Target price revised to €3.70 on improved outlook
A new cycle is starting and prices are steadily rising. Free cash flow prospects have improved. We are updating our forecasts to incorporate the pulp cycle and the improved FCF outlook.
A better outlook for free cash flow improves our SOP-DCF based valuation. We are increasing our target price from €3.00 to €3.70 (a +17.3% upside).
Our Buy recommendation remains unchanged.
Ence Energia Y Celulosa is engaged in the manufacture and commercialization of wood pulp and derivatives. Co. divides its activities into the following two business lines: Forest Division: Co. manages timberlands in South America and the Iberian Peninsula. Co. is involved in trading of wood, and supplies solid wood products including: plywood, sawn timber, parquet flooring and glued-edge paneling. Co. is involved in forest and environmental consulting. Pulp Division and Energy Production: Co. is engaged in the production of Eucalyptus globulus-based TCF and ECF paper pulp. Co. is also involved in the generation of electricity through biomass power producing plants.
Bankinter S.A. is a Spanish brokerage firm established in 1989. The company's line of business includes the provision of market research and trading services for Equity and Fixed Income products.
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