DSV: Increasing Fair Value Estimate 48%; Market Missing Potential of DB Schenker Acquisition

We are increasing narrow-moat DSV's fair value estimate by 48% to DKK 1,660 per share after transferring coverage to a new analyst and incorporating the proposed DB Schenker acquisition. The acquisition should drive an increase in earnings and margin growth the market is failing to appreciate fully. DSV earns a narrow moat rating due to the network effect advantage of its vast network of carriers/airlines and customers, which results in superior scale, margins, and returns on invested capital. Shares are 11% undervalued based on our bullish view on the DB Schenker acquisition. DSV has shown the ability to successfully integrate less profitable businesses and come out the other side with superior margins, having done so three times in the past decade.