Storebrand (Buy, TP: NOK95.00) - Financial market tailwind in Q1
We expect Q1 adjusted EPS of NOK1.5 (the results are due on 8 May at 07:30 CET), which is above a normalised level, driven by strong equity appreciation and narrowing credit spreads in the quarter. We estimate the solvency II ratio will decline from 172% in Q4 to 170%, hampered by a 14bp reduction in Norwegian long-term interest rates, increased equity stress requirement, and a reduction in the ultimate forward rate. We believe Storebrand will pay out dividends representing a total yield of 10% from 2020 due to its improved solvency position. BUY recommendation and NOK95 target price reiterated.Storebrand ASA is the parent company in a financial group. Co. is a provider of pension savings. Co. provides range of products within life insurance, property and casualty insurance, asset management and banking, to companies, public sector entities and private individuals. Co.'s corporate organization includes the business areas of Savings, which comprises of non-guaranteed Defined Contribution in Norway and Sweden, Asset Management and Bank products to the retail market; Insurance, which includes Co.'s risk products; Guaranteed Pensions, which includes long-term pension savings products that give customers a guaranteed rate of return; and Other.
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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