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