SCA (Buy, TP: SEK185.00) - In pole position
Due to lower-than-expected costs for the containerboard and sawn goods businesses, Q3 earnings were above our expectations. The Q3 report removed much of the earnings uncertainty for 2025e. As a result of its unique business model (with 50% backward integration in its own forest mitigating wood price inflation), signals that pulp prices are set to improve, and earnings support from growth investments, we continue to see a good risk/reward in a high-quality name. We reiterate our BUY and have increased our target price to SEK185 (180).Svenska Cellulosa is a holding company. Through its subsidiaries, Co. is a global consumer goods and paper company that develops, produces and markets personal care products, tissue, publication papers and solid-wood products. Co. consists of three business areas - Personal Care, Tissue and Forest Products. Personal Care activities comprise three product segments: incontinence products, baby diapers and feminine hygiene products. Co.'s Tissue product portfolio comprises toilet paper, kitchen rolls, facial tissues, handkerchiefs and napkins. Co.'s Forest Products offers publication papers, kraftliner (packaging papers), pulp, solid-wood products and renewable energy.
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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