Marketing material commissioned by DDM Holding with the aim of providing investors with quality research on the company
Sequential improvement in collections – Updated 2 Aug
Net collections increased by 55% compared with Q2 2017 and cash EBITDA improved by 53% y/y, owing to the contribution from the large acquired portfolios. Operational costs of EUR 2.1m were broadly in line with our expectations, implying good potential for operational leverage with increased scale. DDM closed two smaller investments in the Czech Republic and the Balkans, totalling approximately EUR 6m. The gross estimated remaining collections (ERC) totalled EUR 269m at the end of Q2, which implies an increase of 209% compared with Q2 last year. The company mentioned that the quarter was characterised by intensive work on a number of significant transactions.
Marketing material commissioned by DDM Holding
Further expansion in the Balkans – Updated 4 May
Q1 report: Significant portfolio acquisition in March
In Q1, DDM invested about EUR 30m in a large portfolio of corporate receivables in the Balkans. About 90% of the portfolio value is located in Slovenia and Croatia, while it also includes receivables in Bosnia & Herzegovina and Montenegro, among others. The transaction brings gross estimated remaining collections (ERC) to EUR 279m, which implies an increase of 12% from year-end 2017. The company also issued guidance for an additional investment of about EUR 10m in the coming months, pending regulatory approval. We note a shift from consumer to corporate receivables, which should imply fewer initial spikes in collections and a smoother collection curve over time.
In the coming quarters, we will mainly focus on collection in the recently acquired portfolios, and continued momentum in new portfolio acquisitions, which we view as key for building confidence in DDM’s business model. Quarterly numbers are likely to be volatile in the near term, as collection of corporate receivables could be lumpy, while the collection curve on an annual basis is likely to be smoother than in the past, judging by DDM’s current portfolio.
Read the full updated report (04052018)
Updated 2 March
Q4 report: New financial targets for 2018
In its Q4 report, DDM presented its new financial targets including a new investment target of EUR 165m for 2018. This would imply a doubling of the investment pace from EUR 83m in 2017. Following regulatory approval, the second Croatian investment of EUR 21m was closed during the quarter and the company also entered the Serbian market. Gross estimated remaining collections amounted to EUR 255m at year-end, despite the company bringing in a new co-investor in Greece.
In the upcoming quarters, we will mainly focus on collection in the recently acquired portfolios, which we view as key for building confidence in DDM’s business model. Management was also clear at the conference call that it expects to close a number of sizeable transactions in the near future, as some investment opportunities have spilled over into 2018.
Read the full updated report (02032018)
Impressions from DDM’s 2017 CMD – Updated 20 November 2017
Clear message of continued growth ambitions
On 15 November, DDM hosted a capital markets day focusing on the company’s growth ambitions in the EUR 170bn market opportunity for non‐performing loans (NPLs) in Southern, Central and Eastern Europe (SCEE). The event also shed further light on DDM’s strategy, the large transaction in Greece and included a presentation of principal owner Aldridge EDC Specialty Finance.
The opportunity in Greece
Shortly after its Q3 report, DDM announced a new partnership and co‐investment from a global investment manager into its Greek NPL portfolio. The transaction reduced DDM’s initial investment to EUR 35m from EUR 50m and results in a rebalancing of the portfolio, with Greece now representing 32% of carrying value. It also underpins the asset quality and acts as a validation of DDM’s underwriting.
The EUR 120m portfolio investment target for 2017 was reiterated during the event, which suggests there is another EUR 39m in investments to be closed in the near term. The company sees potential to enter additional countries in the focus region. We will closely monitor the time of the closings and the composition of these portfolios, as well as collections in the new portfolios, which we view as important for building confidence in the business model.
DDM also reiterated its ambition to list its share on Nasdaq Stockholm OMX’s main market in 2018. It will continue to strengthen its management team, issue new financing and work towards lowering its funding costs and diversifying its funding structure. We leave our estimates unchanged following the event.
Click here for the report (20112017)
Q2 report: Increased investment target – Updated 8 August 2017
In the Q2 report, DDM increased its investment target from EUR 50m to EUR 120m. As the original target was already hit, some comments or change was expected. The new target clearly shows DDM’s ambitions and the opportunities it sees on the market for Non-Performing Loans (NPLs) in Central and Eastern Europe. The new target leaves another EUR 36m to be invested over the rest of 2017. Future investments could be financed through increased debt.
Click here here for the report (08082017)
Executing on acquisition plan – Updated 5 July 2017
After having made significant portfolio acquisitions in Croatia (30 June 2017) for a total of EUR 28m, DDM followed this up with an even larger, EUR 50m acquisition in Greece. This means DDM has made portfolio acquisitions for EUR 78m within only one week. Together, last week’s acquisitions alone clearly exceed the company’s full‐year guidance to make acquisitions exceeding EUR 50m.
Click here for the report (05072017)
Entering Croatia means portfolio diversification
The investments in Croatia mean DDM Holding is entering a new market. The step is no big surprise, as the management team has previously mentioned Croatia as a potential new market. The investments are in line with the company’s strategy to expand with portfolio acquisitions in Central and Eastern Europe. We note that the EUR 21m portfolio is subject to regulatory approval and that going into a new country could be associated with some risks, however adding a new country to the portfolio could mean lower risk overall in terms of diversifying country‐specific risks and currency risks, as the new portfolios are denominated in the local currency, Croatian kuna (HRK).
2017 acquisition targets within reach
After DDM’s funding activities earlier this year, including the issuance of both equity shares and bonds, larger portfolio acquisitions have been expected. In conjunction with the last report, management guided that portfolio investments in 2017 would exceed EUR 50m. Earlier in 2017, DDM acquired two portfolios in the Czech Republic and Slovenia for a total of EUR 6m. Adding the Croatian acquisitions of EUR 28m, DDM’s investments in 2017 are now at EUR 34m. That means DDM has equalled last year’s total portfolio acquisitions in just the first half of 2017. The target to exceed EUR 50m is within reach and we expect it can be achieved with existing cash on hand.
Click to download report (04072017)
Ready… to take advantage of an immature market – Updated 31 May 2017
DDM Holding is an investor and manager of distressed assets in Central and Eastern Europe (CEE) founded in 2007. With its experienced management team and board, DDM’s intention is to take advantage of the growing market for distressed asset portfolios in the region.
DDM Holding has commissioned Nordea Markets to produce a research report with the aim of providing investors with quality research on the company, which owing to its size might otherwise not receive much attention from the financial markets. For the investor that is interested in DDM Holding, we provide the full downloadable report here. (31052017)
The Commissioned Research Report on DDM Holding does not contain a target price or recommendation, and we do not provide investment advice on the company. Rather, the report is an outline of some of the most important factors to consider when investing in DDM Holding, including a company overview, a valuation discussion, DDM Holding management introduction, historical financials and market outlook, as well as some key risks that the company may face. This is not an exhaustive description of the company or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.
Nordea Markets is the commercial name for Nordea’s international capital markets operation. The information provided herein is intended for background information only and for the sole use of the intended recipient. The views and other information provided herein are the current views of Nordea Markets as of the date of this document and are subject to change without notice. This notice is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient. The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. The document has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination.
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Readers of this document should note that Nordea Markets has received remuneration from the company mentioned in this document for the production of the marketing material. The remuneration is predetermined and is not dependent on the content. It is important to note that past performance is not indicative of future results. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction. This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.
This report has not been reviewed by the issuer prior to publication. Completion date: 4 May 2018, 07:44 CET