Gjensidige Forsikring (Hold, TP: NOK140.00) - Winter is not over yet
We see most of the Q1 miss as a one-off effect relating to the winter weather, but have also factored in lower profitability from motor insurance in Norway and thus cut our EPS estimates by ~2% for 2019–2020. Trading at 14x 2019e earnings, we argue that Gjensidige is trading at an unwarranted discount to peers that are trading at 18–20x. We have cut our target price from NOK150 to NOK140 and reiterate HOLD as we see significant risk of continued negative news flow in the months to come as the harsh winter weather in Q1 continued into April, and also causes risk of flood damage in Q2.Gjensidige Forskring provides insurance products to private and commercial customers in Norway, Denmark, Sweden and the Baltic states. Co.'s activities are divided into six segments in addition to the asset management unit which manages Co.'s investment portfolio. The Private segment provides a range of general insurance products besides banking, savings and investment products. The Commercial segment provides a range of general insurance products to the commercial and municipality markets. Co.'s investment portfolio includes all investment funds in Co. except for investment funds in the Pension and Savings and Retail Bank segments. Co.'s other segments include Nordic and Baltics.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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