DSV-Panalpina (DSV) (OW) reported a solid Q4 20 with EBIT of DKK2.6bn vs. DKK1.8bn in Q4 19. For 2020 EBITDA amounted to DKK 13.6bn vs. DKK10.3bn in 2019 – supported by synergies from the acquisition of Panalpina. FFO rose to DKK10.5bn in 2020 from DKK8.0bn in 2019. Net debt to EBITDA declined to just 1.3x – comfortably below the 2.0x leveage target set by DSV. Due to the strong balance sheet DSV announces another DKK2bn of share buy backs. After the integration of Panalpina DSV launches a new set of financial targets for 2025 which includes a conversion ratio target of >40% (2020:33.4%) and ROIC above 20% (2020 14.3%). The below 2.0x leverage target is unchanged.
For 2021 DSV guides for EBIT before special items of DKK10.5-11.5bn vs. DKK9.5bn in 2020. This compares with Bloomberg consensus of DKK11.2bn. The outlook assumes a stable development in the markets DSV operates and a continued grdual recovery of the global economy after the Covid-19 crisis. Overall a credit neutral report from DSV in our view. We continue to see value in the EUR27 bond after the A3 rating from Moody’s in February 2021. However we only expect the Q4 report to have a marginal spread effect. We remain Overweight on DSV.
