Storebrand (Buy, TP: NOK95.00) - Time to price in higher interest rates
We have increased our target price on Storebrand from NOK85 to NOK95. We have raised our 2019–2020 EPS estimates by 3% to reflect the return of profit-sharing earnings. With improved visibility on dividends due to higher interest rates, a stronger solvency position, and a more constructive dialogue with the regulator, we have raised our 2019–2020 DPS forecasts by 17–27%. In a scenario analysis, we estimate that a 100bp increase in interest rates would lift Storebrand’s fair value by 20% due to the release of excess capital and an increase in running EPS. We reiterate our BUY recommendation.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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