Attractive 0.5 PEG

The attractive <7x PE related to the earnings per share growth ratio provides a good margin-of-safety. The >15% ROE keeps adding to the equity capital, and drives future earnings per share higher. In theory the share has a 100% upside potential when the PE multiple matches earnings per share growth.

The historical conservative valuation of niche banks, with higher risks, is expected to limit the multiple expansion to 8x PE in the short term. In the mid- to longer-term the growth should drive both earnings per share and multiple expansion.

Norion's valuation is pressed due to exposure to Oscar Properties.

Dividend policy

The bank does currently not pay dividends. This could potentially change in case of surplus capital. As long as the company has good growth opportunities, using capital for growth is a better allocation.

Bank's policy is to distribute potential surplus capital in relation to the capital adequacy target, subject to the bank’s future outlook and capital planning, to its shareholders.

Real-estate

Norion bank real-estate primary and secondary financing.

Corporate

Norion bank offers credit solutions to SME.

Collector

Collector offers personal loans and credit cards to consumers.

Walley

Walley offers payment and check-out for e-Commerce.

EriK Selin

Strategic shareholder with excellent track record and expertise in the real-estate market.

Economic downturn

The Swedish and global economy show signs for a possible recession. Norion operates in segments with in general higher risks.

In 2020 Collector issued 1Bkr new shares, that caused 50% dilution, to strengthen its balance sheet during the COVID crisis.

In 2022-2023 rising interest rates triggered a downturn in the real-estate market and increased defaults in SME. Management has navigated these changed market conditions well.

Regulatory risks

As a niche bank Norion is more sensitive for regulatory risks and the costs of regulatory changes.