ENCE: VIRTUAL CORPORATE ACCESS WITH THE COMPANY (ANÃLISIS BANCO SABADELL)
Messages from the virtual roadshow with the company. BUY.From our virtual roadshow held yesterday with ENC, we highlight the following messages from the impact of the Covid-19 crisis: (i) both its pulp (75% sales’19) and renewable production businesses (23%) are deemed essential and stand at usual activity levels, (ii) the company keeps its production (~+15% vs. 2019) and cash cost (-6% vs. 2019) targets’20 unchanged; (iii) potential recovery of pulp prices from the 3Q’20, and (iv) for the time being, it does not see liquidity problems (~ € 230 M in cash and 70 in available credit lines vs. ~ € 50 M in maturities’20-21). Current levels are pricing in the shutdown of the Pontevedra plant (43% production) in the short-term and pulp prices in perpetuity -6% below the average levels seen in the past 10 years (adjusted for inflation).
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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