Zugemailt von / gefunden bei: RCB
(BSN-Hinweis: Lauftext im Original des Aussenders, Titel (immer) und Bebilderung (oft) durch boerse-social.com aus dem Fotoarchiv von photaq.com)
Andritz raised to BUY, TP EUR 54.0 - Price rally could finally end large pulp mill hiatus
- Chinese demand has fuelled last year's pulp price rally; considerable price increases could spur new pulp mill investment, especially given the drop in confirmed additions from 2019 onwards
- We believe that the large pulp mill order hiatus could finally come to an end in 2018e
- We remain cautious on Hydro and Metals
- We raise our price target to EUR 54 (from EUR 50) on a better mid-term earnings outlook and lift our recommendation to BUY from HOLD
With pulp prices at record levels, some M&A issues solved in Brazil and demand soaring in China we reckon that the urgent need for new capacities should lead to green lights for several new pulp mill projects and orders for Andritz in 2018e. Major orders should lay the basis for a recovery of earnings in 2019e, after a bottoming-out in 2018e. We increase our mid-term earnings (by 2% on average) and raise our price target to EUR 54 (from EUR 50), further supported by continued sector rerating. Given a 15% upside to our target price, we review our recommendation ahead of potential new pulp mill orders and raise Andritz to BUY from HOLD.
Pulp has to get going: Hardwood pulp prices increased by 20-52% in 2017, not only on supply issues, but strong demand growth while capacity additions are to slow down next year and in 2019e. In order to meet ever-increasing demand for pulp mainly from China, new plants have to be built, and orders for a 2020/21e start-up have to be placed rather soon (e.g. SUN BIO Arkansas, Finnpulp, Guangxi Jingui and several Russian projects). We expect order news-flow to improve in 2018e and, as a result, also raise our mid-term earnings forecast.
Metals, Hydro still subdued: Power price conditions have improved in the last several months, with coal prices rising on Chinese demand and European CO2 emission permits recovering, but we are still far away from coverage of long-run marginal costs. Hence we maintain our muted stance on the Hydro business, albeit at a bit stronger margins as the decline of service revenues was slower than the top line drop and because of slightly higher sales given Chinese pumped-storage potential. The lack of a B-segment offering could weigh on Metals growth for a while, even as Yadon's C-market business seems to be thriving. On a positive note, we would seem some upside in the old metals business, as voestalpine
plans to replace the Kapfenberg steel plant and the EU supports process optimisation in the industry.
What's next: Andritz is due to report FY 17e figures and the 2018e outlook on March 2, 2018. We reckon with a neutral management comment for 2018e along the lines of "stable sales" and "comparable margins excluding one-offs", which is below the usually more upbeat consensus. However, with expectations for the weaker segments (Hydro and Metals) already low following management comments on investment activity, we would not be overly concerned.
Outlook & recommendation: We have adjusted our forecast to recent results and a better mid-term pulp outlook, but remain cautious on margins given commodity price increases. Slightly higher earnings' impact on target multiple, ROCE and DCF-based fair values as well as a wider discount vs. peers are the key drivers for our target price upgrade.
Companies im Artikel
Matejka & Partner
Die Matejka & Partner Asset Management GmbH ist eine auf Vermögensverwaltung konzentrierte Wertpapierfirma. Im Vordergrund der Dienstleistungen stehen maßgeschneiderte Konzepte und individuelle Lösungen. Für die Gesellschaft ist es geübte Praxis, neue Herausforderungen des Marktes frühzeitig zu erkennen und entsprechende Strategien zu entwickeln.
>> Besuchen Sie 60 weitere Partner auf boerse-social.com/partner