SBB - comment

Operationally, the numbers were in line with our expectations, and we would expect the hybrids to be higher and to outperform the SSNs. SBB values its Core/Non-Core assets at SEK46bn, whereas our valuation is SEK35bn. SEK 7.5 billion of the gap is due to the market value of the stakes versus the book value for SBB, which is the GAV. The remaining gap is caused by our valuation of the non-Core assets, which discounts the value of the SBB development portfolio (SEK5.9bn vs SEK3.9bn) and the JV’s (SEK3.5 vs 1.7bn). If the gap between book GAV and market value closes, we may revisit our valuation. We have discovered an error in our classification of debt, which reduces the LTV through the SUNs to 76% from 86% (and Hybrids from 109% to 100%). This doesn’t change our thesis on investing in SBB and the necessity for an A&E at SBB. We apologise for the error and will update our model.