NLB Group: Too cheap to ignore (stays BUY)
We reiterate our BUY rating on NLB Group, but revise our price target (PT) to EUR 58/share (from EUR 80/share), due to the incorporation of the COVID-19 impact. The stock is down c.40% ytd and trades currently at a P/TBV of 0.45x, despite its strong capital position (a TCR of >20%), a long-term sustainable ROTE of >8% (or >10% post the deployment of the excess capital) and the solid potential to become (again) a top dividend story. Our fair value on the stock is close to a P/TBV multiple of 0.7x (on 2020E), implying upside potential of over 50%. Our valuation ignores the upside optionality of utilising the bank’s large excess capital position either via the Komercijalna Banka (KB) acquisition (our base-case scenario) or higher dividend payout ratios. In both scenarios, we see the sustainable ROTEs at around 10%.
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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