NLB Group: Don’t lose faith (stays BUY)
NLB’s share price is down 33% ytd, underperforming the Eurostoxx banks index (-24% ytd). We believe that this soft performance in the share price is exaggerated, as the COVID-19 impact appears manageable. We have increased our earnings forecasts following the resilient 9M results and the improving outlook from 2021E-onwards. The stock trades currently at a P/TBV of 0.48x and a P/E of 7.7x on our 2020E. We see these multiples as extremely low, in view of its large capital position (a TCR of >21%), long-term sustainable ROTE of >8% (or c.10% post the deployment of the excess capital), and solid potential to become (again) a top dividend story. Based on a payout ratio of 70%, we expect dividend yields in excess of 9% from 2021E-onwards. We remain BUYers of NLB Group and have increased our price target (PT) to EUR 63/share, from EUR 58/share previously.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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