SCA (Buy, TP: SEK208.00) - Strong profits in uncertain times
In our view, the Q4 results clearly showed the strength of the backward-integrated business model with own forests, which helps SCA to mitigate severe cost inflation on pulp wood. Although the results prompted us to cut our 2023e EBITDA by c10%, our earnings scenario remains attractive and we find it positive that SCA increased the book value of its forestry land to SEK139/share (SEK120 a year ago). With confidence in the value story and the new strategy of investing in wind parks, we reiterate our BUY and SEK208 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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