Tessin’s Q2 report was in line with both the previous quarter and our expectations. Net sales were still muted by lower loan volumes, declining 52% y/y. In terms of profitability, Tessin’s EBITDA was SEK-3.8m, and EBIT was SEK-5.2m, compared to our estimates of SEK-3.8m and SEK-4.2m, respectively. Tessin continues to demonstrate solid cost control, and we expect margins to improve when sales rebound.

At first glance, it may seem like Tessin’s situation is worsening with continued declining sales and lower profitability. However, a weak Q2 was anticipated, and attention is now focused on the potential new financing agreement for the platform with a European asset manager for SEK600m. Tessin disclosed in the report that loan demand amounts to approximately SEK2bn, suggesting that Tessin should be able to fill new loans quickly once the final closing is completed.

Following the Q2 report, we have revised our sales estimates for 2024e-2026e, reducing the 2024e estimate by 22%. The downward adjustment is solely due to revised expectations regarding the closing of the new financing agreement. We keep our valuation unchanged, with a base case of SEK0.30 and a fair value range of SEK0.10-0.60. We expect a positive share price reaction once the financing agreement is closed and the increased loan volumes become visible in the P&L.