reports
- Albert Ploegh
- CEFA
- Reg Watson
- CFA
DWS/Setting the stage for 2021 and beyond/BUY
After successful phase one completion post IPO, DWS is now entering phase two. It will continue to build on its solid track record on cost discipline and has set a new adjusted CIR ratio ambition of 60% by 2024 (FY20: 64.5%). DWS will focus on and invest into targeted growth areas with differentiated leadership ambition in ESG, Passive and high margin strategies. DWS has wants to take an active role in M&A activities but the initial focus will be on organic growth. We roll forward our valuation ...
- Albert Ploegh
- CEFA
- Bert Colijn
- Julie Cichon
- Marcel Klok
- Maureen Schuller
- Mirjam Bani
- Philippe Ledent
- Steven Trypsteen
- Suvi Platerink Kosonen
- Teunis Brosens
- Albert Ploegh
- CEFA
Flow Traders/Positive end to an exceptional year/BUY
For 4Q20, we forecast an NTI at €93m, above our average run rate range of €60-80m, given promising EMEA market stats particularly in November, despite slightly reduced volatility vs 3Q20. The moderate NTI level of €78m in 3Q20 was mainly due to disappointing Americas revenue capture and although we remain somewhat cautious of this region in 4Q20 as well, we believe equity market sector rotation has been supportive. Our final DPS forecast of €2.23 (65% pay-out ratio), results in an attractive yie...
- Albert Ploegh
- CEFA
ALD/Remarketing momentum remains strong/BUY
We believe risk is to the upside when it comes to guidance for the FY20 Used Car Sales result, reflecting continued dynamic market conditions into the year end. Our 3Q20 depreciation assumptions are unchanged at c.-€ 15m, versus -€30m over 1H20. Noting fleet revaluation in 4Q, we expect ALD to stop excess depreciation, so positively impacting Leasing Contract Margin in 4Q20 and into 2021. ALD is trading at 9.3x PER 2021F for a 5.4% dividend yield. Total Contract CAGR guidance for 2019-25F is c.4...
- Albert Ploegh
- CEFA
AEGON/The right course of action but patience required/HOLD
The investor update confirms it will take time to transform AEGON, but the right course of action is taken to strengthen the balance sheet and to de-risk. The clarity on the dividend and free cash flows make clear that near-term capital return will be muted. A step-up in dividends is unlikely before 2022. The question remains whether AEGON can accelerate the capital return profile. The separation within core markets between financial and strategic assets offers optionality for disposals, but in ...
- Albert Ploegh
- CEFA
ABN AMRO/The adage remains more patience/HOLD
We see the excess capital angle building by 2022, but its fungibility remains highly dependent on managing RWAs, delivering on cost savings and most important lowering of the high threshold for buybacks. Therefore, it depends largely on regulatory views given low near-term profitability. The level of capitalisation is not the issue at 15% BIV CET1 end-3Q20 (INGF 2024F: 17.0%). Given low ROEs in the near term and buyback threshold at an elevated 15% BIV CET1 means that expectations for an attract...
- Albert Ploegh
- CEFA
Euronext/Mission about to be accomplished/HOLD
A successful acquisition of Borsa Italiana would see Euronext take a giant step towards becoming the leading pan-European market infrastructure. The cash price of €4.3bn equates to an 2019EV/EBITDA multiple of 16-17x falling, including synergies, towards 12x by 2023F. We estimate ROIC of 5.5% by 2023-24F and see adj. EPS accretion of 10% by 2024F (based on €102.5 share price day announced 14%). We retain our HOLD rating and reduce our target price to €100.0. Our target price equates to PF PER 20...
- Albert Ploegh
- CEFA
KBC/Capital return potential remains compelling/BUY
Following the 3Q20 results release we increase our pre-provision profit forecasts for 2020-22F, by 8%, 6%, and 5% respectively. After very likely meeting the target for opex excluding bank taxes cost growth of -3.5% in 2020, we believe KBC will remain very disciplined on costs in the medium-term. We believe KBC warrants a premium to its peers. It is trading at 1.15x 2022F tangible equity (excluding excess capital: c.1.0x) for a RoTE of c.11%. Adjusted for excess capital, PER22F is 9.0x. BUY main...
- Albert Ploegh
- CEFA
ALD/Model update ahead of CMD, BUY maintained/BUY
We have increased our earnings forecasts ahead of the Capital Markets Day on 12 November. The preliminary trading update already suggested a strong performance over 3Q20 underpinned by the recovery in used car sales. Excess depreciation assumptions, however, remained unchanged in 3Q20 (c.€15m INGF). Excluding excess depreciation Leasing and Services Margins growth was in line with fleet growth. Fleet revaluation will take place in 4Q. Despite the clear recovery seen in car sales in 3Q (+70% QoQ)...
- Albert Ploegh
- CEFA
DWS/Upgrade to BUY: entering next phase/BUY (previously Hold)
DWS has built a solid track record on cost discipline, despite volatile markets and the pandemic-induced environment. DWS continues to investment in growth areas and segments while remaining committed to sustain a competitive cost-income ratio at least at achieved levels (and preferably lower), ie, below 65%. Consensus and ING forecast a flat revenue CAGR over 2019-22F and due to cost discipline c.5% CAGR in adjusted net profit, which we consider a constructive expectation. With DWS's share pric...
- Albert Ploegh
- CEFA
Flow Traders/Americas has yet to convince/BUY
After the Americas surprised positive in 2Q the 3Q results arguably disappointed. However, we believe the share price reaction was too fierce. Mix effects and lower realised volatility were for a large part to blame in our view. We do not turn a blind eye and become slightly more cautious on the US revenue capture rate triggering downward EPS revisions. The final DPS yield of c.8% remains very supportive and we see room to do more for shareholders. In our view at PER FY21F of 12x Flow Traders re...
- Albert Ploegh
- CEFA
Van Lanschot Kempen/In pole position to resume dividend payments/BUY
We believe a key catalyst for VLK will be the resumption of dividend payments. An update on the ban on capital distribution is expected by the ECB in December. We believe VLK is in the pole position given its strong capitalisation (CET1 1H20 24.0%) in combination with its asset-light business model. We continue to believe that bolt-on M&A and further special capital return can go hand-in-hand, as evidenced by the recent bolt-on M&A transaction (excess capital including 15% Basel IV inflation €5....
- Albert Ploegh
- CEFA
Flow Traders/Structural improvement in the Americas/BUY
Continued volatility (at the start of 2Q20 in particular) helped Flow to record another solid quarter, albeit considerably down vs. an exceptional 1Q20. We revise up our 2021F and 2022F NTI slightly, to reflect an improving US ecosystem. Flow declared a record interim dividend of €4.00 per share (INGF: €4.21). Flow's strong pay-out track record (INGF: 65% pay-out ratio) means that we see a total dividend of c.€6.57 as feasible, with final DPS yield at c.8% for 2020F. Flow Traders remains o...
- Albert Ploegh
- CEFA
a.s.r./Showing resilience/BUY
The performance of a.s.r. over 1H20 can be characterized as resilient. The overall impact of Covid-19 was a modest -€3m showing the quality of its non-life portfolio and the diversified model. Organic capital creation (OCC) surprised on upside with a €500m 2021 target potentially in sight for FY20. We maintain our BUY rating and increase our target price to €36.5. Our target price represents c.10% OCC yield and 7.5% total capital return yield (incl. SBB of €75m or 1.5% yield). In our Ben...
- Albert Ploegh
- CEFA
AEGON/Bittersweet/HOLD
AEGON provided a clear message that for the time being shareholders come second to strengthening the balance sheet (deleveraging, improving risk profile). This means a dividend rebase with a ‘floor' at €0.12 per share. To accelerate the path to dividend normalisation this requires in our view clear management actions, including asset disposals with the most likely candidate HNWI activities in Asia. We set our TP at €2.40, 5% near-term yield. This looks rich in a Benelux insurance context w...
- Albert Ploegh
- CEFA
KBC/Higher conviction on future capital return/BUY
Following the 2Q20 results release our confidence in KBC's capital position grows and we introduce next to our €1.0bn SBB assumption a special capital return of €0.5bn for 2021. We believe KBC warrants a premium to its peers and believe the strategy update in November could be a catalyst. KBC is trading at 2022F 1.08x tangible equity for an RoTE of c.11%. BUY maintained, TP €61.0.
- Albert Ploegh
- CEFA
Ageas/Hitting the right tone on all fronts/BUY
Ageas resumes payment of dividends, which shows that the regulator is willing to make company-by-company decisions when it comes to capital return. On our definition of free capital generation, Ageas currently trades at a compelling c.9% yield, which we believe in combination with the (growing) Asian business is attractive. Following the strong set of 2Q20 results Ageas mentions it now expects to be close to the initial guidance of a net profit of €850-950m for FY20 (ING at the low-end). BUY m...
- Albert Ploegh
- CEFA
NN Group/Showing resilience/BUY
We believe NN Group's total return profile remains highly attractive at 10-11% with upside in the medium term. 1H20 results were solid showing NN Group is well positioned in light of Covid-19. We remain confident in NN's ability to return capital: (1) a recurring annual share buyback programme of =€250m (c.2% yield) and progressive DPS growth (INGF: 7% CAGR); and (2) in the absence of (bolt-on) M&A more capital to be returned (INGF: capacity of €250-350m pa, or -2-3% yield headroom). NN Grou...
- Albert Ploegh
- CEFA
Euronext/Downgrade to HOLD - Time to catch your breath/HOLD (previousl...
Following a string of value accretive acquisitions, net debt to EBITDA due to high cash conversion and solid execution is back at a low 1.3x (max to remain at the current rating 2.75x). Bolt-on and transformational M&A will remain an important pillar of the investment and ENX has built a good track record we believe. Borsa Italiana finally seems in play and would fit the Federal model of ENX. With the share price up 36% YTD, outperforming its peers materially, we downgrade ENX on valuation groun...
- Albert Ploegh
- CEFA
ALD/Look to the future – not just 2020/BUY
ALD's 2Q20 results came in weaker than expected, but there is a silver lining: (1) ALD notes a pick-up in its main markets both in demand, but more importantly a rebound in second-hand car sales from June onwards and (2) excluding excess depreciation, margins (Leasing and Services) were up 3.1% in 1H20, in line with funded fleet growth of +3.1% while operating expenses are down 1.1% (-5% YoY in 2Q20). We remain confident that ALD will navigate the Covid-19 crisis and come out stronger versus pee...
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