Excessively punished, time to BUY

研报英文原文证据摘录

Excessively punished, time to BUY

AB Sagax

Long-term growth scenarios suggest ample upside

Sagax has a long history of achieving and outperforming its financial targets. We

highlighted the risk that Sagax might downgrade its financial targets on the back of interest

rate headwinds and limited liquidity in its direct transaction markets last year, which

materialised.in April this year in conjunction with the 2025 annual report. The updated

financial targets stipulate:

• Return on equity of at least 12% per year over the period 2026–2030.

• Growth in profit from property management per Class A and B share of 5–10% per year

over the period 2026–2030.

With improving transaction volumes/liquidity in the direct transaction market, we argue these

targets are achievable. We argue that the SEK 1,005m Class D share issue underpins the

impression we have, in speaking to management, of improving transaction volumes ahead.

Furthermore, we argue the Class D share issue has the potential to be CEPS accretive

by 1-1.5%. As such, we have outlined three scenarios together with a sensitivity analysis,

from which to derive a fair value. The most important trigger for the share in the coming 12

months is that transaction volumes pick up, necessary we argue to turn investor sentiment in

the share.

NPV calculations NPV sensitivity analysis

Source: ABG Sundal Collier, company data

Normalised return on equity of 15%

Below, we have outlined a scenario for normalised return on equity. We assume run-rate

NIY in line with the earnings capacity, current leverage ABGSCe definition of 56%, and

our estimate of current funding costs, i.e. 5Y EUR swap of 280bp + margin of 90bp. With

these assumptions we arrive at a levered yield of 12%, and deducting central administration