What kind of company is Sampo to be analyzed?

Sampo is one of the most covered companies by analysts in Nasdaq Helsinki. Over 20 analysts cover us actively. But what kind of company is Sampo as an analysis case? We asked this from two analysts, Sauli Vilén from Inderes and Antti Saari from OP.

How long have you covered Sampo?

Sauli: “I started to cover Sampo in 2011.”

Antti: “I have covered Sampo since 2011.”

What kind of company is Sampo to be analyzed?

Sauli: “As a company, Sampo is exceptionally transparent. This partially explained by the fact that Nordea and Topdanmark are listed companies and by Sampo’s open investor relations policy. Sampo is quite special company because the big picture of the investment case is relatively easy to perceive. By the big picture I refer, among other things, to the value of its sum of parts, the role of mergers and acquisitions in the strategy and the future dividend flow.

Respectively, when diving into the details, analyzing Sampo becomes more difficult. For example, Mandatum Life’s profits and how the changes in regulation affect Sampo’s solvency, are factors that cannot be precisely forecasted. For most companies, these kind of details are easy to be forecasted and the big picture is more blurry, but Sampo is the opposite case. Fortunately, for investors, the big picture is the thing that matters in the long-run and investors should focus on that."

Antti: “Due to the fact that Sampo operates in different business areas, there are lots of parameters affecting the results. However, because of the stability of its businesses, it is easy to make quite accurate estimates. The challenges of analyzing Sampo are related to the valuation. The valuation of a stable company like Sampo can significantly vary depending the current market sentiment. In addition, it is hard to figure out new stock price drivers or point of views due to the stability of the company.”

What are the most important things, which you pay attention in Sampo’s financial reporting?

Sauli: “Sampo’s financial statement is exceptional because significant share of the results is public in advance (Nordea and Topdanmark). When adding If’s exceptionally stable profit performance, big surprises in the financial statement are quite rare. Thus, If’s results and technical results get the biggest attention.

In addition, investors should pay attention to the internal dividends paid by Sampo’s subsidiaries. Those give clear indication for Sampo’s coming ability to pay dividend to its shareholders. “

Antti: “Guidance, the profitability of the insurance businesses excluding the changes in technical reserves and NAV per share. If these are in shape, can all the other deviations be explained by temporary factors.”

Besides financial reporting, how all the other events, for example, conference calls, meetings with the management and capital market days affect your analysis?

Sauli: “For me, the most interesting part of the financial reporting day is the conference call, in which the management, especially CEO and President Kari Stadigh, has an open dialogue with the analysts. Mr. Stadigh has quite exceptional comment policy and has a good “Say-Do ratio”. Hence, it is easy to trust the management’s comments and I think these comments are the most important part of the financial reports.

Naturally, the same applies to the capital markets and analyst day as well. For investors, these events provide the best picture of Sampo as an investment case.”

Antti: “Meetings with the management and conference calls are very important ways to get to know the management and learn to understand how they think. When you have been able to listen and to challenge the management several times, you learn to interpret their comments. A similar comment from two different persons can give very different message to the markets, depending, for example, on the person’s creditability and the general way to communicate.

Capital market days provide important deepening information for analysts and investors. Usually, this information will at some point be needed, even though it may not directly affect the view on the company. In these events, it is also often possible to meet the members of the management who cannot be met in the financial results conferences.”