An interesting situation is expected for Enento next year. The company has its worst worries behind it, with the Swedish credit information register and new regulatory provisions having been resolved in the most favorable way for the company. The only drawback is likely the cessation or radical reduction of quick loans in Sweden due to interest rate regulations.
On the other hand, an earnings turnaround might already be lurking around the corner.
Positive drivers:
Continued recovery and expected acceleration of the real estate market in the coming year due to falling interest rates and the stabilization of the economic situation.
Continued strong growth in compliance solutions: AML, KYC, and Fraud prevention services are growing at a strong double-digit pace, and Enento has managed to seize the trend in time and may well succeed in its goal of becoming a clear leader in the Nordics in this category.
A general decrease in interest rates will likely increase activity in the loan markets, and the demand for credit information will grow simultaneously. From current levels, there is hardly any direction but upwards.
As confidence grows, B2B activities will increase; company reports will be purchased to support mergers and acquisitions, and counterparty information will be checked when new partnerships are formed.
Significant cost benefits from the IT platform and business efficiency improvements will support margins, provided it is completed on schedule and common capabilities are integrated.
If these pieces fall somewhat into place and an earnings warning is avoided, Enento’s business might start to be valued in a completely new way after the middle of next year.
Enento’s stock has been under pressure since our last update. There is still significant uncertainty associated with the new normal in the Swedish credit market, but a slightly decreased valuation and the continued decline in interest rates make the stock’s risk/reward ratio more attractive again, in our opinion. We reiterate our target price of EUR 19.0, but raise our recommendation to add (previously reduce).
Now I dare to write that it is likely that we will not see a negative profit warning for Enento and that the guidance will be met (H2 stronger than H1), which would mean a Q4 report of at least 39 million. This would be a really nice result, and even better than the comparison period.
I also looked at Enento’s job advertisements. Recruitment is starting to be active again after a long time. There was a period when no open positions were available, now there are 6 open positions. Of course, there can be other reasons for these new job advertisements than just business growth, but often it indicates a cautiously positive sign that activity is indeed growing.
Also, the economy in Sweden is stabilizing: Bankruptcy statistics - Bankruptcies of Swedish companies - UC
The year 2025 could very well be Enento’s year to shine in the gloomy Helsinki stock exchange, at least the potential for it has been laid as negative variables and fears dissipate. The only negative thing in my opinion is the interest rate cap regulation in Sweden, which practically removes payday loans from the market. It is, of course, very challenging to estimate the scale of this segment historically. Often, these €150 payday loans are granted without a credit check or any more detailed investigation.
Of course, the economy in Sweden is moving in a healthier direction, and through that, the demand for other economic data such as prospect lists, real estate data, and Master Data will gain a solid foundation for growth, as the adverse effects of the economy do not eat into economic growth due to individuals’ debt distress.
It remains to be seen whether I am just painting roses or if this could even happen
If one looks at those who have increased and decreased their holdings since the beginning of 2024, then actually only funds have decreased their net holdings. That’s why I guess that some fund has also sold the main part of its stake here. What interests me more, however, is who the buyer is. Probably the clearest options are Otava, Long Path Partners (?), Degroof Petercam (?) or Thompson, Siegel & Walmsley LLC (?). I don’t believe that Säästöpankki’s funds would have increased their ownership all at once with such a large block trade
Those with a question mark after them could, in my opinion, very well be nominees for some cornerer (Otava?), whose stakes are sold to the principal just before an acquisition offer is made. Those combined + Otava + Mandatum’s slice would be approximately 36% of the share capital; that certainly wouldn’t take us to the moon yet, but surely those fund companies would give up their holdings with a 30-40% premium without a second thought.
To my nose, it still smells like an acquisition offer is being prepared here Has Otava commented on its ownership in any way, by the way? A financial investment?
SEB apparently drew its own conclusions from the analyst call; it seems things are still difficult, from what I quickly listened to for a couple of minutes. Consumer confidence is not picking up. A quick news flash from Kauppalehti: SEB lowers Enento’s target price to 18 euros from 20 euros, reiterates its hold recommendation.
Will we get comments from @Roni_Peuranheimo on that call, or will they come in the earnings preview? I didn’t notice Roni being present at the talking heads’ meeting!?
Let’s add another target price change from Kauppalehti’s quick news: Danske Bank lowered Enento’s share target price to 18.70 euros from 20 euros. Recommendation remains hold.
The waiting for a turnaround at Enento continues. One could have hoped for better, especially since many macroeconomic factors are moving in a better direction, particularly regarding interest rates, and the general economic situation in the Nordics shows signs of stabilization in several consumer product businesses.
Unfortunately, the demand for consumer credit plays a particularly strong role in Enento’s current business, and a strengthened market position in Compliance is simply not enough to bridge this gap. Significantly more actions would be needed to bring the top-line numbers back to the level of recent years. Below are some thoughts and points on where things have gone wrong.
UC AB has fallen significantly behind its competitors’ development in Sweden. Roarign, Creditsafe, Syna, and Dun&Bradstreet have all grown in recent years, even in a difficult market, but UC’s sales have declined. Thus, there are clear problems either with a narrow product offering outside the financial sector or with unsuccessful customer acquisition. Not everything can be blamed on the market, as the general situation is not challenging for others.
Denmark and Norway lack proper investments. Enento’s only truly good news, quarter after quarter, comes from the stable development in Denmark and Norway. Markets are evolving rapidly, and Enento’s presence in these markets with just a few products is quite subdued, even though in Norway, it is among the largest in terms of company data. In my opinion, more could be done to grow the business more rapidly when the trend is favorable.
Dividend policy. Enento is currently paying an extremely high dividend, over 100% of its earnings. In my opinion, investments should be directed specifically towards winning the market, either organically or inorganically. Especially now, when the overall trend in Finland/Sweden is somewhat subdued, a strong player could gain a significant advantage with strong investment. Now it seems more like there’s no desire to grow, and the focus is on defending the bottom line and quietly improving old brands with platform development, which isn’t wrong either, but as a shareholder, my interest would be to see a bit more risk-taking and growth ambition, as there’s plenty of market to win, and behind it, Hesulin’s strongest cash generators are supporting due to its strong market position.
I was on a slightly longer vacation and abroad at that time, so I wasn’t actually present on that call. Since a high-quality recording of the call becomes available, I didn’t see a compelling need to send a substitute or participate in the call from my trip. The recording has, of course, been watched now retrospectively.
But indeed, that call didn’t give rise to any major cheers. The challenging market situation has continued, especially concerning consumer credit information services, and the company didn’t really have any new positive messages to convey regarding the market situation. The CEO commented quite directly regarding Sweden that the impact of new regulatory changes (discussed in previous analyses) on the volumes and demand for Sweden’s consumer credit information services will be negative. Profitability, as expected, remains under pressure due to weak volume development and other cost pressures. Of course, I won’t comment on forecast changes in advance, but the forecasts will be reviewed at the latest in connection with the Q4 results. Potential guidance for the coming year is therefore of great interest. It’s good to note that I already made small negative forecast changes over a month ago in my update, but our current forecasts still expect the company to return to moderate growth this year.
So, Otava is strengthening its grip on Enento. In addition to the financial statements to be published soon, it will also be interesting to see if there will be changes in the board composition, now that Otava’s dominant position is growing.
Somewhat surprisingly, Proprius Partners has reduced nearly 50,000 shares, even though they were actively buying the stock last year. Did they lose faith already, or was a quick sale of Enento expected? In any case, Otava’s moves are of interest, as Nordea’s and Mandatum’s stakes account for over 20% of the entire share capital.
It’s hard to see a quick turnaround for Enento right now. I think the price is very neutral considering its defensiveness, but at the same time, the subdued growth prospects and, above all, growth investments are not among management’s interests, but rather improving cost efficiency for the coming years.
I myself intend to stay on board for at least 2-3 more quarters, as I no longer find downside risks for the valuation. Let’s hope the market situation turns around, if we could still find earnings leverage from this
A link had already been posted in the thread for Enento’s competitor, Dun & Bradstreet, to a news story stating that rumors are circulating around the company about its sale or being broken into parts. Rumors are, of course, always rumors; it will be interesting to see if they materialize in some way.
Quite interesting personnel changes are proposed for the spring general meeting; even though Mandatum is a major owner, perhaps Lapveteläinen’s time is no longer sufficient or he’s run out of steam (it’s also possible that Mandatum is getting rid of its shareholding and negotiations are already well underway). I warmly support the election of Veli-Matti Mattila, who retired from Elisa, as chairman of the board: Enenton osakkeenomistajien nimitystoimikunnan jäsenten ehdotus hallituksen kokoonpanosta ja palkitsemisesta - Inderes
The members of Enento’s Shareholders’ Nomination Board propose to the next Annual General Meeting, scheduled to be held on March 24, 2025, that the number of Board members be eight, and that:
Tiina Kuusisto, Erik Forsberg, Nora Kerppola and Markus Ehrnrooth be re-elected as members of the Board,
Veli-Matti Mattila, Petra Ålund, Paul Randall and Kalle Alppi be elected as new members of the Board
Veli-Matti Mattila be elected as the new Chairman of the Board.
Of the current Board members, Patrick Lapveteläinen (Chairman), Minna Parhiala and Martin Johansson have announced that they are no longer available for re-election as Board members.
The presentations of the proposed continuing Board members are available on Enento’s website https://enento.com/hallitus/. The CVs of the proposed new Board members will be made available on Enento’s Annual General Meeting website.
Petra Ålund at least seems like a good choice based on her LinkedIn profile, SEB employer: Petra Alund - SEB | LinkedIn
One has to be a bit worried. Half of the board is changing, including the chairman of the board, the new one is a retiree from another field. The strategy has also been lacking, and small shareholders mainly hope that someone would buy this out. I don’t understand what Otava sees in this – this would be a topic for an interview for Arvopaperi or similar. Let’s see!
New board appointments are certainly positive news! This company would indeed need a new strategy update. During the current CEO’s tenure, the focus has consistently been on defensive gains, and no direct moves have been made other than very moderately creating organic growth with new services. The only acquisitions have been minority purchases of Goava, which, at least in light of current information, have been as profitable as lottery ticket purchasing programs.
If this company needed anything, it would be to take a cue from Musti Group, which is now accelerating growth even when the market is subdued. They have been able to acquire veterinary clinics and stores in the Baltics at low valuations. I believe the same is possible for Enento, because there is a lot of market to conquer! In Finland and Sweden, there’s admittedly little sensible to acquire, but in Norway and Denmark, there’s plenty of potential. Also, if one looks a bit outside the Nordic countries, the markets in the Baltic states are very undeveloped but growing rapidly as the economy develops.
There, I believe winning the market would be easier than going into the large Central European markets, although even there, one can be significant in individual product areas; there’s no need to buy the whole palette immediately. #DividendFreeze
As a highlight to the previous message, an example of a large player, Creditsafe, that broke into Norway. Grew from 9.5 million NOK to 26.5 million NOK in five years. Of course, the operation is very small, but over time, the investments pay for themselves. Enento has a somewhat similar operating model with Denmark. Considering Enento’s strong cash flow profile and expertise, there could be several such “Denmark-like” market entries happening simultaneously. The invested money will bear fruit over time, but stalling and regretting amidst Swedish consumer loans doesn’t move things forward at all if we look at the long game. We only get defensive victories year after year.
Revenue decreased by 2.6% at comparable exchange rates (2.9% decrease at reported exchange rates) to EUR 37.8 million (EUR 38.9 million).
Adjusted EBITDA was EUR 11.7 million (EUR 13.4 million), a decrease of 12.6% (12.5% decrease at comparable exchange rates).
Adjusted EBITDA margin was 30.9% (34.4%), a decrease of 3.5 percentage points (3.5 percentage points decrease at comparable exchange rates).
Adjusted operating profit was EUR 8.4 million (EUR 10.5 million), a decrease of 19.9% (19.7% decrease at comparable exchange rates).
Operating profit was EUR 4.3 million (EUR 5.9 million).
January – December 2024 in brief
Revenue decreased by 3.3% excluding the impact of the discontinuation of the Tambur service at comparable exchange rates.
Revenue was EUR 150.4 million (EUR 155.9 million), a decrease of 3.5% (3.6% decrease at comparable exchange rates).
Adjusted EBITDA was EUR 52.0 million (EUR 57.1 million), a decrease of 8.9% (9.0% decrease at comparable exchange rates).
Adjusted EBITDA margin was 34.6% (36.6%), a decrease of 2.0 percentage points (2.0 percentage points decrease at comparable exchange rates).
Adjusted operating profit was EUR 39.6 million (EUR 46.0 million), a decrease of 13.9% (13.9% decrease at comparable exchange rates).
Operating profit was EUR 24.6 million (EUR 30.4 million).
The efficiency program aiming for efficiency benefits of at least EUR 10 million by the end of 2024 has achieved over 100% of its efficiency targets by the end of the fourth quarter.
The Board of Directors proposes to the Annual General Meeting a dividend of EUR 0.50 per share, after which a second installment, maximum EUR 0.50 per share, will be paid in November, according to the Board’s decision. OUTLOOK
There are signs of a gradually improving macroeconomic situation and a stabilization in demand for housing and consumer loans, and demand for business information continues to be good. However, the Swedish consumer credit market faces structural changes and regulatory reforms. These are expected to impact Enento’s operational environment and financial performance in 2025. Enento continues to focus on maintaining profitability and strengthening free cash flow through disciplined cost management while investing in future competitiveness and growth opportunities.
Enento Group estimates its revenue for 2025 to be approximately EUR 150-156 million and adjusted EBITDA to be approximately EUR 50-55 million.
The guidance assumes that exchange rates remain at current levels.
