EUR 400.00 For Business Accounts Only

ENCE: THERE IS LIFE BEYOND PONTEVEDRA (ANÁLISIS BANCO SABADELL)

Life beyond Pontevedra. BUY
In its CMD on 17 March ENC announced the rollout of the “Navia Excelente” project to boost the Navia biofactory, capable of generating 43% of Pontevedra’s EBITDA (cycle average; € 105 M CAPEX). We raise our estimates to include this project (75%) and the closure of the Pontevedra factory in 2023 (the most likely scenario), as well as the impact from the new RD on renewable energy, which subtracts around € -100 M of cash this year (9% of EV), although the impact on EBITDA and the valuation is small. We estimate € 221 M of EBITDA’22 (+100% vs. 2021; € 165 M in 2024e), meaning a +24% increase vs. the previous estimate, thanks to the better paper pulp and pool prices, and a 0.3x NFD/EBITDA’22e ratio (0.5x in 2024e). With all this in mind, our T.P. rises +7% to € 3.85/sh. (+20% upside), and it would reach € 5.20/sh. if the Pontevedra factory is not shut down or € 4.08/sh. if we consider 100% of the “Navia Excelente” project, and we maintain our BUY recommendation. The stock has outperformed the IBEX by +44% YtD and has recovered the level at which it was trading when the Supreme Court ruled on the closing of the Pontevedra factory in July’21.