Semapa/ Navigator: Cement looks attractive
In this note we reiterate our Buy rating on Semapa but lower Navigator from Buy to Neutral as our FV has been reached. Our FV for Semapa goes up to Eur23/sh from Eur19.6/sh on the back of the debt reduction while Navigator’s also increases but by only Eur0.1/sh to Eur4.7/sh, as the effect of slightly higher estimates and the rollover is mostly offset by the dividends paid. Semapa remains interesting in our view due to the potential of the cement recovery, but also as the implied holding discount based on our cement valuation and the current share price of Navigator is still at c. 24%, which is in our view too high. We note that by valuing only the equity stake owned in Navigator and deducting the holding debt Semapa would have 13% upside potential, which essentially means attributing a negative value to the cement unit.Navigator and its subsidiaries are engaged in the production and sale of cellulose pulp and related products, the purchase of wood and agricultural and forest production, the harvesting of forests and the transport of wood from the forests to the plants, and the production and sale of electricity and thermal energy. Co. is also involved in the production of paper and derivative paper products.
Semapa - Sociedade de Investimento e Gestao SGPS is an industrial group based in Portugal. Co.'s main activities are the production of cement and the production and sale of ready mixed concrete and clay, and the operation of quarries. Co.'s operations are organized along three industrial areas: Paper and Pulp (producer of bleached eucalyptus kraft pulp), through its holding in the Portucel Group; Concrets and Aggregates (a manufacturer of cement and its derivatives), through holdings in the Secil Group; and Environment (waste management involved in the collection, storage and treatment of animal by-products), through its holding in the ETSA Group.
Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.
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