In this financial analysis report analysts Axel Belin and Saadat Mozaffari take a closer look at Nordic Paper, a paper company that offer specialty paper in the A- quality segment globally. The Company’s independent production creates strong pricing power and has allowed Nordic Paper to increase prices with 5.5% p.a., while maintaining an EBITDA margin of 7.2% between 2019A-2022A. A relative peer valuation, further supported by a DCF, motivates a target multiple of 8.0x EV/EBIT in 2024E, implying a target price of SEK 57.0 and a potential upside of 82.7%.
Investment highlights:
- The stock is currently undervalued due to the market exaggerating the effects of decreasing underlying commodity prices. Thus, justifying a target EV/EBIT multiple of 8.0x
- Independent production results in strong relations and pricing power
- As a leader within their segments the Company is well suited to capitalize on the growing market resulting in an estimated revenue of SEK 5,689m in 2028E (4,481m)
- High entry barriers and small size makes it a compelling buy-out opportunity