Norske Skog (Buy, TP: NOK30.00) - All eyes on the Golbey start-up
We have made relatively small changes to our estimates, with the largest impact coming from FX (weaker NOK). We believe the stock offers a favourable risk/reward for three reasons: 1) the stretched balance sheet is under control; 2) we expect strong earnings growth with the ramp-up of Golbey containerboard production; and 3) we do not rule out further actions, such as cost-cutting programmes or asset sales. We base our modelling on zero benefit from improving markets, but still see 2027e FCF of cNOK700m, translating into a 40%+ potential yield. We reiterate our BUY and NOK30 target price.Largely unchanged sequential Q1e profits. We estimate Q1 EBITDA of cNOK600m (essentially the same as in Q4), including NOK560m in insurance recognition. Our forecasts are based on similar market conditions as in Q4. As the investment project in Golbey is now completed, we have assumed that cNOK75m per quarter of fixed costs transfer from the paper division to the packaging division, mainly explaining why we expect sequentially higher profits for the paper division and vice versa lower profits for the packaging division. The results are due at 07:00 CET on 23 April.
All eyes on Golbey. We expect management to provide a constructive outlook for its new containerboard business at Golbey. We have assumed a gradual ramp-up, and that it will turn profitable by end-2025e.
Norske Skog ASA is a Norway-based company engaged in the paper industry. The Company manufactures, distributes and sells publication paper and pulp, including long and short fiber sulphate pulp, newsprint, magazine and bleached kraft paper, and particle boards. Its business activities are divided into two operating segments: publication paper Europe and publication paper Australasia. The publication paper Europe segment includes production and sale of newsprint and magazine paper in Europe. The publication paper Australasia segment includes production and sale of newsprint and magazine paper in Australasia. It owns and operates paper mills in Norway, France, Austria, Australia and New Zealand.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.