Mayr-Melnhof confirmed at BUY, TP EUR 192 - Cost inflation defied by pricing power
It appears to us that MM Groups ability to defy cost inflation defied by pricing power is currently underappreciated by the market and consensus forecasts alike (well below RBIe)Sharply higher energy costs, including concerns regarding gas supply security as an additional burden to sentiment, and record higher waste paper prices certainly stand at the forefront of the challenges
The war in Ukraine might induce asset impairments and dent the RUS/UKR earnings contribution
BUT the convincing pricing power is supportive for the margin restoration
The demand fundamentals remain comforting both in board & paper and in packaging. With the realisation of M&A related synergies progressing even a bit ahead of budget, further investments in the new production capacities and unbroken M&A appetite we see the main building blocks of the investment case as intact
We reiterate the BUY recommendation and have tweaked the target price to EUR 192 from EUR 194
Mayr-Melnhof Karton and its subsidiaries are primarily engaged in manufacturing and selling cartonboard and folding cartons with a focus on Europe. Co.'s business segments include: Mayr-Melnhof Karton, which is engaged in the manufactures and markets numerous grades of cartonboard, concentrating on coated cartonboard produced predominantly from recovered paper as well as virgin fiber-based cartonboard; and Mayr-Melnhof Packaging, which is engaged in converts cartonboard into industrial printed folding cartons mainly for the food industry, other consumer goods industries, and into cigarette packaging as well as confectionary packaging.
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