DAVY VIEW

Smurfit Kappa Group (SKG) has been fundamentally transformed in the last five years. A shift to value-based selling and investment in the efficiency of the integrated model have together delivered progressively higher returns on sales and capital. Earnings quality is now much higher than generally perceived, while SKG has also established a sector-leading position on sustainability. Looking forward, the group’s 2021-23 growth-focused investment programme, balance sheet optionality, ongoing tailwinds from e-commerce and an inflection point in plastics-to-paper substitution leave us excited about future prospects. We raise our 12-month price target to €62; thinking ‘outside the box’ gets us to €72.5.