 the purchase of a United Kingdom based financial services company with interim permission under the new regulation by the FCA.

Finally, we advice all interested investors to read the recent company presentation provided by TrustBuddy: http://trustbuddyinternational.com/wp-content/uploads/2014/12/TrustBuddy-Group.pdf

Nordic Investor

#Thin Film: #Venture Beat article explains potential, $XRX

Thin Film Electronics ASAInteresting article just out on www.venturebeat.com with additional information on today’s milestone agreement between Thin Film Electronics and US giant Xerox.

Here is what Venture Beat has to say:

Norwegian tech firm Thinfilm has cut a deal with Xerox to mass produce “printed electronics,” or electronic chips that can be fabricated by printing their features on top of thin surfaces. Under the deal, Thinfilm will be able to print as many as a billion chips a year for applications such as processors, memory, and sensors for the Internet of Things, or smart and connected everyday objects.

The strategic partnership with printing giant Xerox will enable Thinfilm to commercialize its printed electronics, which have been part of a grand technology vision for decades. Rather than fabricating its chips in a traditional silicon chip factory, Thinfilm has figured out how to print circuitry for memory chips (and soon logic chips) on top of flexible substrates such as plastic or paper. If the plan succeeds, Thinfilm and Xerox could imbue an enormous number of disposable goods with intelligence.

Thinfilm believes its “smart labels” for packages could sense and store data for a tenth to a hundredth the cost of conventional electronics. If, for instance, you put a temperature sensor on a smart label and stick it on a package of meat, that sensor could tell you whether the meat stayed at the correct temperature during its journey to the supermarket. Suppliers can attach smart labels to food and then use connectivity technologies such as near-field communications to read the sensors and transfer the data to the retailer via the Internet-connected cloud.

Thinfilm printed electronics

In our minds, this is an extension of the Internet of Things in a new dimension,” said Davor Sutija, chief executive of Oslo, Norway-based Thin Film Electronics USA, which is traded on the Oslo Stock Exchange. “There’s only 20 billion chips a year that are manufactured. Xerox is going to put in place enough capacity to print a billion chips. That is 5 percent of the worldwide capacity for making chips. Printing is immensely scalable, and Xerox can scale it.”

Xerox has licensed Thinfilm’s proprietary technology to manufacture Thinfilm Memory Labels, which are rewritable memory chips that can be used as labels on food or other packaged goods, replacing the traditional bar code. Xerox will develop a marketing strategy aimed at snaring customers. Peter Fischer, chief product officer at Thinfilm, will lead the project to transfer the tech to Xerox, which will modify a production line at its factory in Webster, N.Y.

The production capacity could support Thinfilm customers such as Bemis, which ships more than 200 billion packages a year.

It’s a non-starter to offer Bemis about 5 million or 10 million units of production,” Sutija said. “A single brand may use tens of millions or hundreds of objects a year. Having a partner like Xerox could really scale this technology to meet the demands of applications for brand protection or smart consumables. That is the first step. We will go to market later this year with sensor systems and NFC.”

Thinfilm printed electronics

The demand for low-cost, non-conventional electronic solutions is real and it’s growing,” said Steve Simpson, vice president, non-Xerox Supplies Business, in a statement. “By partnering with Thinfilm, we are leveraging our deep manufacturing expertise and ability to scale globally in order to participate in exciting new markets adjacent to our core business.”

Right now, Thinfilm prints its circuitry on substrate sheets. But with Xerox, it will be able to transition to “roll to roll” manufacturing, meaning you could put a big roll of plastic at one end of the manufacturing line and unwind it, feeding an endless supply of plastic for the printing process.

Once we go to packaged goods, we will need roll-to-roll manufacturing,” Sutija said. “This deal with Xerox is a model for that. We want to be the arm of the printed electronics industry, creating a platform that people can license and innovate upon.”

In the third quarter, Thinfilm announced customers that received samples of its smart label technology. Those customers include Temptime, a healthcare industry provider; PakSense, a perishable food monitoring company; and others. Those customers are expected to ramp up orders over time, if all goes well. The first product is printed rewritable memory. Other products could include printed logic processors and sensors.

Last fall, Ferd AS, a Norwegian financial and industrial group, invested $23 million in Thinfilm. A year earlier, it raised $24 million from investors including Invesco Asset Management. Thinfilm was started as a division of Norway’s research company Opticom. Opticom also created a tech for search dubbed Fast Search and Transfer. Microsoft bought that bought for $1.3 billion in 2008. By that time, Thinfilm became a separate entity, and it worked closely with Intel in read-writeable memory to apply it to printed electronics. It has raised $100 million over the past decade, and it still has $40 million in the bank.

A year ago, Thinfilm bought the assets of an electronics company called Kovio, allowing Thinfilm to create an NFC innovation center in San Jose, Calif. Over the years, Thinfilm worked closely with Xerox’s Palo Alto Research Center to bring the printed electronics technology to market.

Thinfilm does business as Thin Film Electronics ASA, a publicly listed Norwegian company. The company has more than 90 employees.

 

#Thinfilm: Milestone contract with #Xerox

Thin Film Electronics ASA

Big news just out from our latest top-pick, Thin Film Electronics.  The company announced this morning a strategic partnership with Xerox (NYSE: XRX), the global business services, digital printing, and document management company. Thin Film is one of the hottest companies in the field of Internet of Things (IoT).

As a core element of the agreement, Xerox has licensed Thinfilms proprietary technology to manufacture Thinfilm Memory labels – the only printed, rewritable memory commercially available today. Xerox will develop a marketing strategy targeted to key customers. “This partnership with Xerox – a technology pioneer with a deep history of innovation and thought leadership – marks a critical milestone in Thinfilms strategic roadmap“, says Davor Sutija, Thinfilms CEO.  “We are pleased that Xerox shares Thinfilms vision regarding the future of printed electronics, and we look forward to working alongside them in delivering cost-effective, scalable intelligence to the market.”

The demand for low-cost, non-conventional electronic solutions is real and its growing” says Steve Simpson, vice president, non-Xerox Supplies Business. “By partnering with Thinfilm, we are leveraging our deep manufacturing expertise and ability to scale globally in order to participate in exciting new markets adjacent to our core business.”

Peter Fischer, chief product officer for Thinfilm, will lead the technology transfer initiative. To produce the memory labels, Xerox will modify a production line in one of its existing facilities in Webster N.Y.

Nordic Investor

#Opus: #CEO interview gives confidence

logoAs we reported yesterday, Swedish vehicle inspection specialist Opus published an encouraging operational update. Nevertheless, its share is stuck  in bearish territory, which is hard to understand from a fundamental perspective.

Swedish news agency Direkt interviewed Opus CEO Magnus Greko in an article following yesterday’s announcement:

“The state of Colorado decided that the first inspection for a newly sold car should take place after seven years, compared with previously five years. This leads to a revenue reduction of around SEK 40m for Opus. Says CEO Greko: “Colorado’s decision means a reduction by roughly 212,000 annually, which can be compared to the roughly 1.2m inspections we execute. The total revenue reduction is around SEK 40m.” At the same time he highlights that less inspections also mean lower costs for the company.  Opus reported revenues of SEK 1.1bn for the first 9-months of 2014.

Colorado’s decision increases the pressure on Opus to reduce its costs. This process has already started e.g. by performing simpler inspections on certain kinds of vehicles, without affecting Opus’ sales. Further measures are on their way.

Says CEO Greko: “Obviously we want to dampen the negative effect as much as possible. That is something we are constantly working on. How big the net effect on the result will be is hard to say today. The Colorado contract is very profitable, it is one of our most profitable programmes.

During 2014, Opus’ result was also burdened by the introduction of a new IT-system in its Swedish operations. The major part of this work is now done. Says CEO Greko: “Most of the work has been done in September and October last year, which meant that we could not inspect as many cars as before and consequently lost market shares. Now the system is up and running, but we still have some fine-tuning left. As 2015 proceeds, we will be able to fully utilize the capabilities of the new system.”

Opus market share in Sweden was basically unchanged at 27.5% in November compared with October, according to statistics from the Swedish traffic ministry. This means that Opus’ market share remained at its lowest level since November 2012. The average for 2013 was 30,5%.

In California on the other hand, Opus is now controlling more than 50% of the rental market for control equipment. This result exceeds the company’s expectations by far, according to CEO Greko. “There 7.500 – 8.000 inspection stations in California and we have so far more than 4.100 contracts. We would have been happy with maybe 2/3 of that number.” Those stations that want to be part of the inspection programme have until March 9th to buy or rent equipment, so additional contracts are not unlikely. “It is hard to say where we will end up exactly, but I am hoping for even more.”

The rental contracts are without any specific end date. The participating stations cannot cancel the contract in order to change to a competitor, but only the state could stop its exhaust controls all together or a station could leave the inspection business.

Says CEO Greko: “It is easy for certified stations. Once they have signed the contract we supply the machinery, installation and support. Furthermore, we are helping with the financing.” The disadvantage with this model is that it locks-up a lot of capital. In the beginning, the company also has to pay provisions to the sales staff, before revenues start to materialize. “This means that we get a neative EBIDTA the first quarters. Once provisions are paid, this quickly changes however. This business has very nice margins.”

The bonus payments to sales usually are paid once the customers has paid three months of rental fees. CEO Greko expects the majority of the provisions to be paid out during Q2 2015.

The next phase in California is initiated in March with roughly 3,000 Star-stations that also inspect older cars expected to buy and rent equipment. “Many of these stations have equipment that is 15 years old and older and we are the only ones that are launching brand new equipment right now. We hope that as many as possible will chose our rental contracts for their upgrades.

So all-in-all, news flow in the coming months should turn more and more positive. Increased IT costs in 2014 will be behind us, as will the initial provision payments in California that burdened margins. Changes seems also quite good that Opus will secure more business and new contracts in the months ahead. Nordic Investor has decided to use currently depressed share price levels to build a position in Opus. We also note that Opus’ CEO and the CEO of Opus Bilprovning both bought 100,000 shares each in December at around SEK 9, which is around 30% above today’s share price level.

Nordic Investor

 

#TrustBuddy: #Deloitte study bullish on #P2P lending

TrustBuddyLogoAccording to research from business advisory and accountancy firm Deloitte, alternative non-bank lenders recorded a 109% increase in deals in the UK and Europe during the third quarter of 2014.

Deloitte’s Alternative Lender Tracker recorded 73 deals for the quarter which is over double the 35 deals recorded for the same quarter in 2013. The accountancy firm estimates that European direct lending funds have EUR 50bn of committed capital, including spent and unspent capital for private debt and plans to raise another EUR 15bn during 2014.

Fenton Burgin, head of UK debt advisory at Deloitte said: “There is a growing recognition in lending that one size simply does not fit all. The outlook for alternative lenders is strong for 2015, based on significant capital raised this year. Other factors such as changing investor appetite in a low-yield environment and the improving economic activity in the UK and US economies will only boost this activity. Traditional lenders still face the challenge of capital shortfalls and increased regulatory demands on the allocation of what bank capital there is.”

Non-bank lending has grown significantly in recent years and as traditional banks have taken a step back, start-ups have raced to fill the gap with new business models. Paypal recently ventured into the alternative lending market, alongside start-ups such as peer-to-peer (P2P) Lending Club which was valued at USD 8.9bn after its initial public offering at the beginning of December and small business loan provider OnDeck which gained a valuation of almost $9bn after its shares rose almost 60 per cent on their first day of trading.

Steve Allocca, Head of Credit at Paypal said: It’s just scratching the surface as what we see as the opportunity there, this has never been a space that’s been particularity well served by banks or traditional lenders.

Paypal launched their merchant lenders programme last September and has provide 35,000 loans and made USD 60,000. Paypal charges merchants a fixed fee rather than an interest rate for the money and calculates risk based on the data they have about merchants’ revenue.

Floris Hovingh, head of alternative lender coverage at Deloitte said:With the leverage loan and high-yield bond market cooled down, alternative lenders have an opportunity to team up in a club to lend to bigger companies on a direct basis without a bank’s involvement.

According to the Bank of England’s latest Trends in lending report, in the last quarter bank lending to SMEs was down by GBP 400m. Research from Nesta and the University of Cambridge shows that the UK’s alternative finance market, including P2P lending and invoice trading is expected to double in 2015 and results show that 44 per cent of SMEs surveyed are familiar with at least one type of alternative finance, as are 58 per cent of UK consumers.

This bodes very well indeed for Sweden listed TrustBuddy, which recently acquired the Dutch company Geldvoorelkaar. Geldvoorelkaar is the first P2P lending platform with a credit licence issued by the Dutch Financial authority (AFM) and offers a professional and established alternative source of financing for SMEs. TrustBuddy also acquired Italian Prestiamoci, which is a P2P lending company focussing on long term consumer loans. The acquisitions mean that TrustBuddy will not only grow organically but also structurally, making the years ahead very exciting for investors.

Nordic Investor

Investing up North

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