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Sep 17 2024, 07:00 IST/BST
Paper & Packaging
Q4 top picks: Mondi and Smurfit Westrock
- Sectors : Paper & Packaging
- Companies : International Paper | Stora Enso | SCA | Mondi | UPM | Huhtamaki | DS Smith | Smurfit Westrock
Ratings
Ratings and price correct at time of issue
| Company | Rating | Date | Previous Rating | Date | Closing Price |
|---|---|---|---|---|---|
| International Paper | NEUTRAL | 08/07/24 | N/A | N/A | 4870c |
| DS Smith | NEUTRAL | 08/05/24 | Outperform | 23/01/23 | 467p |
| Mondi | OUTPERFORM | 08/05/24 | Neutral | 05/05/20 | 1417.5p |
| Huhtamaki | OUTPERFORM | 04/10/23 | Neutral | 03/04/23 | 3478c |
| Stora Enso | NEUTRAL | 24/07/23 | Outperform | 10/05/23 | 1105c |
| UPM | NEUTRAL | 17/09/24 | Outperform | 03/04/23 | 2930c |
| SCA | OUTPERFORM | 04/10/23 | Neutral | 03/04/23 | 14380 |
| Smurfit Westrock | OUTPERFORM | 08/07/24 | N/A | N/A | 4492c |
DAVY VIEW
Pulp and packaging is a cyclical sector, in which demand and pricing determine company profit. 2024 has seen a European (and US) return to box demand growth, supporting price increases. In contrast, weak pulp demand and new supply have led to pulp price falls. Our UPM, Stora Enso and SCA 2025e profit forecasts sit 5-10% below the street. We reaffirm our packaging over pulp view. Our Q4 2024 top picks are (1) Mondi and (2) Smurfit Westrock (SW). Mondi profits are boosted by containerboard and bag price increases. Confident of an upbeat Q3 update on October 17th, we reaffirm our Mondi ‘Outperform’ view. Following the July 2024 formation of US-listed SW and as confidence builds in merger integration, synergy delivery and de-leveraging, we expect a SW re-rating. Ahead of Q3 2024e results on October 30th, we reaffirm our ‘Outperform’ view.
