Train Alliance: Strong margins on soft revenues - SEB

Train Alliance’s Q2 earnings were roughly in line with our expectations on weak revenues. The Covid-19 impact on passenger traffic was temporary but as societies opens up railroad activity should start to rise and Train Alliance guides h/h earnings improvement in H2. With continued strong growth in rail transportation the company has in depth railway competence and unique land assets from which value is to be created for many years to come.

The performance of the shares has been weak recently and they trade on a premium to Train Alliance’s latest NAV of around 18%. We believe that a potential share price driver ahead is a positive outcome in the zoning process in Sigtuna, which we described in our 18 March initiation report. If successful, this zoning could have a positive impact on Train Alliance’s NAV of some SEK 300-400m, or SEK 11-15 per share. We think this justifies a premium to the current NAV, which is also supported by a DCF valuation approach. We derive a fair share price range of SEK 80-85 per share with a mid-point value of SEK 83.

Länk till analysen i sin helhet: https://research.sebgroup.com/corporate/reports/109884