Sava Re: slight discount, despite competitive ROE profile (stays HOLD)
Sava Re continues to perform well, so we have increased our price target (PT) to EUR 33.5/share. At the same time, however, we maintain our HOLD recommendation, as the potential upside is c.14.3%. We have updated our estimates and brought them into line with the company’s 2022E plan, noting that it is relatively unlikely that Sava Re will be able to repeat the strong performance of 2021. However, we believe the company is likely to continue to report higher ROEs than the peer group, even though we see its ROEs converging towards the peer median over our forecast period. We highlight the growth prospects of Sava Re’s international operations, coupled with valuation levels below its peers on P/BVs, despite the aforementioned competitive ROEs. Sava Re trades currently at 0.8x P/BVs, on our 2022-23E numbers, at 12-15% discounts to its peers. On our PT, the discounts would be erased completely, which we see as a more reasonable valuation. In view of the upside, the lower dividend yields vs. its peers and its earnings peaking in 2021, we continue to recommend to HOLD Sava Re’s shares.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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