Metsa Board (Buy, TP: EUR9.00) - Value support but weak momentum
Following the Q1 profit warning and a more cautious view on the pulp and paper board businesses, we have cut our 2023e EBIT by 20%. Still, we believe earnings remain healthy and 2023e represents a cyclical trough, translating into an EV/EBIT of below 8x. Thus, we note the weak earnings momentum, but continue to see a strong value case tilted towards quality paper board. We reiterate our BUY, but have cut our target price to EUR9 (12) on estimate revisions.Metsa Board is a European producer of folding boxboard and white fresh forest fibre linerboard and a market pulp supplier. Co. and its subsidiaries comprise a forest industry group, which operations are organized into two business segments: Cartonboard and Lineboard and Paper. The Cartonboard business area is a manufacturer of folding boxboards. The business area also provides packaging services in Asia. The Linerboard and Paper business area is a manufacturer of coated white fresh forest fibre linerboards and producer of uncoated fresh forest fibre linerboards. The Linerboard and Paper business area also manufactures uncoated fine papers mainly for office end-use as well as coated papers.
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.
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