Berenberg starts Nordic pulp and paper coverage; flags structural China drag, prefers SCA

Svenska Cellulosa Aktiebolaget SCA

29/08/2025 10:47

** Berenberg initiates coverage of Nordic forestry, pulp and paper sector companies Stora Enso STERV.HE, Svenska Cellulosa Aktiebolaget SCAb.ST and UPM-Kymmene UPM.HE

** "The current earnings weakness in the pulp and paper sector is structural, due to an ongoing Chinese overcapacity build-up", says Berenberg

** It adds that China's paper mills are integrating upstream, switching from imported market pulp to wood chips, which is pushing pulp prices down

** "We view forest holdings as a key driver of profit margins", the analysts say, citing SCA as a clear example

** However, they view Stora Enso decision to partly demerge its forest assets as a bet against vertical integration, that could weaken operating margin and trigger fiscal obligations

** Berenberg sees UPM as the most exposed to declining graphic paper, with returns capped despite the low-cost Paso de los Toros pulp mill

COMPANY
NEW RATING
OLD RATING
NEW PT
OLD PT
Stora Enso
Hold
-
EUR 10.40
-
SCA
Buy
-
SEK 150.00
-
UPM
Sell
-
EUR 21.00
-

 (Reporting by Agnieszka Olenska)

 ((Agnieszka.olenska@thomsonreuters.com))