ENCE: CMD - ENC BEGINS MAKING DECISIONS INDEPENDENT OF PONTEVEDRA (ANÁLISIS BANCO SABADELL)
CMD: The company is starting to make decisions independent of the Pontevedra plant. BUY.From the Capital Markets Day held at the end of yesterday’s session we highlight that ENC is starting to make investment decision (although not highly relevant) mainly in the pulp business (~33% of normalised EBITDA). In this regard, regardless of the final outcome on the Pontevedra factory, the group will implement an efficientisation plan in Navia immediately that starting with € 105 M of CAPEX (11% of EV) will mean (according to ENC) around € +20 M of EBITDA (+11% in a normalised average cycle year without Pontevedra). With this measure, which includes several improvement plans and adjustment in pulp prices, we will revise our estimates and T.P. where in principle we would foresee between +6 and +11% vs. € 3.60/sh. currently (+15% upside). ENC has outperformed the IBEX by +42% YtD (-1% since the announcement of the resolution against the Pontevedra factory in July’21).
Ence Energia Y Celulosa is engaged in the manufacture and commercialization of wood pulp and derivatives. Co. divides its activities into the following two business lines: Forest Division: Co. manages timberlands in South America and the Iberian Peninsula. Co. is involved in trading of wood, and supplies solid wood products including: plywood, sawn timber, parquet flooring and glued-edge paneling. Co. is involved in forest and environmental consulting. Pulp Division and Energy Production: Co. is engaged in the production of Eucalyptus globulus-based TCF and ECF paper pulp. Co. is also involved in the generation of electricity through biomass power producing plants.
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