Komercni Banka confirmed at BUY, TP CZK 969 - Not the cheapest, though attractive from several angles
We confirm our BUY recommendation and raise 12m TP to CZK 969 on the wings of improving earnings outlook (rate hikes, lower risk costs)Assuming 55-60% payouts going forward, KBs superior capital position will enhance further and we consider a discounted CZK 91 per share in our 12m TP as excess capital above the upper end of management guidance
KB is not the cheapest stock in our universe but our ROE estimates are notably south of 15% strategic 2025 guidance hence offering ample room for upside risks
In addition the KBs P/B premium to some peers has narrowed recently increasing the attractiveness of shares
We model slightly growing NIM into the rate hike cycle and reckon with normalization of risk costs down to 25 bps by 2023e
Komercni banka is a universal banking group based in the Czech Republic. Co. is engaged in the provision of a range of financial services in retail, corporate and investment banking. Co.'s operating segments include: Retail Banking, the provision of products and services to individuals, such as among others building savings, pension insurance, overdrafts, credit card and personal loans and mortgages; Corporate Banking, the provision of products and services to corporate entities such as foreign currency and derivative products, syndicated and export financing, and guarantee transactions; and Investment Banking, which involves trading in financial instruments.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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