Stora Enso (Buy, TP: EUR13.50) - Forest offers valuation support
We are in line with consensus ahead of the Q3 results (due at 07.30 CET 29 October), expecting operational EBIT of EUR229m, just below the guidance mid-point. We have lowered our 2020−2021e EBIT by c16% due to lower pulp price assumptions as we no longer expect a price recovery near-term. We have integrated Stora Enso’s forest asset with a separate valuation in our SOTP ahead of the change in reporting structure next year. As a result, we have raised our target price to EUR13.5 (11.5) and reiterate our BUY recommendation.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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