Inbox: RCB erhöht Mayr-Melnhof-Kursziel

Akt. Indikation:  94.70 / 95.30
Uhrzeit:  16:21:42
Veränderung zu letztem SK:  1.50%
Letzter SK:  93.60 ( 2.41%)

We maintain the BUY recommendation for Mayr-Melnhof on the back of a slight target price increase to EUR 123 from EUR 119. 2Q results were no catalyst, with operating profit and EPS marginally shy of expectations, but we identify two positive take-aways. Firstly, the EBIT margin in the MM Karton division recouped the 7% threshold from 5.6% in 4Q and 6.1% in 1Q as higher selling prices but also efficiency improvements over-compensated for higher recovered paper costs. We think this improvement once again underscores the companys track record when it comes to preserving/restoring profitability. Importantly, CEO Hörmanseder displayed confidence that profitability should remain >7% also in 2H (vs. 5.8% in 2H 16), suggesting a strongly positive earnings momentum. We understood that as of 3Q (Aug/Sep) the company has all selling price increases in the books, which heralds a stable price-cost differential (management does not anticipate a further uptick of prices for the time being owing to sufficient waste paper supply). Secondly, the company gave a more confident outlook, pointing towards a broad-based strengthening of order behaviour in its main European markets, which should not only preserve high capacity utilisation rates but also facilitate the passing on of input cost inflation. With regard to 2017 the management reiterated that the prior years record result represents a challenging level (do our best to match 2016). In the short run we regard a potential M&A transaction (pharma packaging) as the main catalyst for the share price. Although reiterating the commitment to external growth opportunities, the management was also vocal that price expectations are elevated (currently 10-11x EBITDA is demanded by sellers, whereas Mayr-Melnhof regards 8-8.5x as threshold), which hinders value-accretive transactions.