SBB Norden (Sell, TP: SEK14.50) - Premium seems unjustified
With EUR1,850m in eurobonds and EUR800m in euro hybrids, SBB has ~SEK28.8bn in EUR debt obligations, but only SEK7.6bn in EUR/DKK assets – a large EUR-tilted debt position. While we expect it to have ongoing hedging costs, this is not part of its profit from rental operations. The Q1 results missed our expectations on M&A costs, financial hedging, bond charges and a high payable tax ratio. The EPRA net tangible assets (NTAs) were SEK14.05/share. We find the NAV premium too high, and reiterate our SELL and SEK14.5 target price.
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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