Jefferies sees better value elsewhere, starts Holmen with 'hold'

Holmen AB

04/10/2021 08:01

** Jefferies initiates Swedish paper products company Holmen
 HOLMb.ST  with "hold" rating and target price of SEK 430, 
citing forest holdings value, structural tailwinds in wood
products, but seeing better risk/reward elsewhere 
    ** The brokerage has a positive long-term view on forest
holdings - seeing them as a scarce real asset and carbon sink
that should see value growth greater than inflation   
    ** Wood products may benefit from a multi-year thematic, it
says, adding that it is only the start of regulatory &
sustainability (CO2) tailwinds shifting demand from
non-renewable to renewable construction materials like wood
    ** According to the broker, renewable energy division offers
long term growth opportunities in wind power and potential
earnings upside from 35% Q4 capacity increase in a high
electricity price environment 
    ** Paperboard division is benefiting from a tight market
environment & potentially record 2022, Jefferies says, given the
targeted EUR 100/t (>10%) price hikes   
    ** However, the brokerage sees better risk/reward elsewhere
in the pulp & paper sector -- rates Nordic peers Stora Enso
 STERV.HE  and SCA  SCAb.ST  at "buy"  
    ** Out of eight analysts that cover Holmen, three rate the
stock "buy", two rate "hold" and three rate "sell"/"strong sell"

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))