UPM (Hold, TP: EUR30.00) - More challenging H1 2020e
Heavy declines in selling prices weighed on revenue growth, but UPM still achieved a strong EBIT beat in Q4, and record cash flow for 2019. Declining paper prices, low pulp prices, and a heavy maintenance schedule should be a drag on H1 earnings, but an earnings recovery in H2 looks likely as commodity headwinds subside. Having made only minor changes to our forecasts, we reiterate our HOLD with an unchanged target price of EUR30.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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