Stora Enso (Buy, TP: EUR11.50) - Near-term weakness
The Q2 report was on the soft side, with sales and EBIT missing consensus by 2% and 7%, respectively, and the Q3 guidance implying downside to consensus. A key positive was the strong progress of the cost-cutting initiatives, and EUR80m expansion in the scope of the programme. While the near-term outlook is challenging, Consumer Board showed solid margin progress, and renewals of liquid packaging board contracts should bring further gains from the beginning of 2020. We reiterate our BUY but have trimmed our target price to EUR11.5 (12).Stora Enso is a provider of renewable solutions in packaging, biomaterials, wooden constructions and paper on global markets. Co.'s reporting segments are: Consumer Board, which develops and provides consumer packaging boards for printing and packaging applications; Packaging Solutions, which develops fibre-based packaging; Biomaterials, which provides a variety of pulp grades for paper, board, tissue, textile and hygiene product producers; Wood Products, which provides wood-based solutions for building and housing; Paper, which provides paper solutions for print media and office use; as well as Other, which includes Co.'s shareholding in the energy company, Pohjolan Voima.
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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