Topdanmark (Hold, TP: DKK330.00) - Higher digitalisation costs
The underlying Q4 results were somewhat softer than our forecasts, with a 2%-point weaker combined ratio. We have reduced our 2020–2021e EPS by 1% on the back of the miss on claims and hiked cost guidance relating to digitalisation. We find the valuation implying a 5% dividend yield as fair for such a stable quality company, and see some potential upside to peer pricing (Tryg and Gjensidige are trading at 2020e P/Es of 23–25x). We reiterate our HOLD and DKK330 target price.Topdanmark A/S is a Denmark-based insurance company engaged in the insurance and pension fund business. The Company's activities are divided into such segments, as Personal, and SME (Small and Medium Enterprises) and Industrial. The Personal segment sells policies for individual households in Denmark. The SME and Industrial segment offers policies for Denmark-based SME, agricultural and industrial businesses. The Company's private insurance offering includes such insurance products, as home, vehicle, accident, pet, child and life and health insurance, as well as pension funds. Its corporate insurance offering includes property insurance, insurance of goods and equipment, and car insurance, among others. As of December 31, 2012, it had subsidiaries responsible for life and non-life insurance, as well as for asset management, investment and property-related activities.
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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