Ence 1H17 results’ first take is positive
Ence has reported a superlative set of results in 1H17. Sales increased by +18% to €342mn (€344mn BKTSe), with pulp advancing +13% to €285mn and biomass by +53% (helped by capacity additions in 2H16) to €52mn. The EBITDA increased +65% to €88mn (€86mn BKTSe). The cash cost declined –8% to €345/t (notably better than our €354/t BKTSe). EBIT increased +139% to €57mn (€53mn BKTSe), PBT +243% to €43mn (€41mn BKTSe) and net profit +242% to €32mn (€31mn BKTSe).
We recently revised up our estimates, increased our target price to €3.80 (from €3.70) and maintained our Buy recommendation. We are making no changes from our last report, and believe that if the pulp pricing outlook is reaffirmed in tomorrow’s call, the stock will outperform again.
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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