UPM (Hold, TP: EUR28.50) - ‘Lower for longer’ pulp prices
We expect the Q3 results (due at 08:30 CET on 24 October) to show a steady QOQ trend, as lower maintenance activity and a seasonal pick-up in volumes should help to offset the deterioration in pulp and paper markets. Despite significant supply cuts in 2019, pulp inventories have failed to materially improve, and with the majority of the announced market-related downtime accounted for, we no longer expect a near-term recovery in prices. After a solid share price performance, we have downgraded the stock to HOLD (BUY) with a EUR28.5 (29) 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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