UPM (Buy, TP: EUR42.00) - Strong earnings growth
Although the strike in Finland led to cEUR200m in lost EBIT, UPM guided for flat earnings YOY in H1, which we find notable. Given the tight markets to which it is exposed, we expect UPM to report strong earnings growth from Q3. For 2023–2024, we expect strong incremental earnings from ongoing growth projects, while the net long electricity position of 7Twh implies that UPM should benefit from structurally higher electricity prices. We have raised our target price to EUR42 (41) and reiterate our BUY.UPM-Kymmene is a global paper and forest products group, mainly engaged in the production of paper, with an emphasis on the manufacture and sale of printing and writing papers. Co.'s operations comprise of these segments: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Paper Asia, UPM Paper ENA, UPM Plywood and Other. UPM Biocomposites, UPM Biochemicals business units and Group services are reported in Other operations. Co.'s activities are centred in European Union countries, North and South America and Asia with production plants in 13 countries.
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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