Sava Re: Downgrade amid stellar performance (downgraded to HOLD)
In this report, we have downgraded Sava Re to HOLD (from Buy), with an increased price target (PT) of EUR 30.7/share (from EUR 25.0), offering upside potential of c.13.7%. The downgrade in our recommendation follows the stock’s stellar performance over the past 12 months (+65.0%), exceeding our former PT. We have become more cautious at these levels as, on our PT (c.13.7% upside), Sava Re would trade on a par with its peers on P/BVs and at a slight discount on P/Es. The increase in our PT is the result of two factors: i) increases in our estimates, especially in our 2021E net income and the top-line growth over our forecast period; and ii) the change in our approach to our multiples valuation method, where we do not account for any discount vs. its peers, due mostly to Sava Re’s ability to generate higher ROEs than the peer group’s median level. On our estimates, Sava Re trades at 0.8x P/BVs for 2021-22E, or discounts of 9-10% vs. its peers. On P/Es, the current multiples land at 6.9-7.6x, or discounts of 24-36% for the same period.Pozavarovalnica Sava dd (or Sava Reinsurance Plc), also known as Sava Re dd, is a Slovenia-based reinsurance undertaking. It operates as a parent company of Sava Re Group, which comprises direct insurance and pension undertakings. The Company's activities are divided into four segments: Reinsurance operations, Non-life insurance operations, Life insurance operations and Other business segment. The Reinsurance operations segment comprises treaty and facultative arrangements for intra-group clients and insurance and reinsurance partners worldwide. The Non-life insurance operations segment supports local markets with non-life insurance products and customer oriented services. The Life insurance operations segment is focused on life protection and saving products, including pension schemes. The Other business segment comprises operations of the Company's non-insurance subsidiaries. Sava Re Group operates through subsidiaries in Slovenia, Croatia, Serbia, Macedonia, Montenegro and Kosovo.
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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