Jefferies unwraps European paper and packaging valuations

Holmen AB

04/04/2022 14:07

** Jefferies sees FTSE 100  .FTSE  box makers
underperforming Europe stocks  .STOXX , citing impact of supply
disruptions, cost inflation and higher sustainable demand
    ** "We see prices higher for longer in 1H22 for pulp, wood
and containerboard/box, supported by supply disruptions & cost
inflation" - Jefferies
    ** UK packaging stocks, including DS Smith  SMDS.L , Smurfit
 SKG.I  and Mondi  MNDI.L , dropped by 17% YTD in euros, due to
rising energy costs, potential macro demand hardship and
exposure to Russia-Ukraine conflict
    ** Conversely, continental Europe stocks such as Stora
 STERV.HE , UPM  UPM.HE , SCA  SCAb.ST  and Holmen  HOLMb.ST 
increased by 10% in euros, profiting from higher price estimates
in pulp, wood products, graphic paper and forest valuations
    ** Jefferies believes sustainable materials will benefit
sector most in medium-term, suggesting industry's focus is
currently on higher demand for ecological packaging and product
innovation
    ** It estimates such box demand will be higher at 3%, driven
by sustainability booster and e-commerce, as a result of
changing consumer trends and desires

 (Reporting by Dina Kartit)
 ((dina.kartit@thomsonreuters.com))