UPM (Buy, TP: EUR45.00) - In a league of its own
Although UPM provided no explicit earnings guidance for Q4 onwards, it is clear to us that the earnings outlook for 2023e is rosy. As variable costs were up only slightly in Q3 QOQ, UPM clearly has good control over costs at the same time as we see strong pricing power in most core business areas. Reflecting better pricing for Raflatec, the paper business and the pulp division, we have raised our 2023e EBITDA by 9%. We reiterate our BUY and EUR45 target price.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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