Thursday, November 24, 2016

SHB: the Lundberg share is inflated …

How to measure is the Lundberg share of expensive, with a 14% substanspremie or 51 percent premium vis-à-vis reported property value. It writes Handelsbanken, where Lundberg-ceo Fredrik Lundberg is a major shareholder, privately and via companies, in an analysis of the real estate and investment company ahead of Thursday’s quarterly report.

the Analysis are classified as “Inflated score, look for the door”, and this recommendation will be reduce with riktkursen 495 kronor, against a share price of eur 582:50 sek at the date of publication 22 november.

“Lundbergaktien has a special allure with the ownership of a number of kvalitetstillgångar along the central position in the industrivärden sphere. This, together with the long-term approach and the predictable risk-averse profile, has attracted many investors, in particular private asset management,” writes the bank, and then continues:

“However, we have a hard time to see that 14% substanspremie for a fairly static portfolio of mainly cash, cash equivalents and replikerbara listed shares can be justified.”

the Premium in question is near treårshögsta, noted in the analysis: Lundbergsaktien during the last three years traded at a discount-/premiespann at minus 23 per cent (discount) plus 15% (substanspremie). A few triggers for further premieökning is not in the near future, according to Handelsbanken, rather, on the contrary, now after Lundbergsaktien included in the MSCI Europe index.

The second method of valuation that applies is to look at the market’s implicit valuation of Lundberg’s property portfolio. This have rushed to 25.5 billion, equivalent to a premium of 51 per cent on the book value.

“We do not question the quality or how it goes for Lundberg’s unlisted real estate assets, but we believe that valuations currently are overblown, especially if you compare with the noted sektorkollegor, who have suffered ränteuppgångarna recently,” writes Handelsbanken.

Handelsbanken owned significant part of the Lundbergföretagen and the sphere around the company (Fredrik Lundberg and his two daughters, and two foundations): according to the Holdings owned bank to 3 per cent directly by the “Lundberg-sphere”, and, in addition, indirectly via the Lundbergsfärens 20/29% (capital/votes) of Industrivärden, which holds 10 per cent of Handelsbanken.

Fredrik Lundberg is the largest private owner of Handelsbanken shares for sek 1.5 billion, corresponding to 0.6 per cent of the bank.

the Lundberg’s nine-month interim report will be published at lunchtime on Thursday.

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