Sava Re: Remaining positive, despite ambitious targets (stays BUY)
We maintain our BUY recommendation on Sava Re and increase our price target (PT) to EUR 25.0/share, with potential 12-month upside of c.26%. We have updated our estimates for the inclusion of the Vita assets, as well as the revised 2022E strategy published by the company in August 2020. In our view, the investment portfolio could see its yield improve on the acquisition of Vita, which is more exposed to higher yielding corporate bonds, rather than government paper. While we believe the ROE targets of more than 12% set by management may be quite ambitious, we are optimistic that the company will manage to reach its other targets. Despite our reserved ROE estimates, we still believe there is value in the stock, which trades currently at 26-27% discounts vs. its peers on the P/BVs for 2021E and 2022E, and at a quite appealing P/E ratio of c.6x for the same years. In our view, the dividend yields could be supported by the as yet unpaid dividend from the 2019 profit, which could enhance yields and reward investors.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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