Alm brand emission: key points ● Alm brand emission, number of shares outstanding from 0.154B to 1.54B ● Purpose is to fund purchase of Codan DK insurance business (price 12.6B DKK) ● Emission: Every old share will receive 9 T-ret giving right to be new share at 7.55 DKK ● AlmB+Codan revenue of 11.1B DKK in 2020 and 11.3B DKK in 2021e. After tax profit of 0.82B in 2020 and 0.98B in 2021e (see Ref-5). ● AlmB claim to be able to realize 600M DKK synergies by 2025 giving 1.8B before tax and 1.4B after tax profit when all synergies are achieved. ○ 90M by 2022, 240M by 2023, 450M by 2024, and 600M by 2025. ○ But will they be able to achieve 600M in synergies?? ● No synergies: 0.98B DKK profit => EPS of 0.64 DKK and PE of 17.7 (at 11.3 DKK share price) ● All synergies: 1.4B DKK profit => EPS of 0.91 DKK and PE of 12.4 (at 11.3 DKK share price) ● Typical PE for competitors is about ~17 but Tryg A/S as outlier (PE = 34!!) ● Alm brand expects to pay out more than 70% of after tax profit as dividend and share bb. Average payout for last 4 years in 100% of NP. Net profit including synergies (B DKK) EPS (DKK) Payout yield Share price @ PE=17 (DKK) Share price increase % (base 11.3) 2022 1.05 0.68 6.0% 11.6 2.3% 2023 1.17 0.76 6.7% 12.9 14.2% 2024 1.33 0.86 7.9% 14.6 29.2% 2025 1.40 0.91 8.1% 15.5 37.2% total 3.21 28.4% 37.2% Total return of 4 years = 28.4% + 37.2% = 65.6% => 13.4% per year compounded (If synergies are achieved!) Tryg A/S (Ref-1) Top Danmark (Ref-2) Gjensidig ASA (Ref-3) Alm Brand (Ref-4) AlmB+Codan no synergy(*) AlmB+Codan with synergy(*) Mkt Cap (10/11/2021) 102 30.6 107 7.07 17 17 Revenue 2020 22.5(**) 22.7 26.1(**) 20.7 28.6(**) 27.2 7.25(**) 5.48 11.1 11.1 Revenue 2021 (estimate) 24.1 24.3 20.2 21.7 11.4 Net profit 2020 2.77 1.12 4.95 0.618 0.822 Net profit 2021 (estimate) 2.39 2.97 2.01 1.8 (Ref-2) 6.19 0.563 0.463(***) 0.979 1.40 (****) PE (2020) 36.8 27.3 21.6 11.4 20.7 PE (2021) 42.7 34.3 15.2 17 (Ref-2) 17.3 12.6 15.3(***) 17.4 12.1 All numbers except PE are billion DKK (NOK for Gjensidig). Revenue and profits taken from latest quarterly reports unless stated otherwise. 2021e Earnings and revenue based on reported guidance or 1.33*(Q1-Q3) results. (*) Based on ‘Proforma’ numbers in Ref-5 and assuming new share price of 11 DKK. (**) From FT.com database. (***) Continuing activities only. (****) Based 1.8B DKK before tax profit after synergies. When multiple numbers are given, the number in bold is the best estimate. Tegnings ret pris Effektiv kurs (ny aktie) Effektiv kurs (gammel aktie) Mkt cap (1.54B shares) PE no syn (0.98B NP) PE with syn (1.4B NP) 0 7.55 7.55 11.63 11.9 8.3 2 9.55 27.55 14.71 15.0 10.5 3 10.55 37.55 16.25 16.6 11.6 3.5 11.05 42.55 17.02 17.4 12.2 4 11.55 47.55 17.79 18.2 12.7 5 12.55 57.55 19.33 19.7 13.8 7 14.55 77.55 22.41 22.9 16.0 9 16.55 97.55 25.49 26.0 18.2 Figures from FT.com Figures from FT.com Figures from FT.com Figures from FT.com References 1. Tryg Q3 report here 2. Top Danmark Q3 report here 3. Gjensidig ASA Q3 report here 4. Alm Brand Q3 report here 5. Alm Brand emission retail brochure here