Venture: European bank
Issue 5;
A bank that was recently scrutinized and deemed to be significantly undervalued by the analysts.
BAWAG Group AG (BG AV) is a bank headquartered in Vienna, serving 2.1 million retail, small business, corporate, real estate and public sector customers across Austria, Germany, Switzerland, Netherlands, Western Europe, and the United States. “The Group operates under various brands and offers simple, transparent, and affordable financial products and services across multiple channels.”
It was founded in 1922 and has a lively history where it was involved with REFCO (failed commodity business) in 2006. It was sold to Cerberus (private equity) before the 2008 crisis. They sold via an IPO in 2017.
In July 2023, the hedge fund Petrus Advisers published a report backing up their short position in BG. Both JP Morgan and Deutsche Bank retorted it, saying they were taking advantage of the recent banking crisis (Silicon Valley, Credit Suisse, etc.) and could not back up their findings. The analysts rallied around BG, and 10 have a buy rating, and 2 a hold. Their target price is €73 vs €45 today.
Forecasts have been steadily upgraded all year, and there has been no further bad news. BG was racing ahead of the European banks until the report but is now back in line. Earnings have kept on being upgraded despite the report.
BAWAG Upgraded Forecasts
Other metrics are supportive. 82 million shares remain outstanding in contrast to 100 million at the time of the IPO in 2017. It trades at book value, on a forward PE of 5.5x and a dividend yield of 8.1%. It’s cheap.
Risk
BG is a mainstream mid-sized bank. The shares are liquid, and volatility is 32%, which is the same as Barclays. It has recently been scrutinized, and I deem it to be medium to high risk, similar to other European banks.
Venture Update
Last week, the market was knocked with most holdings firm, and just TIG down. TIG are buying back over 100k shares each day, so I doubt it will stay down for long, provided macro behaves. BATS paid a 57p dividend on 29/9/23. I now have over 30 companies on my Venture watch lists, which is building. BG is the first non-UK stock, but the list will grow.
Please let me know your thoughts by emailing me at charlie.morris@bytetree.com or tweeting me @AtlasPulse.
Many thanks,
Charlie Morris
Editor, Venture
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