SCA (Buy, TP: SEK190.00) - Deep roots ahead of a recovery
Unlike many of its peers, we believe SCA will continue to generate healthy earnings through the cyclical trough and into a market recovery. Based on company self-help and normalised (mid-cycle) market conditions, we estimate annual cash earnings of cSEK7bn by 2025, implying a 7% FCF yield – which we find attractive, with growth underpinned by megatrends and high barriers to entry. We reiterate our BUY and SEK190 target price.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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