VEF: Trading at record high discount to NAV levels - ABG

Q1 NAVPS (SEK) flat q-o-q, driven by two new additions
VEF trades at a 45% discount to NAVPS…
…and 23% below the low end of our fair value range

Q1’22 NAVPS (SEK) flat q-o-q and up 55% y-o-y
The NAV of VEF’s portfolio (excluding cash) increased during Q1’22 to USD 715.2m. The NAV per share (SEK) remained flat q-o-q but increased by 55% y-o-y, to SEK 6.58 per share. In the portfolio in Q1, it was primarily the addition of the portfolio companies, Gringo and Solfácil which help to grow the Group’s net asset value. The company has also written down the value of its Russian holding, REVO to USD 0m in the quarter, from USD 13m in Q4’21.

Now trading at a 45% discount to NAVPS…
During the first quarter, VEF participated in two funding rounds. VEF invested USD 12m into Gringo, which offers vehicle documentation related services such as payments, and BNPL solutions for drivers to pay for renewal of licenses, taxes and fines etc. VEF also invested USD 20m into Solfácil, which designs technology solutions for its partner solar installers. Between Q4’21 and Q1’22, the NAVPS in SEK has been flat, while the share price has decreased by 27%. Following Q1’22, the share price of VEF has continued to fall by 13%. Given the latest reported NAVPS, we asses VEF currently trades at a 45% discount to NAV. This is almost at record high levels and well above both their one-year and five-year average of trading to a 7% and 19% discount to NAV, respectively (ABGSC calculation). The company is also trading 23% below the low end of our fair value range of SEK 5.0-7.8.

… yet the NAVPS has grown with 31% CAGR since inception
We view the current discount level to NAV as excessive, especially since the company has built up an impressive track-record, growing NAV per share by a CAGR of 31% since inception. Given that the NAVPS hasn’t moved to a large extent during the first quarter, we believe the discount level will start to shrink the coming weeks.
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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/vef/Equity-research/2022/4/vef---trading-at-record-high-discount-to-nav-levels/