Jefferies ups Ence to 'buy' on pulp prices bottoming in Q1, energy business opportunity

ENCE Energia y Celulosa SA

18/11/2024 11:40

** Jefferies upgrades Ence  ENC.MC  to "buy" from "hold"
pointing to pulp prices bottoming out and opportunity for
earnings growth in renewable biomass energy 
    ** The broker expects China hardwood pulp prices bottoming
in the first quarter of 2025, before rising into 2026, and says
pulp will be key near term for Ence as it accounted for 75% of
2024 EBITDA
    ** It also says that Ence's existing renewable biomass
energy business looks well-placed into 2025
    ** It notes that Ence is Nr. 1 renewable biomass energy
producer in Spain with about 40% market share and lower Spain
biomass raw material costs into 2025 should support profits
    ** It expects the company to announce investment decisions
on projects in 2025 and says energy division growth upside is
appealing
    ** The broker adds that the energy valuation could double to
1.60 euro/share if growth & ROCE are delivered; hikes its PT by
4% to 3.65 euro
    ** Out of 10 analysts that cover Ence, nine rate the stock
"strong buy" or "buy"​ and one rates it "strong sell"​​

 (Reporting by Tiago Brandao)
 ((Tiago.Brandao@thomsonreuters.com;))