VEF: High NAV discount considering track record - ABG

NAVPS down 35% q-o-q, reflecting market conditions Strong cash position for future needs Excessive discount to NAV, and far below historical levels NAVPS (SEK) down 35% q-o-q, reflecting market conditions
The NAV of VEF’s portfolio decreased by 40% q-o-q in Q2’22 to USD 441.2m. Given favourable FX tailwinds, where the USD/SEK is up 9% q-o-q, the NAV per share (SEK) posted a smaller decline, falling by 35% q-o-q to SEK 4.3 per share. In the portfolio in Q2, the write-down of the two largest portfolio companies, Creditas and Konfio, where the fair value was written down by 50% and 55% respectively q-o-q, was the main driver of the group’s NAV decline. The underlying drop in NAV is driven by the turmoil in financial markets, where multiples for comparable listed companies have fallen sharply.

Solid cash position to support further deals when needed During the second quarter, VEF participated in a few follow-on investments: Juspay (USD 4.1m), Magnetis (USD 1.0m), FinanZero (USD 1.0m) and Abhi (USD 0.5 m). Total follow-on investments amounted to USD 6.6m in the quarter. Between Q1’22 and Q2’22, the NAVPS in SEK has fallen by 35%, while the share price has decreased by 48%. The company’s cash position, including liquidity investments, was USD 64.1m at the end of Q2, following the issuance of SEK 500m of sustainability bonds earlier in the quarter. Given the recent debt issue, we assess that the company has a solid liquidity position to support more deals and the current portfolio of companies in future financing rounds. According to VEF, the majority of the portfolio is well-funded without any immediate need of additional financing.

Trading at an excessive NAV discount We view the current discount level to NAV as excessive, especially since the company has built up an impressive track record of growing NAV per share by a CAGR of 22% since inception. Given the latest reported NAVPS, we assess that VEF is currently trading at a 45% discount to NAV. This is above its five-year aver ... Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/vef/Equity-research/2022/7/vef---high-nav-discount-considering-track-record/