Få branscher är så inskränkta som finansbranschen. Ett enda internship under tredje årets universitetsstudier kan vara skillnaden mellan en framtid som aktieanalytiker eller som fondförvaltare. Men finansbranschen är också en bransch under stor förändring. Under det senaste decenniet denna bransch, som tidigare så totalt dominerats av finansmän från Handelshögskolan i Stockholm, nu öppnat upp för att inkludera ingenjörer av alla sorter. Ibland kan det gå längre än så. När vi nu går in i hösten och lämnar sensommaren bakom oss närmar vi oss också de sista dagarna av öppna annonser för sommarjobb 2024 inom aktieanalys. Även fönstret för konsultjobb börjar nu stängas. Jag studerar själv till läkare, en utbildning utan minsta anknytning till finans. Trots detta har jag hört runt lite inför nästa sommar. Detta resulterade i att jag skickade in en "prov-analys" till norska Protector Forsikrings förvaltningsteam. Tyvärr ledde det inte hela vägen. Av 100 ansökande nådde jag topp-5. Att det inte blev jag skyller jag på norsk diskriminering mot svenskar, men förstås är anledningen åtminstone mer nyanserad än så. Att analysen var på engelska när ett anställningskrav var affärsmässig norska kan vara en annan. Haha. Nåja. Då jag inte går vidare med den analysen med Protector tänkte jag att ni kanske kunde vara intresserade av vad som betraktas som en "topp-5-"intro"analys" för ett sommarjobb inom aktieanalys i Oslo. Söker du efter ett finansjobb? Kika på finn.no eller Linkedin! Nedan följer således min servettanalys av SaveLend, som på 3 sidor försöker sammanfatta detta case jag nu skrivit om i mer än 3 år.
SaveLend Group (STO:YIELD) - “Two for the price of one”
Analysis by Erik Sandström - erik.x.sandstrom@gmail.com
2023-09-13
SaveLend Group is listed on First North Sweden. The group consists of two separate business areas. One is a leading platform for automated investments into peer-2-peer loans as a low-volatility credit option to investments into the stock market “SaveLend”. The other is a cutting edge invoicing service “Billecta”. The investment platform has attracted 1,7 Bn SEK in capital from primarily ~40.000 Swedish investors. The platform is on the brink of reaching critical mass - the group recently turned operating cash flow positive. The strong fundamental tech stack is expected to continue to show great scalability - showing ~50% incremental EBITDA-margin on recent and estimated future sales growth while the much larger European p2p-market still remains an untapped growth opportunity. This analysis estimates that the fair value of SaveLend Group is 13,9 SEK in 2025, an upside potential of +118%.
Billecta - untapped potential
Concealed within SaveLend Group is Billecta. Billecta was acquired in 2018 and has since grown its volumes 25x. Its 12-month-rolling average Net Revenue Retention and churn is better than all listed Nordic companies in the Redeye Q2 2023 SaaS-update at 130% and 0,5%, respectively.
The strong NRR suggests Billecta is on track to more than double its revenues within 3 years on the back of current customers. Billecta’s customer concentration towards unions as well as housing societies, and its large customer base (2600+), provides good diversification in stable sectors. Billecta has, this far, managed to continue to show high growth (TTM +36% y/y). This is despite the business failing to win any new single substantial customer and the current economic downturn. Last major customer win was in Q2 2021, when Billecta signed Akavia, Sweden's 8th largest union. SaveLend Group has very recently hired a designated CEO and COO for Billecta to better capitalize on its large sales pipeline.
As reflected in the graph above, Billecta has managed to show positive consecutive growth in all but one quarter. The recent stable growth of ~7% Q/Q is a result of increased invoicing volumes and higher revenues per invoice. Q1 2022 showed limited negative growth, which was a result of major technical upgrades during Q1 2022 which are touted to allow the platform to scale 10x before a future major overhaul of underlying tech. My view is that Billectas revenue growth will continue to hover around mid to upper-mid single digits with the always present option that the company manages to attract another large customer, which might double or triple the quarterly growth and greatly increase the profitability due to the underlying scalability of the platform. One major risk in Billecta is the current large dependency on Akavia, who contribute up to ⅓ of all invoices sent via the platform. New major customer wins will both provide increased revenue, profit as well as diversification.
The investment platform
Investments into peer-2-peer loans are hailed as a high yield alternative to traditional banking and a lower volatility option to stock market investments. SaveLend has managed an average annual return to its investors after fees of circa 8% since inception, in line with the historical stock market average. SaveLends offering offers a more linear, low volatility, option that historically has overperformed considering its great return and its low beta - reflected in 0 months with negative return since 2016. The company has grown through organic and inorganic growth - its first acquisition within the p2p-market with Fixura in 2021 and thereafter acquiring its largest credit originator Svensk Kreditförmedling in 2022. Finally, SaveLend acquired Lunars P2P-business Lendify during Q2 of this year.
Despite performing three acquisitions, SaveLend has managed to continue to attract capital into its core product. The above graph shows the organic growth of assets and the customer acquisition to the SaveLend platform. Evidently the company has continued to reach new highs despite challenging macro economics. SaveLend are confident in their future return and will soon offer 6% guaranteed return accounts where they will invest into credits on their own balance sheet and pocket the excess return.
SaveLend is on track to continue to scale. Headcount is guided to increase to max 85 people at the end of 2024 and 100 by end of 2025. At the same time, marketing costs are expected to trend to lower than 25% of revenue. External costs have leveled out on an absolute basis and have historically grown at a slower pace than revenues. Due to the previous large investments into SaveLends tech stack, they were able to transfer all operations from Lunar without retaining any of their staff. The purchase agreement was agreed to a 50/50 revenue split and is expected to provide at least 25% EBITDA-margin, implying >75% margin post-earnout and/or if invested into other SaveLend projects.
Risks
Major risks for the investment platform include increased credit losses, where large losses for SaveLends customers would lead to decreased interest in the platform, preventing SaveLend from utilizing its relatively fixed cost base. The credit risk is exacerbated by the upcoming guaranteed return accounts where SaveLend will be liable if they are not able to reach their promised annual return. Other risks include potential legislation on the sourcing of consumer credits. With regards to Billecta, major risks include increased competition and negative effects related to their current customer concentration.
Valuation Assuming a MCAP (about equal to EV) = 350 MSEK
To better visualize the miss-pricing of SaveLend Group stock, I have broken down the valuation into two.
Sources: Redeye SaaS Update Q2 2023, own estimates, Capital IQ, Börsdata
By applying a median SaaS-EV/EBIT-multiple, derived from companies with lower average sales growth and profit margin than Billecta, I suggest Billecta’s true standalone valuation in itself can justify all of SaveLend Groups current market cap. Even when applying the conservative median ratio, Billecta in 2025e still accounts for 68% of SaveLends current market cap.
In the case of the investment platform, I have compared the company with Nordic online stock brokers Avanza and Nordnet, who derive their income from stock transactions as well as banking. I have applied a 0% rebate during the forecasting period. SaveLend has a much higher revenue and earnings growth, which affords a premium to its peers, but is also exposed to more risks, viz. credit risks, regulatory risks, sourcing risks etcetera. At terminal growth, a higher rebate might be applied to account for these factors.
By valuing the constituents of SaveLend Group at an industry median as well as at an conservative EV/EBIT 11,5 in 2025e (on the back of 29% revenue growth and even greater earnings growth), respectively, I arrive at a 2025e stock price target of +118% ⇒ ~14,2 SEK per share.
Appendix
Redeye SaaS valuations Q2 2023
Detailed estimates SaveLend Group
Comments