UPM (Buy, TP: EUR48.00) - Investing and monetising
UPM is set to reap the benefits of its transformational capex that we project will raise its annual EBITDA to cEUR3.8bn for 2024e (FCF yield of ~ 13%). With a high probability of additional capital allocation into a biofuel plant in the Netherlands, the organic growth story is set to continue beyond 2025e. Thus, from 2028e we believe the annual EBITDA could be near EUR4.1bn (FCF yield of ~ 15%). Due to the unique combination of earnings growth, improved earnings quality and an attractive valuation, UPM remains our top sector pick. 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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