Tuesday 10 September 2013

Analysis of ABG Sundal Collier

A Norwegian company working with investment banking

Company: ABG Sundal Collier (ABGSC)

Business: A Norwegian company dealing with investment banking that focuses on equity sales and trading, research, and corporate finance as well as give advice on merger and acquisitions, raising capital, corporate re-structuring, on Nordic companies.

Active: Focus on the Nordic market. Have offices in Norway, Sweden, Denmark, the UK as well as in the USA.

P/E: 12.7

contrarian values of P/E, P/B, ROE as well as dividend
The P/E of ABGSC is for my liking a bit too high with 12.7 and the P/B is running at 1.7 which according to Graham puts it at the boarder for being an interesting investment. Which it actually is not. The earnings to sales are at 17% which is ok but not more and the ROE is 13% which is acceptable. The book to debt is at a ratio of 1.1 which is also pretty ok. The growth in the last five years has been bad and it has been dropping year by year so it has nothing to do with 2008 being excellent year and then a big drop for 2009 which has usually been the normal case either way they have had a negative yearly growth of -6.3%. They pay a dividend that is very good of 11.9% but that represents 150% of the earnings and they have been paying out a higher dividend than their earnings for the last five years! Crazy! The amount of shares have also increased year by year for the last five years so by the look of things the dividends are being financed by new stocks. I feel sorry for the people buying those stocks! The motivated P/E would be 8 to 10 which means that the market is today slightly overvaluing the stock. Another "funny" aspect is that they have earnings of 160 million NOK and they pay out bonuses to their employees/partners of  190 million NOK. What are they getting bonuses for?

Conclusion: Do not invest in this company! They only seem to be on the stock market to pay themselves bonuses and high salaries and have no interest in doing something good for the shareholders. I feel sorry for every person that have invested in this company.

If this analysis is outdated then you can request a new one.

No comments: