BUY OR SELL-Will property slump, state aid weigh on SNS?
* Stock's price-to-book ratio is 0.22 vs 1.53 for sector
* Worries remain about property unit, state aid repayment
* Shares up 6.4 pct this year vs 3.8 pct fall for sector
AMSTERDAM, June 11 (Reuters) - Shares of Dutch bancassurer SNS Reaal (SR.AS) have outperformed European rivals recently and still look cheap against their peers, but the company is losing market share and has warned of rising property writedowns.
SNS Reaal cut its first-quarter loss to 4 million euros ($5.6 million) from 642 million euros posted in the October-December period last year, when it got a 750 million euro capital injection from the state.
Will SNS Reaal's results continue to improve and boost its share price?
Or could rising impairments at its international property finance unit, shrinking markets and a possible rights issue to cover state aid repayments nip the shares' recovery in the bud?
CHEAP VALUATION
Contracting financial markets, which hurt SNS Reaal in the first quarter, has already been priced into the shares, KBC analyst Dirk Peeters said.
"Declining markets will impact everyone the next six to twelve months. This is no longer a surprise," said Peeters, who has an "accumulate" rating and a 6.50 euro price target.
Trading at 4.14 euros on Thursday, the stock has a price-to-book ratio of 0.22, indicating SNS Reaal's market valuation is just 22 percent of the company's sum-of-the-parts -- or liquidation -- value, Reuters Estimates data shows.
The same ratio is 1.53 on average for the European insurance sector .SXIP, which includes rivals such as ING (ING.AS), Aegon (AEGN.AS) and Aviva (AV.L).
Dutch asset manager Fred Huibers from Haags Effectenkantoor bought SNS shares last month at around 4 euros, partly because they were cheap, he said. Continued...
