Ence: The outlook for pulp prices improves, we increase our target price
- The best performing pulp stock in 2017
- Pulp prices are above the historical high
- Further price increases lie in store
- Raising our target price to €5.63 /share
- The relative valuation remains attractive
- We reiterate our Buy recommendation
Ence is one of our star recommendations in 2017. Although at record pulp prices there may be worries of a cyclical downturn, we are keen to shrug these off as demand growth outstrips that of supply and the outlook for BKHP pulp prices is reinforced. We expect that Ence will continue to outperform as pulp prices continue to rise and earnings growth accelerates. We continue to see good value in the stock and reiterate our Buy recommendation with a revised TP and a 21% upside.
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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