LHV Institutional 'Coop Pank (CPA1T ET) Annual Review, March 3rd, 2021'

* Coop Pank AS (hereafter referred to as ‘CPA’ or the ‘Group’) is a local Estonian bank, formerly Eesti Krediidipank AS, which was fully reorganised and rebranded after Coop Estonia and its member cooperatives became new strategic owners of the Group in 2017. In November 2019, an IPO of CPA took place, and the Group attracted over EUR 30m of new equity capital, followed by the listing of its shares on Nasdaq Baltic Main List. After the IPO, Coop Estonia and its member cooperatives remain strategic partners, with their combined ownership at c.a. 43%.
* CPA performs all traditional universal banking operations and positions itself as one among the five universal banks in Estonia, presently controlling over 3% of the market. The Group’s subsidiaries are engaged in the areas of leasing, consumer finance, and real estate management. Essentially, CPA has the most extensive network of outlets in the country, comprising 15 bank branches, 17 banking points within Coop stores as well as all c.a. 330 Coop stores as access points to its services. As of 2020, the Group employed c.a. 300 people. CPA’s principal area of activities is focused on serving private individuals and small and medium-sized enterprises (‘SMEs’).
* In valuing CPA, we have used the weighted average of values derived from the RIM, the GGM, and the peer group data (P/E and ROE&P/B correlation), applying different weights to each method. Given the aggressive growth profile of CPA compared to its listed peers, we see the income approach as more suited for the Group and have given both the RIM and the GGM a 40% weight in the total value, leaving the peer valuation contribution at 20% in total. All in all, based on our current projections for CPA and other assumptions, we decided to set our fair value range at EUR 1.45-1.55 per share. Please note that before placing the stock under review in March 2020 our FVR was at EUR 1.40-1.50 per share. The key risk factors to our valuation include slower than projected growth in volumes and a significant deterioration of the economic environment in Estonia, especially considering the ongoing COVID-19 pandemic and related business disruptions in many economic sectors. This report contains a full set of financial forecasts and is useful for gaining an initial insight into the company. Please also refer to the tables and charts in the attachment.