DnB Markets - Sparebanken Ost ASA (SPOG) Sparebanken Ã˜st (Hold, TP: NOK56.00) - NII momentum and low costs

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DnB Markets

Håkon Astrup

EUR 185.59 For Business Accounts Only

Sparebanken Ã˜st (Hold, TP: NOK56.00) - NII momentum and low costs

SPOG reported Q3 ROE of 9.9% and pre-tax profit 25% above consensus due to solid NII momentum, lower than expected operating costs, and continued low loan losses. The bankâ€™s capital position is well above its internal target and we believe it has the potential to pay out a dividend equal to a yield of around ~7% in 2019. Following the strong report, we have raised our 2020â€“2021e EPS by 1â€“4% due to higher NII and lower costs. We reiterate our HOLD and NOK56 target price.

31/10/2019 15 EN

Underlying

Sparebanken Ost ASA

Sparebanken Ost (the Bank) is a Norway-based regional bank. The Bank is engaged in the provision of both banking and financial products and services to individuals and businesses. The Bank's primary market area is the lower part of Buskerud county and the Drammen region. Its product and service offering includes loans, cards, payment services, savings accounts, pension funds, life and non-life insurance, investment services and foreign exchange. As of December 31, 2011, the Bank had such subsidiaries, as Sparebanken Ost Boligkredit AS, a mortgage company; AS Financiering, a car financing company; Sparebanken Ost Eiendom AS, which was engaged in real estate development and operations, and Ost Prosjekt AS, a subsidiary supporting the Bank's activities. As of December 31, 2011, the Bank's largest shareholder was MP Pensjon (9.89%).

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NO0006222009 Oslo Bors Norway

Provider

DnB Markets

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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Analysts

Håkon Astrup

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DnB Markets

Scope for continued strong earnings

Seeing support from still-high interest rates and sound fundamentals, we expect solid NII and robust asset quality to contribute to continued strong earnings generation for the banks, despite the stable and eventually falling key policy rate trajectory. Trading at an average 2025e P/E of ~8.5x (adjusted for undistributed 2023 dividends), we continue to find the valuation undemanding. We maintain a positive view on the sector and highlight SVEG as our top pick.

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March 21, 2024 March 21, 2024 1 EN

DnB Markets

Sparebanken Øst (Hold, TP: NOK51.00) - Generous dividend capacity

Helped by solid NII and low loan losses, SPOG reported a Q4 ROE of 9.7%, despite sustained cost pressure. The board proposed a generous 2023 DPS of NOK5.4, implying a ~95% payout ratio and a 9.9% dividend yield. With the bank’s strong capital position (noting further upside potential from Basel IV; +4.0%-points guidance) and flexible dividend policy, combined with a more moderate growth outlook, we see scope for payout ratios to remain close to 100%. That said, trading at a dividend-adjusted 2025e P/E of ~9.1x, we continue to find the risk/reward more attractive elsewhere in the sector. We rei...

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February 9, 2024 February 9, 2024 1 EN

DnB Markets

Scope for further generous distributions

With repricing efforts yet to take full effect and sound fundamentals boding well for manageable loan losses, we see prospects for solid earnings generation ahead, despite likely margin pressure from high levels longer-term. Given the banks’ solid capital positions, a more moderate growth outlook, and an enhanced profitability focus in the sector, we forecast further generous shareholder distributions, with an average dividend/ buyback yield of ~8% for 2023e. At an average 2024e P/E of ~8.4x, we reiterate our positive sector view, with SRBNK and SVEG as our top sector picks.

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December 11, 2023 December 11, 2023 1 EN

Medistim (Hold, TP: NOK190.00) - Sales in Americas weaken

Revenues grew 3.5% YOY in Q1 (currency-neutral total sales grew 2.2%), below our estimate c6%. The EBIT margin of 24% was almost back to normal and in our view shows the low margin in Q4 2023 (16.4%) should be seen as a one-off. However, we remain concerned about revenue growth, especially in the Americas, after the fifth consecutive quarter of declining currency-neutral sales. Thus, while we reiterate our HOLD, we have lowered our 2024–2026e sales by c3–8% and cut our target price to NOK190 (210).

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11h / 20m 11h / 20m 1 EN

Niklas Wetterling

Niklas Wetterling

Catena (Buy, TP: SEK515.00) - Time to put the money to work

The Q1 results were solid in our view; although the vacancy rate rose, it was from a very low level, and was therefore of limited concern. We reiterate our BUY and have raised our target price to SEK515 (500). In our view, Catena has (too much) firepower following its last equity raise and we would like to see more M&A, project activity, or speedy reinvestment. Following the equity raise the stock looks highly valued on a 2025–2026e P/FFO of 21–19x, but that drops to 15–14x adjusted for earnings from our forecast recurring development gains.

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11h / 20m 11h / 20m 1 EN

Miika Ihamaki

Miika Ihamaki

Kesko (Hold, TP: EUR17.00) - Technical(ly) weak

Q1 disappointed due to Building & Technical Trade (BTT) profitability well below expectations. We continue to see a mixed case, with stable to gradually improving Grocery Trade (GT) but still-weak Building & Technical Trade. We reiterate our HOLD but have cut our target price to EUR17 (18), after lowering our 2024–2026e clean EBIT and DPS by c4%.

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11h / 20m 11h / 20m 1 EN

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Sparebanken Ã˜st (Hold, TP: NOK56.00) - NII momentum and low costs

Scope for continued strong earnings

Sparebanken Øst (Hold, TP: NOK51.00) - Generous dividend capacity

Scope for further generous distributions

Medistim (Hold, TP: NOK190.00) - Sales in Americas weaken

Catena (Buy, TP: SEK515.00) - Time to put the money to work

Kesko (Hold, TP: EUR17.00) - Technical(ly) weak

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