ENCE: SALE OF RENEWABLES AND PULP RISING... ONLY PONTEVEDRA IS LEFT (ANÁLISIS BANCO SABADELL)
Sale of Renewables and rising pulp... only Pontevedra is left. BUYFollowing the divestitures in the renewable energy business and given the weakness of the USD, we cut our EBITDA21-23 estimate by -14% on average (+5.6% CAGR’19-23e vs. +17% previously and +9% consensus) and we assume a net recurring pulp price -2% lower than before. NFD’20e improved to € 212 M (vs. € 605 M previously; 3.4x NFD/EBITDA’20e and 1.7x in 2021). Thus, we raise our T.P. by +13% to € 4.31/sh. (+28% upside), as the impact from the divestitures exceeds the cut to pulp. As for the Pontevedra factory, ruling out a scenario of an immediate closure (which we see as unlikely), an unfavourable ruling would have a small impact on our T.P. (around -1%), whereas a favourable ruling would mean +7%, leaving +38% upside.
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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