{"id":3526,"date":"2019-06-18T09:41:54","date_gmt":"2019-06-18T07:41:54","guid":{"rendered":"https:\/\/finserve.se\/var-syn-pa-saab-stor-uppsida-begransad-nedsida-2\/"},"modified":"2019-06-18T09:41:54","modified_gmt":"2019-06-18T07:41:54","slug":"we-have-saab-with-big-upside-limited-downside-2","status":"publish","type":"post","link":"https:\/\/finserve.se\/en\/var-syn-pa-saab-stor-uppsida-begransad-nedsida-2\/","title":{"rendered":"Our take on Saab \u2013 big upside, limited downside"},"content":{"rendered":"<div><\/div>\n<p>In the last five years, the development of Saab&#039;s share price relative to the Swedish stock exchange has been strong. The price has primarily been driven by better sales prospects and hopes that international contracts will improve the company&#039;s profitability. However, Saab has had difficulty converting increased sales into cash flow. This, in combination with the fact that large investments were required and will be required to gain ground internationally, meant that the company carried out a targeted share issue as recently as last October. The issue added approximately SEK 6 billion to the company.<\/p>\n<p>Saab&#039;s share price has yo-yoed on the stock market for the past three years and is around 35 percent below the top price of SEK 446 that was noted in October last year - before the issue was announced. The stock currently makes up 4.7 percent of the portfolio in the Global Security Fund.<\/p>\n<p><strong>What we think looks interesting<\/strong><\/p>\n<p>Saab has a unique position on the Swedish market, with a near monopoly-like position. 40 percent of the company&#039;s revenue comes from Sweden.<br \/>\nThere is a lot of debate about the potential for the Swedish defense budget and the increase it is expected to have until the year 2025. Analysts estimate that the increase could be as large as 70 percent until 2025 \u2013 an annual increase of 9.2 percent.<br \/>\nAn increased Swedish defense budget means that Saab has a high probability of increasing its organic growth.<br \/>\nOpportunities to obtain new international contracts have been strengthened by the order won from the US Air Force for the TX training aircraft together with Boeing during the past year.<br \/>\nThe stock has performed significantly worse over the past five-year period compared to American industry peers Lockheed Martin and Boeing, especially if the weaker krona is taken into account. This despite the fact that a stronger sales trend was noted.<\/p>\n<p><strong><br \/>\nIs Saab a good investment?<\/strong><\/p>\n<p>We believe that Saab looks interesting from a risk\/return perspective. The key to future price rises lies in how well you succeed in attracting international orders, which, all else being equal, means higher margins.<\/p>\n<p>Analysts see a justified price of SEK 390, which we think is somewhat high. Various fundamental valuations show the stock may have an upside of 10-20 percent from today&#039;s levels. If the company can profit from continued strong growth and rising profitability, the justified value is higher.<\/p>\n<p>\u00a0<\/p>\n<div class=\"\"><em><span class=\"\">Image: Copyright Saab AB, Saab @Linus Svensson<\/span><\/em><\/div>","protected":false},"excerpt":{"rendered":"<p>De senaste fem \u00e5ren har utvecklingen f\u00f6r Saab:s aktiekurs relativt den svenske b\u00f6rsens varit stark. Kursen har prim\u00e4rt \u00a0drivits av b\u00e4ttre f\u00f6rs\u00e4ljningsutsikter och f\u00f6rhoppningar om att internationella kontrakt ska f\u00f6rb\u00e4ttra bolagets l\u00f6nsamhet. Saab har dock haft sv\u00e5rt att omvandla \u00f6kad f\u00f6rs\u00e4ljning till kassafl\u00f6de. Detta i kombination med att stora investeringar kr\u00e4vts och kommer att kr\u00e4vas [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":3527,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"view_count":"720","footnotes":""},"categories":[22],"tags":[],"class_list":["post-3526","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-security-fund"],"_links":{"self":[{"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/posts\/3526","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/comments?post=3526"}],"version-history":[{"count":0,"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/posts\/3526\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/media\/3527"}],"wp:attachment":[{"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/media?parent=3526"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/categories?post=3526"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finserve.se\/en\/wp-json\/wp\/v2\/tags?post=3526"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}