Tryg (Hold, TP: DKK165.00) - EPS-accretive acquisition
Tryg has agreed to acquire Alka, in a deal we calculate would imply a ~3% increase in the value per Tryg share, with a ~9% boost to the NPV of future earnings, only partly offset by a reduction in Tryg’s Solvency capital, which would drop from 211% to 170%. We view identified synergies as fairly ambitious, and assume it could realise roughly two thirds of the DKK300m target by 2021. We have raised our 2020e EPS by 5% after the announcement, while we have lowered our 2020e DPS by 6% on a reduced Solvency II ratio. We keep our HOLD recommendation and have raised our target price to DKK165 (160).Tryg is an insurance company, engaged in providing insurance services. Co.'s private segment encompasses the sale of insurance products to private individuals in Denmark and Norway. Co.'s commercial segment encompasses the sale of insurance products to small and medium-sized businesses in Denmark and Norway. Co.'s corporate segment sells insurance products to corporate customers under the brand Tryg in Denmark and Norway, Moderna in Sweden and Tryg Garanti. Co.'s Sweden segment comprises the sale of insurance products to private customers under the Moderna brand. Moreover, insurance is sold under the brands Atlantica, Bilsport & MC, Securator and Moderna Djurforsakringar.
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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