Storebrand (Buy, TP: NOK95.00) - Headwinds before year-end
We expect Storebrand to report a somewhat soft EPS adj. of NOK1.0 for Q4 (results due 07:30 CET on 13 February). We forecast the Solvency II ratio to fall from 166% at end-Q3 to 163% at the end of 2018, as a result of a 20bp reduction in long-term interest rates, global equity markets being down around 12%, credit spreads widening, as well as a dividend payment. We forecast a total DPS of NOK3.5 for 2018, a 64% payout ratio. Beyond Q4, we still see ample upside potential and reiterate our BUY and NOK95 target price.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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