Pulp prices at ATH, but more supply into ‘23e Pulp prices in Europe have risen above their 2021 peak, to USD 1,480/t. Chinese pulp prices have risen ~45% since November. The pulp market appears tight short-term (supply disruptions) and prices rose 3% in June m-o-m. Note that our leading indicator for OECD IP growth is pointing down and pulp prices usually follow IP growth with a lag. Supply growth has been reduced to 2% in ’22e (delayed projects), but supply growth could become problematic at +5% in ’23e. Market pulp shipments have grown by 2-3% p.a., aided by megatrends driving demand for packaging and tissue.
Valuation – fair value range of SEK 10-15/share Rottneros is trading at an EV/CE of 1.1x vs. 0.8x historically, but we note its earnings are higher vs. history. ATRoCE averaged ~11.9% from ’16-’22e, and we estimate 10.2% for ’23e-’24e. By using a WACC of 9% and the Q2’22 CE of SEK 1.97bn, we find a fair value of SEK 15-16/sh. The midcycle valuation points ... Läs mer på ABG Sundal Collier
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