Stifel starts UPM with 'buy' amid rising wood costs in Nordics

Holmen AB

09/07/2024 12:40

** Stifel initiates UPM-Kymmene  UPM.HE  with "buy" rating,
while it rates the Finnish forestry firm's Nordic peers with
"hold"
    ** Stifel notes UPM's strong balance sheet and improved
revenue mix, adding that the company has managed the decline in
graphic paper by closing and selling mills
    ** "While Nordic wood costs are an issue also for UPM, we
note c.60%+ of the group's wood consumption is outside the
region since the Uruguay pulp expansion," Stifel notes
    ** It says SCA  SCAb.ST  is UPM's most relevant peer, and
could benefit from higher wood costs that protect the forest
value
    ** It sees Holmen  HOLMb.ST  as a long-term compounder of
value, but has a limited near-term upside
    ** Stifel expects poor returns for Billerud  BILL.ST  from
packaging board investments and questions growth prospects,
citing high wood costs impending the Nordic platform
    ** It says Stora Enso's  STERV.HE  1 billion euro ($1.08
billion) investment in the Oulu project may reduce ROIC due to
rising Nordic wood costs, unless structural changes occur

    
 COMPANY          NEW RATING  OLD RATING   NEW PT    OLD PT
 UPM-Kymenne Oyj  buy         n/a          EUR 43.5  n/a
 Billerud AB      hold        n/a          SEK 110   n/a
 Holmen AB        hold        n/a          SEK 476   n/a
 SCA AB           hold        n/a          SEK 164   n/a
 Stora Enso Oyj   hold        n/a          EUR 13.8  n/a
 

($1 = 0.9240 euros)

 (Reporting by Anna Chaberska)
 ((Anna.chaberska@thomsonreuters.com))