Semapa/ Navigator: Momentum & valuation favour Semapa
We reiterate our NEUTRAL rating on Navigator (FV moves from Eur 4.7 to Eur 5.4) and our BUY rating on Semapa (FV moves from Eur 23 to Eur 28.2). Navigator has had a strong performance, up by 35.5% YTD and outperforming the PSI20 by more than 27%, supported by higher pulp and paper prices, but in our view this better scenario is fully priced in and the shares trade at the high end of their historical valuation. Semapa is also up by c. 32.5% despite its main asset being the 69% stake in Navigator. According to our calculations a 1% move in Navigator’s equity value has a 1.1% impact on the equity value of Semapa. At this point we calculate that using the market price of Navigator and valuing the equity of cement and environment at zero, Semapa still has c. 20% upside to current levels. In the coming quarter we expect the operational momentum to be strong for both companies with pulp and paper prices driving Navigator’s EBITDA, which should be up by 17% in 2018E and have a knock-on positive effect on Semapa.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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