One step forward, two steps back

Q1: 9% beat, but Kemi shutdown to weigh on Q2. Early-cyclicals improve, late-cyclicals to follow. Kemi and Husum projects could add >50% to EBIT. HOLD.

Metsa Board (Hold, TP: EUR7.70) - Positive start to 2024

The Q1 results were largely in line with our expectations, and the long-lasting market headwind finally turned into a tailwind, enabling paper shipments to rise 20% QOQ. However, while we expect market conditions to remain fairly healthy in 2024 and beyond, Metsa Board looks unlikely to reap the benefits due to interruptions at the Kemi flagship mill during Q2. With favourable business exposure to packing and pulp, we reiterate our HOLD and EUR7.70 target price.

Metsa Board (Hold, TP: EUR7.70) - Underlying earnings set to rise

With rising pulp prices alongside evidence of more normal conditions for the paper business, we are convinced that Metsa Board will show much stronger earnings compared to 2023, which represented a cyclical low point. However, in the short term, H1 earnings are set to be affected from the Finnish strike and long-term interruption at the Kemi mill, something that is likely to linger on the share price. We reiterate our HOLD and our target price of EUR7.7.

Metsa Board (Hold, TP: EUR7.70) - Evidence of improving markets

Q4 volumes were down almost 30% YOY, and EBIT was close to breakeven – largely in line with our muted expectations. However, based on good January activity, Metsa Board guided for better volumes for containerboard and carton board, and consequently an EBIT improvement in Q1 versus Q4. We are encouraged by the new outlook statements, but have made few changes to our earnings recovery scenario for 2024–2025. We reiterate our HOLD and EUR7.7 target price. Constructive Q1 guidance. The soft Q4 earn...

Metsa Board (Hold, TP: EUR7.70) - Worst should be over

With rising pulp prices alongside indications of more normal business conditions for the paper board business, we continue to see good support for gradually improved earnings throughout 2024e. Still, near-term, we believe management will guide for only slightly better market conditions in Q1. Although we have reduced our 2024e earnings, we have slightly increased our target price to EUR7.7 (7.5), as we believe higher pulp prices in H1 are likely to support sentiment on the stock. We reiterate ou...

Metsa Board (Hold, TP: EUR7.50) - Volume pain continues

The weak Q3 earnings were in line with our expectations, but we find the outlook disappointing, with continued market uncertainty and even lower sequential shipments in Q4 due to seasonality. Due to Metsa Board’s Q4 guidance, we have cut our 2024e EBITDA by 10%+ and our target price to EUR7.5 (8.3). We reiterate our HOLD.

Metsa Board (Hold, TP: EUR8.30) - Appreciation yet to come

With rising pulp prices alongside indications of more normal business conditions for the paper board business, we see good grounds for improved 2024 earnings. Still, near-term we do not expect the company to guide for any material earnings increase, which we believe would be necessary to provide broad support to the stock. We have made small but positive changes to our earnings scenario and as we also believe the risk of a ‘worst case’ 2024 is lower, we have raised our target price to EUR8.3 (8....

Northern Lights

Metsa Board (Hold, TP: EUR8.00) - Volume pain, but pricing healthy

Metsa Board’s profits are under pressure due to weak Q2 volumes, which are likely to spill over to Q3, prompting us to cut our 2023e and 2024e EBITDA by c30% and c10%, respectively. However, it is encouraging that prices for its core products are holding up well, suggesting a strong earnings recovery once market volumes improve, likely at year-end in our opinion. Another positive is the company’s low inventories combined with its solid balance sheet. We reiterate our HOLD and EUR8 target price.

Metsa Board (Hold, TP: EUR8.00) - Too-strong market headwinds

Due to harsher than expected market terms, we have made further, significant estimate cuts. We emphasise the company’s cost-competitive asset portfolio, strong positions in lucrative niche markets, and solid balance sheet, but we struggle to see any positive near-term share-price catalysts. We expect a muted near-term outlook from management with the Q2 report; however, as this should be widely expected, we have downgraded only one notch, to HOLD (BUY). We have reduced our target price to EUR8 (...

Northern Lights

Metsa Board (Buy, TP: EUR9.00) - In good shape

Given a c75% shipment to capacity ratio for the paper board business, we are impressed by Metsa Board’s ability to maintain healthy earnings in Q1. On an underlying basis, we believe Q2e core earnings will stay largely the same as in Q1, and as we remain confident that many of its key end-markets should soon start to normalise, we see better earnings ahead. We have made relatively small but negative changes to our earnings scenario. We reiterate our BUY and EUR9 target price.

Metsa Board (Buy, TP: EUR9.00) - Value support but weak momentum

Following the Q1 profit warning and a more cautious view on the pulp and paper board businesses, we have cut our 2023e EBIT by 20%. Still, we believe earnings remain healthy and 2023e represents a cyclical trough, translating into an EV/EBIT of below 8x. Thus, we note the weak earnings momentum, but continue to see a strong value case tilted towards quality paper board. We reiterate our BUY, but have cut our target price to EUR9 (12) on estimate revisions.

Metsa Board (Buy, TP: EUR12.00) - Tougher market but in good shape

As we expected, the Q4 report showed that Metsa Board is in good shape and – despite low paper board volumes – reported an attractive underlying Q4 EBIT margin of 17%. Our optimistic forecasts are unchanged, translating into highly attractive valuation multiples. We reiterate our BUY and EUR12 target price.

Northern Lights

Metsa Board (Buy, TP: EUR12.00) - Outlook still rosy

Although we have taken a more positive view on Metsa Board’s pulp business, this is offset by a more cautious view on the company’s paperboard prices. In sum, we have cut our 2023–2024e EBITDA by 20%. However, we emphasise that the stock remains attractively valued on our updated 2023–2024 forecasts. We also like the overcapitalised balance sheet, enabling investments and generous dividends. We reiterate our BUY, but have lowered our target price to EUR12 (14).

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

Metsä Board - Strong performance at the peak of the cycle

Clean EBIT was 7% above consensus - Q4e weaker Cartonboard prices up ~25% y-o-y Kemi and Husum projects could add ~50% to EBIT

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