Sappi | How far has the can been kicked?
Sappi's Q2 '19 results represented a fourth consecutive quarterly earnings miss. The standout feature of SAP's results was the need to take 85kt of coated paper market downtime which raises questions about the Group's ability to successfully transition to growth businesses (dissolving wood pulp and specialty paper). We remain supportive of SAP's investment programme since we argue that headwinds from weak economic sentiment, sequentially lower DWP prices and underwhelming specialty margins are cyclical.Sappi is a holding company, engaged in providing dissolving wood pulp, paper pulp and paper-based solutions. Co.'s dissolving wood pulp products are used by converters to create viscose fiber for clothing and textiles, acetate tow, pharmaceutical products, as well as a range of consumer products. Co.'s paper products includes: coated fine papers used in the production of books, brochures, magazines, catalogues, direct mail and many other print applications; casting release papers used for fashion, textiles, automobile and household industries; and in the Southern African region newsprint, uncoated graphic and business papers and premium quality packaging papers and tissue products.
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