Northern Lights

Norske Skog (Buy, TP: NOK100.00) - Overreaction presents opportunity

The Q1 earnings and outlook were largely in line with our forecasts, and over the coming days, the landslide situation affecting operations at the Halden mill should be sorted out. Although we have cut our 2023e EBITDA by 8%, we reiterate our BUY and NOK100 target price. Besides a solid balance sheet, we see sustained high earnings and generous dividends.

Norske Skog (Buy, TP: NOK100.00) - Transformational story intact

We have reduced our volume and price assumptions for 2023, but stress that we expect earnings to remain strong. With the Q1 report, we believe management will likely confirm that the two containerboard conversion projects remain on track and budget. Reflecting a more cautious view on the traditional business, we have cut our 2023e EBITDA by 10%, and in turn reduced our target price to NOK100 (117). Still, with the recent weak share-price performance, we see excellent entry points in the shares a...

Northern Lights

Norske Skog (Buy, TP: NOK117.00) - Impressive pricing power

The Q4 report confirmed our view that Norske Skog can maintain high European magazine prices despite much lower input costs (electricity and recovered fibre costs). Due to a more positive view on pricing power for the newsprint business, we have raised our EBITDA by c8% for 2023e and 6% for 2024e. And with the company moving ahead with its first containerboard production, we have raised our target price to NOK117 (115) and we reiterate our BUY.

Northern Lights

Sector Fast Comment - October pulp data: shipments +2% y-o-y

Global shipments: +2% y-o-y, China +8% Pulp prices have started to fall but show resilience '23 supply manageable, but a recession could hit demand

Sector Fast Comment - September pulp data: shipments +5% y-o-y

Global shipments: +5% y-o-y, China +1% Pulp prices have started to fall amid a weaker cycle ’23 supply manageable, but a recession could hit demand

Norske Skog - In a good place despite large capex

Q3 was slightly weaker, Q4e will be better 2023 likely represents a more normal market Solid credit with leverage-peak at 1.5x despite its capex

Norske Skog - ’22 was great, ’23 holds a weaker cycle

Q3 EBITDA 6% below, Q4 likely better on higher prices ’23 holds a weaker cycle – paper prices could normalise SOTP of NOK 80-100/share incl. growth projects

Norske Skog (Buy, TP: NOK100.00) - Dressed for success

On an underlying basis, the Q3 report was in line with our expectations of continued healthy earnings in a volatile market. We were encouraged the company guided for QOQ earnings growth in Q4 and the transformational conversion investments in packaging were going to plan. Our optimistic earnings scenario is largely intact and we still believe the stock is poised for a revaluation. We reiterate our BUY and NOK100 target price.

Norske Skog - Q3 EBITDA: Down, but not out

Q3 clean EBITDA 6% below cons Lower volumes – 12% yoy Q4e likely up q-o-q (higher paper prices)

Northern Lights

Norske Skog (Buy, TP: NOK100.00) - Trading at unwarranted discount

Although we have reduced annual CO2 compensation payments from 2023e, this is more than offset by a slightly more positive view on publication paper prices, and we have increased our 2023e EBITDA by 3%. With transformation projects on track, and strong signs of still-tight paper markets, we are comfortable with our optimistic 2023–2024 forecasts, translating into P/Es of c5x. We reiterate our BUY and NOK100 target price.

Sector Report - A weaker cycle and a Nordic sweet spot

Norske Skog - Another loser in the Norwegian budget

CO2 compensation scheme cut by NOK 200/ EBITDA down NOK 143m, EPS NOK -1.5 Easy come, easy go. SOTP down NOK ~5/sh.

Powerpoint Sector Report - Leading indicators for OECD industrial prod...

OECD: The indicator points down. IP has held up so far US: The indicator points down (housing starts, monetary policy, FX) EU: The indicator points down (monetary policy, bond yields)

Sector Fast Comment - July pulp data: shipments +4% y-o-y

Global shipments: +4% y-o-y, China +1% First sign of weakness for the pulp price ~3% supply growth in ’22e-’23e

Sector Fast Comment - Swedish forest asset values +11%

Forest values up 10.7% (5.4% in real terms) Central up 9%, Northern up 14% Positive for Holmen, SCA, Stora – SOTPs up 4-10%

Sector Fast Comment - June pulp data: shipments +5% y-o-y

Global shipments: +5% y-o-y, China -1% First sign of weakness for the pulp price ~3% supply growth in ’22e-‘23e