The Navigator
Pulp & Paper / Portugal
Reuters/Bloomberg: NVG.LS / NVG PT
May 23, 2017
Navigating into new business segments and geographies - Initiating coverage Rating Buy with a Buy rating vs. previous NR
We initiate coverage on The Navigator Company (NVG), a leading pulp and paper producer, with Target8.0 Price (€/sh.) 4.75 a Buy rating and a target price of EUR 4.75/share, implying a 23.1% upside form current levels. Current7.0 Share Price* (€/sh) 3.86 Despite the volatility in pulp and paper prices, the company has been able to maintain an average *18 /05/ 2017
EBITDA margin of above 24% over the last 6 years reaching 25.2% in 2016 (+120bps y-o-y) on the 6.0 back of volume sales growth, high capacity utilization (leveraging on a modern and efficient asset base), and good access to raw materials. Stock5.0 Data Market Cap (€m) Pulp and paper prices are expected to remain relatively stable in the short term as (mainly) 2,765.5 4.0 demand from Asia should help counterbalance new capacity coming online. At the same time, the EV (€m) 3,383.2 company has been able to extract additional capacity, increasing volume sales, expanding exports Free 3.0Float 30.6% into higher-growth developing markets, while further efficiency efforts should support the Num. of shares (m) 717.0 profitability of the pulp & paper divisions. 2.0
Still, for the medium-to-longer term the main driver of growth is expected to come from group’s Performance1.0 1m 3m 12m new divisions, namely pellets and primarily tissue paper. These divisions are catering to markets 5.6% 12.7% 46.3% Absolute (%) with substantial growth potential. Cumulative revenues, over the next five years, from tissue and 0.0 pellets are expect to amount to EUR 735m and EUR 305m, respectively. 3.7% 10.3% 6.1% PSI 20 (%)
EBITDA and Net income to increase slightly between 2017 and 2021 Group revenues are estimated at EUR 1.6bn in 2017 (+2% y-o-y), while for the period 2017-21 are Trading Data EDP RENOVÁVEIS S.A. PSI-20 Index (Rebased) forecasted to grow at a 2.1% CAGR, on the back of additional pulp capacity and the new revenue Daily volume (1y avg)* 55 streams (tissue and pellets). Group EBITDA is seen at EUR 398m in 2017 (stable y-o-y), while the estimated 2017-21 CAGR is 1.5%, as NVG should benefit by operating leverage as well as its 12M high (€/sh) 4.05 integrated production model. 2017-21 EPS CAGR is expected at 1.8%, following a 22.9% decline to 12M low (€/sh) 2.40 EUR 168m in 2017 from EUR 217.5m in 2016 because of higher taxation (the company had *000’s shares enjoyed tax benefits over the last 4 years that come to an end) as well as higher depreciation and amortization charges from 2017 due to increased investments. 8.0 7.0 6.0 5.0 Attractive dividend yield estimated at c.6.1% in 2017 and 5.8% in 2018 4.0 3.0
Navigator remains a very attractive dividend payout story. The payout has remained very high 2.0 over the last few years, the proposed dividend for 2016 totals EUR 250m (payout ratio of 115%), 1.0 0.0 while according to company’s guidance, this strategy will be maintained. In our model, we incorporate a dividend payout ratio of 100% for the period 2017-2021, which translates into an EDP RENOVÁVEIS S.A. PSI-20 Index (Rebased) accumulated distribution of EUR 843m over the 5-year period. Dividend yield estimated at c.6.1% in 2017 and 5.8% in 2018. The Navigator Company, S.A. manufactures and markets pulp and paper products worldwide. It 23.1% upside potential-initiating with a Buy provides printing and writing, décor, tissue, office, Our valuation exercise results in a target price of EUR 4.75 per share. Based on our estimates the offset, and special papers, as well as bleached company currently trades at EV/EBITDA for 2017-18 of 8.8x, after gaining 43.6% over the past 6 eucalyptus pulp. The company offers its products months. under the Navigator, Discovery, Inacopia, Soporset, Explorer, Pioneer, Target, and Inaset brand names. The stock is up c.18.1% ytd vs. PSI20 index that is up by 8.4% for the same period. The sectoral In addition, it generates electricity from biomass, a index STOXX TMI Forestry & Paper is up by 5.8% ytd. renewable source of energy. The company was formerly known as Portucel, S.A. and changed its EUR m 2014 2015 2016 2017E 2018E name to The Navigator Company, S.A. in February 2016. Revenues 1 542 1 628 1 577 1 609 1 647 EBITDA 328 390 398 398 394 Shareholding structure: Semapa 69%, Zoom Net Income 181 196 218 168 162 Investments 2%, BPI Pension Fund 4% and Norges Net Debt 274 654 641 718 721 Bank 4%
P/E 12.04 13.14 13.50 16.5 17.3 EV/EBITDA 7.5 8.3 7.4 8.8 8.8 Analysts Net Debt/EBITDA 0.83 1.68 1.84 1.81 1.83 Maria Almaça, CFA FCF yield 14,1% 4,9% 12,3% 6,2% 6,0% [email protected] Dividend yield 20,2% 6,6% 10,7% 6,1% 5,8% +351 21 936 4447
Source: AXIA Research Axia Ventures Group - Avenida da Liberdade 240, 4th floor, Tel: +351 219364444, Fax: +351 966049598, Web: www.axiavg.com Please refer to the last page for disclosures and analyst certification
The Navigator Company - Initiation of Coverage
Table of contents
Section Page
Investment Case 3
Valuation 6
Company Overview 9
Premium pricing and cost-competitiveness remain key for the Navigator 13 strategy
Pulp & Paper business: steady flow of profitability 17
New growth areas: Tissue (mainly), Pellets & Mozambique 24
Capex, Capital Structure & Dividend Policy 30
Assumptions and Forecasts 33
Detailed Financials 36
Disclosures 38
AXIA Research Page 2
The Navigator Company - Initiation of Coverage
Investment case
We initiate coverage on Navigator, a leading producer of Pulp & Paper, with a Buy rating and a target price of EUR 4.75/share, implying a 22.1% upside from current levels. With an expected relative stability of pulp and paper prices in the international markets in the short term, the company should continue to benefit from its strong position in high quality paper production in Europe, with margins supported by the integrated pulp production capability. More importantly, applying this integrated approach to the lucrative new business segment, tissue paper, we expect margins to head higher as revenues from this division are bound to increase.
Since the beginning of the year, the NVG’s share price has recovered from the decline registered in 2016 (-9.1%) that resulted from the concerns over the economic developments in Portugal but also the negative trend exhibited by paper prices. We believe the NVG continues to present an interesting investment case given the significant free cash flow the company is generating especially following to completion of the current investment cycle in 2018. FCF compound growth for the period 2016-2019 is forecasted to come in at 25%, vs. -0.1% expected for its international peers. At the same time the payout should remain at 100%, based on the demands of the company’s largest shareholder (Semapa). For 2016 the dividend payout ratio is expected to stand at 115% with a dividend yield (at current price levels) settling at 6.1% in 2017.
Leadership position in the EU premium paper market The Navigator Company is among the global leaders in the pulp and paper business with these two divisions accounting for 85% of group sales (2017 estimates). Beyond the EU paper market (that represents 63% of the company’s sales) the Navigator exports to 123 countries over the five continents. Demand in the developing markets for paper is expected to grow faster over the next years vs. the developed ones, while the Navigator maintains a strong position in a number of these markets, (i.e. Turkey generates c.6% of paper sales in 2016). Paper prices should remain relatively stable in the near term as the expected increased supply in the market should be counterbalanced by global demand (especially from Asia). This, plus production efficiency gains and the optimization of pricing discounts is expected to continue to allow the group to enjoy healthy margins. In addition, the Navigator’s leadership in the premium paper segment, where it attained a market share of more than 50% in Europe in 2016, provides the company with pricing power and, consequently, offers further support to margins.
Tissue paper, a new line of growth Management’s strategy to diversify operations by entering into the higher growth market segments of tissue paper and pellets started in 2015, while by 2021 these two segments are expected to come to represent 16% of group sales. In Europe the tissue market is forecasted to grow between 1% and 2% p.a. Sales from the tissue segment are estimated to grow from EUR 67m in 2016 to EUR 205m in 2021, boosted by investments aiming at increasing pulp that will be used towards higher tissue paper production. The strategy for this segment also targets more value-added segments allowing for increased pricing power. The construction of a pellets factory in the US was concluded in September 2016 and will start to contribute with increasing results in 2017. The company has already contracted the sale of 40% of the mill’s production capacity at fixed price (above current levels) over the next 10 years.
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The Navigator Company - Initiation of Coverage
Focus on efficiency: cost competitiveness and good access to raw materials The integration of pulp in the production of paper and tissue optimizes the cost structure giving a strong competitive advantage to the group. To this end we note the projected increase of pulp production capacity and the positive impact this will have in the volumes and profitability of the paper tissue segment. The production of energy from biofuels (2.5 GW of total installed capacity makes it the country’s largest energy producer from biomass) is a crucial component to the company’s efforts to optimize the cost structure. Furthermore this allows the NVG to generate revenues by selling to the grid, albeit at a decelerating pace (due to the decrease in the subsidized prices). The Navigator manages 120k hectares of forest holdings in Portugal that support 15-20% of pulp production needs, while own wood produced exhibits a higher conversion ratio, being more productive when compared with species produced in other countries. Therefore, the upcoming legislation that bans the planting new areas of eucalyptus in Portugal is a setback for the company. The expansion project in Mozambique, with the plantation of 250k hectares, will allow the company to lower wood production costs, although the wood produced in Mozambique can be expected to serve the industrial project in Mozambique or be marketed in the Asian markets.
Strong cash generation We estimate that the Navigator will generate more than EUR 1.68bn of operating cash flows cumulatively in 2017-21, accounting entirely for its capex and dividend distributions. Total CAPEX between 2017 and 2021 is expected to amount to cEUR 425m, with the bulk of spending expected to take place in 2017 and 2018, as the company concludes the latest investment cycle that started in 2015. We expect the company to deliver strong FCF over the next few years (12.1% CAGR for 2017- 21), which should assist deleveraging efforts. We estimate a Net Debt to EBITDA ratio of 0.91x by 2021.
The hefty dividend distribution strategy to be maintained The dividend distribution policy is expected to remain generous, driven by the decisions of the parent company, Semapa (controls a c69% stake in the Navigator). We incorporate a dividend payout ratio of 100% for the period 2018-2021, which translates into an accumulated distribution of EUR 677m over the 4-year period. Dividend yield at c.9.0% in 2017 (current price levels), with the company expected to distribute EUR 250m in dividends this year following a proposal by Semapa to increase dividends.
2017-2021 EBITDA and EPS CAGR forecasted to be positive (1.5% and 1.8%, respectively) Revenues are estimated at EUR 1.6bn in 2017 (+2% y-o-y), while for the period 2017-21 are forecasted to grow at a 2.1% CAGR, on the back of new revenue streams (tissue and pellets). Group EBITDA is seen at EUR 398m in 2017 (stable y-o-y) while the estimated 2017-21 CAGR is 1.5%. The respective margin is seen at 24.7% in 2017 and estimated to decrease to around 23.5% until 2019, recovering to 24.2% in 2021. 2017-21 EPS CAGR is expected at 1.8%, following a 10.2% increase to EUR 218m in 2016 from EUR 196m in 2015 on the back of cost-cutting initiatives, lower financing costs and the non- recurrent effect of positive income taxes.
We are initiating coverage with a Buy rating attributing a 23.1% upside potential to the stock We initiate coverage with a Buy recommendation and a target price of EUR 4.75/share, implying a 23.1% upside from current levels. Based on our estimates the company currently trades at EV/EBITDA for 2017-18 of 8.8x vs. its worldwide peers that trade at 7.8x and 7.4x respectively. The stock is up c.18% ytd vs. PSI20 index that is up by 8.4% for the same period. The sectoral index STOXX TMI Forestry & Paper is up by 5.8% ytd. AXIA Research Page 4
The Navigator Company - Initiation of Coverage
Upside risks to our valuation include: Favorable evolution of the market prices of paper, tissue and pellets. Strong demand for tissue paper and further expansion in this market segment. Outperformance of the pellets business segment, not only on the back of the product quality and consequent premium prices but also through a shorter ramp-up period of the factory. Productivity gains in paper production, namely in the ATF (Setúbal) machine. Further operational cost containments, which would improve profitability levels. Advantageous outcome of the legislative process on eucalyptus plantation in Portugal, which would increase the company’s access to quality raw materials at a lower cost. Lower effective tax rate. Note that the effective tax rate has averaged 11% over the past 7 years (reaching a maximum of 22% in 2011/2012) assisted by contractual tax benefits that are not applied any more. We estimate a flat 27.5% tax rate starting this year.
Risks
Negative evolution of the price of paper products As the main driver of the sector’s profitability, and considering that paper sales account for c.78% of the group’s revenues (YE16), a negative evolution of the price of paper versus our forecasts would impact significantly the Navigator’s total turnover.
Foreign exchange rate volatility USD accounts for a significant portion of the company’s sales. According to the company, a 1pp variation in the USD exchange rate negatively impacts EBITDA by c.EUR 4m. However, the company hedges its exposure to the USD with options contracts.
Anti-dumping process in the US A period of review will begin in the near future by American authorities, which can take between 12 to 18 months, after which a decision on the process is expected to be disclosed. The US Commerce Department may rule in favor of an anti-dumping tax on paper sales in the US. The risk is that the anti-dumping tax is maintained at the current level of 7%. In 2016 the US market accounted for 9% of UWF paper sales.
Political Risk in Mozambique The political scene in Mozambique is currently far from stable. The company has delayed its project to build a pulp and biomass plant in the country with a decision not expected to be made within the next five years. Regarding the plantation of eucalyptus in the African country, the CEO of Navigator announced that the company will scale down the pace of investment in the country.
Risks related to the forestry sector and the supply of raw materials Risks related to the productive capacity of the plantations, the risk of wildfires, drought, and the regulatory risk related with the upcoming legislative revision of the legal regime applicable to forestation and reforestation with resort to forestry species (DL nr 96/2013) which can lead to the increase of the average cost of wood purchases.
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The Navigator Company - Initiation of Coverage
Valuation
We rate the Navigator Company’s shares a Buy, with a price target of EUR 4.75 per share, implying an upside potential of 23.1% from current levels. Our valuation is based on a DCF model with explicit forecasts between 2017 and 2021.
The company’s stock performance in 2016 was weak (-9.2%) hurt by the negative sentiment around Portuguese stocks (PSI20 index -11.9%), mainly related to the political and economic developments in the country. Despite the declining trend in pulp and paper prices during the year, the sectoral index rose 26.11% over the same period. As sentiment on Portugal improved, the share price recovered significantly since the beginning of this year (+18% YTD).
Stock performance vs. PSI 20 index Stock performance vs. Sector index
130 160 120 140 110 100 120 90 100 80 70 80 60 60
Navigator PSI20 Index Navigator Sector index
Source: Capital IQ
Our valuation for NVG is based on a DCF model, with explicit forecasts up to 2021 and a terminal value considering a 0.5% growth rate. Our WACC is set at 7.9% assuming an equity risk premium of 5.5%, risk free rate at 3.5%, beta of 1.08 and a target gearing of 40%.
Table 1. The Navigator DCF Valuation (EUR m) 2017f 2018f 2019f 2020f 2021f
EBIT 247,5 239,1 241,1 251,5 260,4
Tax (63,6) (61,3) (61,9) (64,8) (68,2)
NOPAT 183,9 177,8 179,2 186,7 192,2
Depreciation 150,1 155,2 158,5 160,1 161,7
Change in WC (1,5) (4,2) (8,2) (2,8) (11,5)
Capex (144,0) (147,0) (45,0) (45,0) (45,0)
FCF 188 182 284 299 297
NPV of FCF 188 168 244 238 220
Terminal Value 2 990
EV 4 049
Net Debt 641
Equity Value 3 408
Num of Shares 717,0
Target Price 4,75
Current Price 3,86
Upside/(Downside) 23,1%
Source: AXIA Research
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The Navigator Company - Initiation of Coverage
Table 2. WACC Composition Table 3. TP sensitivity to WACC and Terminal Growth WACC/g 6,0% 7,0% 7,8% 9,0% 10,0% Risk-free Rate 3.5% 0,00% 6,12 5,13 4,47 3,82 3,36 Risk Premium 5,50% 0,25% 6,37 5,31 4,61 3,92 3,44 Asset beta 1,08 0,50% 6,64 5,5 4,75 4,03 3,52 Pre-tax Cost of Debt 1,7% 0,75% 6,94 5,71 4,91 4,14 3,61 Debt/Total Capital 0.40 1,00% 7,28 5,94 5,08 4,26 3,7 WACC 7.88%
Source: AxiaVG Research
Following the share price performance over the past six months, the stock is now trading at a premium when compared to its peers in terms of PE ratio and EV/EBITDA. Still, we believe the NVG continues to present an interesting investment case as we recognize that the company is currently in an investment cycle that is expected to be concluded in 2018, after which we would expect the NVG to generate significant free cash flows. In fact, FCF compound growth for the period 2016-2019 is forecasted to come in at 25%, comparing positively with its international peers which are forecasted (Capital IQ) to see its FCF decline at an average rate of 0.1% over the same period, whilst the Navigator’s FCF yield in 2019 is forecast at 9.7% (vs. 8.3% on average for the sector).
In addition, the company is also expected to remain a very lucrative dividend play as the payout should remain at 100%, based on the demands of the company’s largest shareholder (Semapa). In 2016 the dividend payout ratio is expected to stand at 115% while the dividend yield (at current price levels) is expected to settle at 6.1% in 2017, with the sector average (EMEA region) standing at 3%.
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The Navigator Company - Initiation of Coverage
Table 5. Global P&P valuation multiples
Mcap P/E EV/EBITDA Div. Yield FCF Yield 2016- 19 FCF EUR 2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019 CAGR
Altri, S.G.P.S., S.A. 835 12,6 13,5 11,6 8,3 8,5 7,9 4,2% 4,8% 4,8% 9,8% 11,9% 11,9% 13,9% Semapa 1 249 12,1 11,2 10,0 7,4 6,9 6,6 2,2% 3,0% 3,3% 10,2% 14,6% 22,5% 32,4% ENCE Energía y Celulosa, S.A. 799 11,3 14,5 16,6 5,2 6,2 5,7 3,4% 3,6% 4,0% 9,8% 6,3% 3,1% -22,4% Holmen Aktiebolag (publ) 3 301 18,8 18,3 18,0 11,3 11,0 11,1 3,4% 3,5% 3,6% 5,8% 5,8% 5,7% 4,2% Iberpapel Gestión, S.A. 336 17,9 18,0 21,2 7,9 7,8 7,7 2,2% 2,2% 1,8% 2,0% -7,4% -3,9% 0,0% Metsä Board Oyj 2 328 16,0 12,4 10,9 9,6 8,1 7,5 3,4% 3,9% 4,6% 7,2% 8,5% 9,0% 0,0% Mondi plc 11 187 15,1 14,4 14,0 8,9 8,6 8,3 3,2% 3,3% 3,4% 4,6% 3,4% 7,1% 7,4% Stora Enso Oyj 8 848 14,4 12,9 11,7 8,1 7,7 7,5 3,5% 3,8% 4,1% 6,4% 7,3% 8,4% 13,6% UPM-Kymmene Oyj 12 895 14,2 14,1 13,8 8,4 8,5 8,5 4,2% 4,2% 4,4% 8,0% 7,9% 7,9% -1,7% Sappi Limited 3 656 13,1 12,0 11,9 7,2 6,9 7,0 0,1% 0,2% 0,2% 5,6% 0.0% 0.0% 0,0% Average EMEA 14,6 14,1 14,0 8,1 8,0 7,8 3,0% 3,3% 3,4% 6,9% 6,5% 8,0% 6,8% Empresas CMPC S.A. 5 244 55,4 27,9 22,5 8,8 8,6 8,0 0,0% 0,0% 0,0% 4,1% 5,0% 8,4% 35,9% Fibria Celulose S.A. - 4 738 21,6 18,5 10,6 8,2 6,6 5,5 2,6% 2,3% 1,7% -5,9% 9,8% 14,8% 191,6% Suzano Papel e Celulose S.A. 4 081 10,9 11,6 10,2 7,0 6,4 5,9 2,3% 2,1% 2,5% 7,8% 11,2% 12,2% 6,4% Clearwater Paper Corporation 668 16,9 11,0 8,7 7,3 6,0 5,3 0,0% 1,8% 1,8% -6,7% -2,8% 14,9% 38,1% Domtar Corporation 2 076 13,8 12,4 10,6 5,7 5,4 5,2 4,6% 4,7% 4,8% 13,3% 12,8% 16,9% 37,9% KapStone Paper and Packaging Corporation 1 734 14,5 11,5 10,5 8,0 7,1 6,8 2,0% 2,1% 2,4% 7,9% 9,5% 10,5% -3,8% Mercer International Inc. 651 11,3 13,7 14,9 5,4 5,8 6,1 4,1% 4,1% 4,1% 12,4% 12,2% 0,0% 0,0% Neenah Paper, Inc. 1 130 18,0 15,8 0,0 9,7 8,7 0,0 2,0% 2,1% 0,0% 5,2% 5,9% 0,0% 0,0% P. H. Glatfelter Company 710 14,8 10,7 10,3 6,8 6,0 5,9 2,7% 2,7% 2,6% -1,2% 8,1% 9,5% 0,0% Average NA-LATAM 17,4 13,7 10,7 6,6 6,2 5,3 1,9% 2,0% 1,8% 5,3% 8,8% 7,5% -7,4% Lee and Man Paper Manufacturing Ltd 3 391 8,6 8,0 7,9 8,1 7,6 7,5 3,9% 4,1% 4,1% 3,8% 8,8% 9,4% 0,0% Nine Dragons Paper (Holdings) Limited 4 762 n.a. 8,4 8,0 n.a. 6,5 6,2 3,0% 3,1% 3,5% 5,4% 10,5% 11,8% 14,3% Nippon Paper Industries Co., Ltd. 2 031 n.a. 17,1 16,4 n.a. 9,8 10,3 2,8% 2,8% 2,8% 1,8% 5,9% 5,8% -38,1% Oji Holdings Corporation 4 464 n.a. 12,9 12,4 n.a. 8,7 8,5 1,8% 1,8% 1,8% 12,5% 8,9% 9,6% -8,9% Average Asia/Pacific 15,5 12,9 12,0 8,1 8,1 8,1 2,2% 2,3% 3,0% -0,5% 9,1% 9,3% 2,9% Lee and Man Paper Manufacturing Ltd 3 391 8,6 8,0 7,9 8,1 7,6 7,5 3,9% 4,1% 4,1% 3,8% 8,8% 9,4% 0,0% Average ASIA/PACIFIC 15,5 12,9 12,0 8,1 8,1 8,1 2,2% 2,3% 3,0% -0,5% 9,1% 9,3% 2,9%
The Navigator Company, S.A. 2 768 16,50 17,13 16,96 8,8 8,8 8,5 6,1% 5,8% 5,9% 6,2% 6,0% 9,7% 24.8%
Source: Capital IQ; AxiaVG Research
Table 5a. NVG 12m FWR EV/EBITDA Table 5b. NVG 12m FWR P/E
12 20 18 10 16 14 8 12 6 10 8 4 6 4 2 2 0 0 21/05/2012 21/05/2013 21/05/2014 21/05/2015 21/05/2016 21/05/2012 21/05/2013 21/05/2014 21/05/2015 21/05/2016
Source: Capital IQ
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The Navigator Company - Initiation of Coverage
Company Overview
Description The Navigator Company (Navigator) resulted from the rebranding of the Portucel Soporcel Group in April 2016. The company is based in Portugal and was incorporated in 2001, although its origins go as far back as 1953.
The Navigator (former Portucel) is a leading producer of premium and branded office paper, bleached eucalyptus kraft pulp (BEKP), and also produces and markets tissue paper. Moreover, the Group operates in the energy sector (biomass) and in the agro-forestry sector, managing c.120k hectares of woodlands. The group employs more than 2,600 employees in: two integrated paper mills, one pulp mill, the recently acquired tissue operations in Portugal (AMS), a pellet mill in South Carolina (USA) and a forestry project in Mozambique.
The Navigator is listed on the Lisbon stock exchange and its market capitalization as of April 2017 amounted to EUR 2.76bn.
The group's production capacity and exports make it a driving force for Portugal's economy, accounting for approximately 3% of all goods exported by the country, with turnover representing close to 1% of GDP. The Group sells its products to 123 countries over five continents, with its prime markets in Europe and the United States, making it the Portuguese company with the broadest international sales base.
The company’s majority shareholder is Semapa, owning directly and indirectly a total of 69.354% of the share capital. In June 2015, Semapa launched an exchange offer of its own shares for shares of Navigator with the purpose of increasing Navigator’s liquidity and streamlining Semapa and the Navigator’s shareholder structures. This effectively decreased Semapa’s stake in Navigator from c81% to 69.354%. Pedro Queiroz Pereira, majority shareholder of Semapa (owning directly and indirectly a 70.5% stake), is the Chairman of the Board of Directors of Navigator.
Table 6. Semapa’s Debt indicators 2013 2014 2015 2016 Total debt (EUR m) 2 180 1 989 2 009 1 964 Net debt (EUR m) 1 514 1 386 1 803 1 780 Net debt / EBITDA 3.59 3.38 3.77 3.64 Interest coverage 3.69 3.94 3.89 6.00 Source: Semapa’s AR
The company is strategically important for the Semapa group, as it represents 76% of its sales and c81% of its EBITDA (FY2016). Semapa benefits from Navigator’s high dividend payout (Semapa’s net debt to EBITDA stood at 3.64x at YE16) and thus, we do not consider that Semapa intends to divest further in the company, following the abovementioned disposal that took place in 2015.
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The Navigator Company - Initiation of Coverage
Shareholder Structure (FY16) Investors by geography (FY16) *
2% 2% 2% 5% 8% Germany
4% Semapa 10% UK
Free Float US 22% 14% 38% Norway Zoom Investments Portugal 69,4% BPI Pension Fund Rest of Europe Norges Bank 23% Others
* Excluding Semapa’s stake; Source: The Company
Mr. Diogo da Silveira is the group’s CEO since 2014, coming from a background in the insurance and telecom sectors. The company’s CFO is Mr. Fernando Araújo since May 2016.
Portfolio of industrial assets Within the paper market, the company is focused on the production of Printing and Writing paper (P&W) and, more recently (2015), tissue paper.
Navigator produces in four industrial sites within Portugal: Figueira da Foz, Setúbal, Cacia and Vila Velha de Ródão, with a total production capacity of 1,565m tons of UWF, 1,470m tons of BEKP, 60k tons of tissue reels and 65k tons of converting tissue. In 2016 the company finished the construction of a pellets production plant in the US, giving the first step towards the geographic diversification of its production base which was limited to Portugal.
Table 7. Industrial assets Mill Location Segment Capacity (per year)
Setúbal, PT Integrated Pulp & paper 550k t / 775k t Figueira, PT Integrated Pulp & paper 570k t / 790k t Cacia, PT Pulp 350k t Vila Velha de Ródão, PT Tissue 60k t + 65k t converting South Carolina, US Pellets 460t Source: The Company; AXIA Research
In Setúbal and Figueira da Foz the two industrial mills are completely integrated with a 100% internal pulp supply, which allows for savings in the costs related with energy, transport, solidification and liquefaction of the pulp, among others. In Cacia, the industrial mill is focused on pulp production of which the main part – c.300k tons per year – is sold in the market.
Since 2015, Navigator owns an industrial mill in Vila Velha de Ródão, focused on the production of tissue products, after the acquisition of AMS - Star Paper. The group has expansion plans for the segment, namely the integration of a tissue line in Cacia, which will double tissue production capacity.
In the energy sector, and since 2010, the group is the country's leading producer of electricity from forestry biomass, operating two biomass power stations (Cacia and Setúbal), a combined cycle power station (Setúbal) and a steam turbogenerator (Figueira da Foz). The company is Portugal’s largest energy producer from biomass, selling a part of the energy produced to the national grid, whilst using the bulk of its energy output internally.
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The Navigator Company - Initiation of Coverage
Recently, Navigator entered into the segment of the production of pellets, building a mill in South Carolina US, which started production tests in September 2016 as anticipated. Production and marketing of pellets in the US is expected to start fully in 2017.
Evolution of Revenues per Business Segment Revenues by division (FY16)
0,8% 4,4% 0,8% 100% 0,0% 0,0% 0,0% 0,0% 3,5% 4,8% 11,2% 12,0% 10,2% 9,7% 4,4% 90% 7,7% 4,8% 9,1% 80% 70% 60% 50% 79,5% 79,8% 79,2% 81,5% 80,1% 80,8% 40% 30% 20% 10% 80,8% 9,3% 8,1% 10,6% 8,8% 8,7% 9,1% 0% 2011 2012 2013 2014 2015 2016
Pulp stand alone Paper Energy Tissue Pellets Pulp stand alone Paper Energy Tissue Pellets
Source: AXIA Research, The Company
Geographical diversification and the anti-dumping process in the US
The Navigator Company sells its products to 123 countries, with a special focus on Europe and the US. Regarding paper, sales to other markets include Latin America, Middle East, Asia and Africa – Morocco, Egypt, Tunisia and Algeria. The Group exports around 95% of paper sales, of which 9% to the US, 6% for Turkey and 13% to African countries. Note that the European market since 2010 has been gradually losing weight to the Group’s total sales.
Geographic Mix of UWF Paper Sales Evolution of Total Revenues per Geography
12% 11% 11% 11% 12% 22% 9,4% 11,4% 11,8% 12,2% 6% 9% 13,5% 8,6% 13%
6% 78,5% 77,5% 77,5% 76,9% 69,0% 74,3% 66%
2010 2011 2012 2013 2014 2015
USA Europe Turkey Africa Other Europe America Other Markets
Source: AXIA Research; The Company
The US anti-dumping case
The US represents 9% of Navigator paper sales in 2016, slightly down from 9.8% in 2014, before the anti-dumping tax was imposed.
Note that since January 2015 imports of UWF paper to the US came under investigation following an anti-dumping proceeding promoted by the US Department of Commerce to a number of import countries (including Portugal – The Navigator). The Navigator sales in the US are currently subject to an anti-dumping margin set at 7.8% in November 2015, while management hopes that a review of the case will eliminate this margin and the decision is applied retroactively.
The review of the anti-dumping process by competent US authorities should begin in the near future (this is according to the Navigator management). The review is schedule to last at least 12 months, AXIA Research Page 11
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with the option of extension for another 6 months. If the final margin is set at 0%, the company will recover the amounts paid so far of the anti-dumping tax, which amounted to EUR 15m in 2015 and EUR 10m in 2016, which were accounted as a cash outflow, negatively impacting working capital. According to company sources, a hypothetical reimbursement can only be expected after October 2018.
Anti-dumping process in the US Since January 2015, the company has been under investigation in the US in an anti-dumping proceeding promoted by the US Department of Commerce following a complaint filed by the United SteelWorkers (USW), including the Paper & Forestry industry union and a group of paper producers for dumping practices in several paper formats imports from five countries, including Australia, Brazil, China, Indonesia and Portugal. After ruling on a preliminary anti-dumping margin of 29.53%, which was challenged by the company, the Department of Commerce defined a final anti-dumping margin for Portugal of 7.8% in November 2015.
Although this margin is significantly lower than the preliminary margin determined on August 20th, the Company continues to fully disagree with the enforcement of any anti-dumping margin and is challenging its application in the appropriate forums.
The enforcement is dependent upon a final decision from the USITC that the U.S. domestic industry was injured or is threatened to be injured by imports from Portugal.
2010-2016 Financials characterized by stability at an EBITDA level
Between 2010 and 2016, revenues grew at a CAGR of 2.2% while EBITDA’s CAGR over the same period came in almost flat (-0.1%), as costs rose at a faster pace vs. revenues (2010-16 costs CAGR of 3.5%). Net profits registered a slight increase from EUR 211m in 2010 to EUR 217m in 2016, registering a CAGR of 0.5% between 2010 and 2016.
After attaining its highest sales value in 2015 – at EUR 1,628m - the Company booked revenues of EUR 1,577m (-3.1% y-o-y) in 2016, pressured by lower prices of pulp and paper.
On the other hand, EBITDA for 2016 increased by 2% y-o-y to EUR 398m on the back of increased efforts by the management to optimize its cost base by proceeding with a cost reduction program called M2, initiated in 2014. The M2 program, that continues to run along with other cost-cutting initiatives, resulted into cost reductions of EUR 23m in 2016 or 1.8% of the group’s cost base.
2016 EBITDA, adjusted for non-recurrent items, stood at cEUR 390m in 2016, flat y-o-y.
The Navigator reported net profits of EUR 217.5m (+10.2% y-o-y) in 2016, while the dividend for the year amounted to EUR 170m (or EUR 0.237 per share).
At the end of Dec-2016 company’s gross debt amounted to EUR 708m, while net debt stood at EUR 641m or EUR 14m lower y-o-y, despite the dividend payment and the capex plan.
Revenues and EBITDA (EUR m) Net profits (EUR m)
1 628 1 542 1 577 1 488 1 502 1 531 218 1 385 211 211 210
197 196
181 400 398 386 385 350 328 390
2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 Revenues EBITDA
Source: AXIA Research, The Company
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Premium pricing and cost-competitiveness remain key to the Navigator strategy
Navigator’s business model is based on cost-competitiveness that derives, to a large extent, from the integrated production of pulp and paper (UWF and tissue). The other pillar of the strategy that enhances margins is its positioning in the market as the company’s sales mix is skewed towards products with increased added value.
Focus on premium products to gain pricing power The Navigator’s strategy has been to focus on product and brand differentiation, so that the company is able to charge a premium price over its products, benefitting from a product mix skewed to the high end market of premium products and sheeted paper where the company has more value to add and, therefore, can charge higher prices. In 2016 the company obtained a market share of more than 50% in Europe in the premium paper segment.
The Company’s leadership position in the UWF market should continue to allow the company to benefit from pricing, although it is not shielded from the price volatility of the paper market.
The company intends to replicate the same strategy in the new segments where it is starting to operate, with the production of premium products that is pellets with high calorific value and tissue paper production skewed towards consumer products. This positioning should enable the company to command increased margins through higher pricing power.
Lower costs through the use of its pulp in paper production The main competitive advantage of Navigator derives from the integration of pulp in the paper production. BEKP is the highest quality pulp, mostly used for printing & writing paper or tissue paper, and its price is highly volatile.
The Navigator Company is naturally hedged from this volatility as it produces the pulp needed for paper production. Therefore it has a competitive advantage against non-integrated paper or pulp makers by eliminating this source of risk and volatility. Approximately 30% of the industry capacity in non-integrated.
Additionally, the paper is produced to fill a specific order, so there are no paper stocks, and the factories work at c.100% of their capacity, optimizing the use of the paper mills and extracting their full potential.
Sourcing of raw materials: Forestry As wood productivity is key to pulp production efficiency, Navigator benefits from the quality and the higher productivity of Portuguese wood that provides the company with a significant competitive advantage (i.e. vs. paper mills located in Eastern Europe and Russia that benefit from vast availability of wood but with lower productivity). Still is important to emphasize that wood produced in Portugal covers only between 15% and 20% of the Group’s raw material needs.
The company manages 120k hectares of forest holdings in Portugal, in order to support its pulp production activity. Most of this land is used for eucalyptus plantations, although synergies with other sectors such as wine and cork production are explored.
As the wood produced by the company covers between 15% and 20% of NVGs needs for pulp production, the additional wood is imported from Uruguay and Brazil - c.20% - and the remainder is acquired from independent producers in Portugal and Spain. Despite the higher cost of importing timber from South America, the option allows for the diversification of suppliers. However, since
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wood imported from Latin America is negotiated in USD, the company is subject to exchange rate volatility.
The Group's forestry operations are supported by the largest nurseries for certified forest plants in Europe, able to produce 12 million plants each year, while partnerships (including RAIZ, a research institute for the paper and forestry sectors), ensure that the group remains at the forefront of cost-reducing innovations, better forest management and species modifications.
On average, 3 cubic meters of wood allows for the production of 1 ton of pulp. The conversion ratio varies according to the country of origin of the wood due to the different species produced.
The species produced by the Company is the Eucalyptus globulus, which has a faster growth rhythm when compared with other species, namely the ones that grow in the Nordic countries, currently taking 5 years to grow into usable timber. Brazilian wood grows at an even faster rhythm which represents a threat to the Company.
Efficient mills coupled with own energy makes NVG one of the lowest cost paper producers in Cash cost per ton: Cost Europe competitiveness in pulp and Energy production within each of the paper mills enables the company to achieve significant energy paper markets is generally determined by comparing cash savings. Although in the past a large portion of the electricity output was sold to the market, the manufacturing costs of mills and lowering of the subsidized prices to the grid means that going forward more own energy will be machines. The cash manufacturing cost of a mill is used to power the mills, thus further reducing operating costs despite the lower sales and calculated based on the direct profitability from selling energy to the grid. manufacturing costs of producing a product — i.e. summing the consumption of all On the back of the abovementioned vectors, the Navigator’s industrial mills are large scale, modern natural expense categories and and very efficient, when compared with its peers, allowing for the company to present one of the adjusting for regional cost lowest cash cost per ton among its European peers. The company’s most recent paper mill in differences, configuration differences and operational Setúbal (ATF) is on the first quartile on the global cost curve whilst the other three in the second performance. quartile.
Paper mills utilization rate Estimated cash production costs, delivered to Germany (EUR/t) *
101% 100% 100% 98% 97% 97%
92%
2010 2011 2012 2013 2014 2015 2016 Source: Axia VG Research; RISI; Fisher International; * Reels, DDP Frankfurt, pulp at cost –costs for integrated production
Navigator Costs’ Evolution
Total costs have grown at a CAGR of 3.5% from 2010 to 2016 standing at EUR 1,230m in 2016. The company initiated in 2014 a global cost-cutting program that only in 2016 led to savings of c.EUR 23m. The Company’s CEO announced in the FY16 results conference call that the program was now extended to the tissue business unit, with the Navigator intending to pursue further cost reduction measures across the company.
The main costs items have been fairly stable since 2010, with costs of inventory sold and consumed (wood purchases, natural gas & other fuels, chemicals, packaging material and other) accounting for 54% on average of total costs, cost of materials and services consumed accounting for an average of 34% of costs.
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Payroll costs increased its weight from 10% in 2014 to 12% in 2015 on the back of a higher number of employees and some non-recurrent costs attributable to the rejuvenation program and to the payment of variable remuneration to employees.
Evolution of total costs and EBITDA margin Evolution of the composition of costs
35,0% 1 246 1 253 1 230 1 400 100% 1% 1% 1% 1% 1% 2% 1% 28,9% 1 215 10% 10% 1 119 1 130 13% 12% 11% 12% 12% 30,0% 1 200 1 002 80% 25,0% 1 000 34% 33% 34% 35% 34% 33% 33% 20,0% 25,9% 25,7% 25,2% 800 60% 22,9% 24,0% 21,3% 15,0% 600 40% 10,0% 400 52% 53% 53% 55% 55% 54% 54% 5,0% 200 20% 0,0% - 0% 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016
Costs EBITDA margin Cost of inventories Cost of materials and services Payroll costs Other costs and losses
Source: The Company; AxiaVG Research
Estimated evolution of costs Costs were reduced by 1.8% y-o-y in 2016, while there is an ongoing effort by the Group to increase efficiency and optimize its cost structure. The targeted cost reduction is approximately 0.5% per year, excluding personnel costs, as these are expected to increase following the projected capacity additions and entry into new markets.
The company has implemented several cost reducing programs including i) the implementation of a Lean System expected to impact costs for the period 2016-18, ii) a personnel rejuvenation program in 2015 and 2016, which will reduce the average age of the workforce and decrease the cost per employee, and iii) the outsourcing and insourcing of certain services which are expected to result in net savings of c.EUR 1.2m per year (0.1% of total costs).
Regarding personnel, the number of workers increased from 2,660 in 2015 to c.3,140 in 2016 and is expected to remain stable at this number until 2018 with the early retirements being compensated by the residual increase in the number of workers in Mozambique and in the pellets project in the US. From 2018 onwards, the total number of workers is expected to increase to 3,200 following the start of operations in the tissue line in Cacia and the pulp production increase in Figueira da Foz.
According to our estimates, total costs are expected to register a CAGR of 2.3% between 2017 and 2021 growing from EUR 1,233m to EUR 1,350m over that time period. Note that this growth rate is significantly below the CAGR of 3.5% registered between 2010 and 2016 and accompanies an increase in pulp and tissue production capacity during the period. The evolution of costs will benefit from the lower prices of pulp and also of energy as the decrease in energy prices leads the company to use its own energy internally, leading to lower purchases of energy.
Table 8. Evolution of total costs (EUR m) 2016 2017E 2018E 2019E 2020E 2021E Cost of inventories sold and consumed -662 -676 -698 -736 -739 -746 Cost of materials and services consumed -404 -394 -414 -433 -436 -440 Payroll Costs -145 -147 -155 -154 -154 -155 Others -19 -16 -8 -8 -8 -9 Total Costs -1 230 -1 233 -1 274 -1 332 -1 337 -1 350 Source: Axia VG Research
In any case EBITDA margin is expected to decrease from 24.7% in 2017 to 23.6% in 2019, as the new businesses - tissue and pellets - are still in the ramp-up phase, with EBITDA margin to recover in 2020 and 2021 to 23.9% and 24.2%, respectively.
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Estimated evolution of total costs (EUR m) Estimated evolution of EBITDA margin (%)
1 350 25,2% 1 332 1 337 24,7%
1 274 24,2% 23,9% 23,9%
1 230 1 233 23,5%
2016 2017E 2018E 2019E 2020E 2021E 2016 2017E 2018E 2019E 2020E 2021E
Source: Axia VG Research
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Pulp & Paper business: steady flow of profitability
The company’s strategic focus over the past years has been not only to reach and maintain leadership position in the European pulp & paper business but also to become one of the most significant global players in these markets. These business segments are expected to remain the most relevant for the group and despite pulp and paper price fluctuations, the ability of the group to shift sales into more profitable markets, to expand production capacity (even small additions) and to optimize costs, should allow it to stabilize revenues, while supporting margins.
Within the P&W paper production market, the Navigator has consolidated its position as the leading European manufacturer, and the sixth largest in the world, of Uncoated Woodfree (UWF) printing and writing Paper. The Navigator Company is also Europe's top producer of BEKP (Bleached Eucalyptus Kraft Pulp), the fifth largest in the world. The revenues of these two divisions amounted in 2016 to EUR 1,366m or c87% of the total sales. Going forward 2017-21 pulp and paper combined revenues are expected to remain flattish (CAGR over the period is forecasted at 0.2%) as pricing is anticipated to remain soft, while we don’t expect significant quantity additions.
Pulp: used internally but also sold in the market The Navigator’s total production capacity of pulp amounts to 1,470k tons of BEKP. Most of the pulp produced by the Group is integrated into the production of paper, with the consequent benefits in terms of cost reductions related with energy, transport, solidification and liquefaction of the pulp.
Specifically, the Figueira da Foz and Setúbal mills are completely integrated, i.e. the pulp produced is entirely used for on-site paper production, while the Cacia mill is focused solely on the production of pulp, the surplus of which (pulp not used internally) is sold in the market.
In any case pulp capacity is expected to increase by c5% in 2018 to 1,540k tons. The scheduled increase in pulp production capacity will feed the increased production of tissue as opposed to increase the quantities of pulp sold in the market. According to our understanding, the Navigator intends to remain long on pulp, marketing a steady amount of c.300k tons per year.
Note that pulp sales, are based on the index price, but the industry (as well as the Navigator) sells pulp at a discount negotiated on a client by client basis. The end price varies from year to year based on the market conditions, customer loyalty and the market niche of the sales (e.g., if sales are directed at the décor market, the discount will be lower when compared with sales made to the tissue market, where buyers – tissue producers – have a high bargaining power). We considered an average price discount of c.23.5% for the next 5 years, as discounts have been increasing (from 10.8% in 2014 to 21.3% in 2015 and 23.9% in 2016) due to increased capacity coming into the market.
Pulp: Market & Price Outlook After a decrease in the pulp price between mid-2012 and 2014, pulp prices began to recover in the 4Q14 which was sustained throughout 2015, as the pulp market benefited from a combination of factors, including a slowdown in new capacity reaching the market, a reduction in supply due to a number of production stoppages over the year and robust demand from the Chinese market. Towards the end of the year 2015, business began to slow down, due to strong pressure on commodity prices and slower economic growth in China, the main destination for pulp exports.
Market trends in 2015 allowed prices to rise, and the PIX index stood at an average 5.1% higher than in 2014 to USD 784 per ton. In Euros, due to the currency’s weakness against the dollar, the price increase was even more significant, with a rise of EUR 114 over the course of 2015. On the other
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hand, during 2016, average prices for BHKP declined approximately 13.2% in USD and 12.9% in Euros.
As noted above, the Chinese market is the main driving force behind pulp demand. While demand from Asia and China is expected to remain strong, capacity additions worldwide are estimated to surpass demand, pressuring pulp prices downwards. The timing of these additions though, as well as maintenance work on existing units will be impacting pricing.
To this end some capacity addition projects are experiencing delays, such as the APP project in Indonesia which was postponed, while there have been some maintenance stoppages in Brazil, which smooth the pulp prices decrease. This means that, although according to industry data, between 2016 and 2019 capacity will largely offset demand, especially in 2017, the discipline of producers, who have no interest in flooding the markets with big quantities of pulp, suggests that pulp prices could sustain prices close to current levels, in the near term.
Evolution of PIX price Europe BHKP World demand and capacity annual changes
850
800
750
700
650
600
550
500 2012 2013 2014 2015 2016 EUR/t USD/t
Source: FOEX; Brian McClay & Associates Inc, Aug 24 2015
Momentum in the pulp market is currently good. Prices began the year at low levels - but are exhibiting an increasing trend and are forecasted to pick up leading in 2017 average price close to that registered in 2016 (USD 652 per ton). Eventually, the increased capacity that is expected to come online is likely to impact the positive trend, thus we would anticipate relative stable pulp prices in the next years in USD terms.
PIX BHKP index estimated evolution (2016-2021E)
680 660 640 620 600 580 560 540 2016 2017E 2018E 2019E 2020E 2021E
USD/ton EUR/ton
Source: Axia VG Research
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Segment evolution As the company wants to remain long on pulp in the medium term, the expansion project related with the installation of a tissue line in Cacia will be accompanied by an expansion project for additional capacity of pulp production. Such project will occur in the Figueira da Foz mill and will entail an added capacity of 70k tons of pulp, bringing Figueira da Foz’s total capacity to 640k tons of pulp. The project has a total investment estimated at EUR 85m – divided between 2017 (EUR 45m) and 2018 (EUR 35m). Construction already started in 1Q17 with the new capacity expected to come online in March 2018.
About 20% of the pulp capacity produced is sold to the market. Navigator pulp sales volumes to the market have increased by 0.4% over the past 6 years assisted by a c2% capacity increase in 2015 that was directly used in the production of paper (UWF and tissue). Pulp revenues have fluctuated over the past 6 years (CAGR: -2.6%), pressured mainly by pricing.
Pulp sales discounts from the reference index have ranged between 3% in 2013 and 21% in 2015, depending on the market conditions and the type of clients. As currently, average discounts in the pulp segment stand between 22% and 25%, in our model we pencil in a discount of 23.5% from the PIX BHKP Index between 2017 and 2021.
Evolution of Pulp production and sales Average price of pulp sales
1 600 180 700,0 0% 1 400 160 600,0 -5% 1 200 140 120 500,0 1 000 -10% 100 400,0 800 80 -15% 600 300,0 60 -20% 400 40 200,0 200 20 100,0 -25% - - - -30% 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016
Total output (k tons) Sales (k tons) Sales (EUR m) Discount/Premium vs. Reference Index NVG average price (lhs)
Source: AXIA Research; The Company
We forecast pulp revenues CAGR over the period 2017-21 of -0.6%. In our model, we consider new Navigator capacity to come online in March 2018, with a ramp-up period of 1.5 years and a decrease of the average sale price in 2017 and 2018 in EUR (prices in USD are forecasted to remain stable in the period). Based on the operational assumptions, we anticipate a stabilization of revenues from pulp sales in 2017 when compared with the previous year and a slight decrease in pulp sales between 2017 and 2018, on the back of decreasing pulp prices in EUR terms. We account for the increased capacity of pulp from 2019 onwards to be allocated almost entirely to tissue production, not having an incremental value in pulp revenues in following years, which are forecasted to remain stable at c.EUR 136-137m.
Assumptions for the Pulp segment Estimated evolution of Pulp sales (2017E-2021E; EUR m)
139 2017E 2018E 2019E 2020E 2021E 139 Total Capacity (tons) 1 470 1 540 1 540 1 540 1 540 137 Utilization rate 96% 99% 100% 100% 100% 136 Sales (k tons) 301 303 303 300 300 136 136 Average price (EUR/t) 461 450 452 452 452
2016 2017E 2018E 2019E 2020E 2021E
Source: Axia VG Research
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Paper: the most lucrative business segment Since the last capacity expansion in 2009 in Setúbal, total production capacity of paper stands at 1,565m tons of UWF.
The paper delivers EUR1.23bn of revenues to the group in 2017 or 77.8% of the total. As i) we account for minimum price changes going forward, ii) the utilization of the units already exceeds 100% and since iii) no new capacity increases is expected in the near term, we forest for flattish revenues from this division in the coming years. As other group business units are expected to generate accelerated revenues over the next 5 years, paper should continue to account c70% of group sales by 2021.
UWF Paper – Market & Price Outlook The demand for P&W paper is related to macroeconomic factors and to the increasing use of copy and print material. While this is currently true for developing economies, the opposite movement is now occurring in the developed world due to the digitalization of the economy, with P&W paper production declining since 2007. To counter the potential demand decrease, gradually several P&W paper producers converted their production lines to Packaging (another segment of the paper production) which granted some equilibrium to the P&W paper market prices through 2015.
What shifted the equilibrium in 2015 was the antidumping case launched by the US to paper imports from several countries (including China, Australia, Indonesia, Brazil and Portugal) that forced a number of producers to redirect sales, mainly into Europe, resulting in a flood of paper in the European market which pressured paper prices downwards in 2016, despite the lower capacity in the market.
In the last quarter of 2016, the negative paper price trend was inverted due to a pick-up in demand in Europe, Middle East and Africa. In addition, increases in freight costs and the higher demand in Asia, turned Asian producers inward looking. The persisting trends lead to expectations for stabilization of the price of paper in 2017 at about 2016 levels. More specifically, for 2017 there has been an improvement in the market conditions in Europe, Africa and Middle East. Additionally, European producers are seen placing more volumes in the US, whilst the Asian markets have also exhibited a growing demand (namely in China), pipeline stocks being build up after depletion, and capacity changes due to pollution controls in China. In the 1Q17, the strong order book and the market’s strength have allowed the Navigator to introduce higher prices that will be reflected from the 2Q onwards. Still note that average Q1:17 prices were still below average 2016 prices therefore the price increases taken place should allow average 2017 to return to average 2016 levels.
Since new capacity into stream coming from Asia is expected to be sold mainly in the Asian markets, as long as consumption and economic trends evolve positively in Europe, we expect paper prices to remain supported at current levels. Thus, in our model we pencil in stabile paper prices at EUR 823/ton between 2017 and 2021.
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World P&W paper demand evolution Evolution of PIX price Europe A4-Copy B (EUR/t)
900
850
800
750 2012 2013 2014 2015 2016
Source: RISI 2015; FOEX
Segment Evolution The total Navigator paper volume has increased by 2.1% per year between 2010 and 2016 (CAGR), growing from 1,397 tons to 1,587 tons, attaining a record level last year. The value of paper sales has also grown consistently over the same time period registering a CAGR of 2.3% over the period 2010-16. In 2016 sales reached EUR 1,227m or 5% lower y-o-y pressured by lower average prices and after attaining record sales of EUR 1,292m in 2015.
While the reference index for UWF paper – PIX A4-copy B – has grown at a compound rate of 0.1% between 2010 and 2016, the Navigator’s average sales price has registered an annual growth rate of 0.2%, attesting to the company’s leadership and pricing ability in the paper market. Discounts have reached a maximum level of 9% in 2011 and 2012 and a premium of 1% in 2015, over the average index price for the year (Euro terms). According to the Navigator, UWF paper discounts over the benchmark index for paper usually ranges between 6% and 8%. In our model we considered discounts between 5 and 6% between 2017 and 2021, as the company is more focused on the sale of premium products.
Evolution of Paper production and sales Average price of UWF paper sales
1 650 1 400 840 2%
1 600 1 200 820 0%
1 550 1 000 800 -2% 1 500 800 780 -4% 1 450 600 760 -6% 1 400 400 740 -8% 1 350 200
1 300 - 720 -10% 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015
Total output (k tons) Sales (k tons) Sales (EUR m); rhs Discount/Premium vs. Reference Index NVG average price (lhs)
Source: The Company; Axia VG Research
In our paper segment forecasts we account for full capacity utilization (101% utilization rate) given that in 2015 and 2016 productivity gains in the new Setúbal mill have allowed the company to produce more paper in that mill than the 580k tons originally anticipated. As the company intends to continue to focus on productivity enhancements in paper production, these productivity gains are deemed sustainable. On the back of higher average prices and production of UWF paper at full capacity, paper sales are forecasted to mildly increase between 2018 and 2021, after remaining relatively stable in 2017.
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Assumptions for the Paper segment Estimated evolution of UWF paper sales (2016-2021E; EUR m)
1 241 1 241 1 241 2017E 2018E 2019E 2020E 2021E
Total Capacity (tons) 1 565 1 565 1 565 1 565 1 565 1 234 Utilization rate 101% 101% 101% 101% 101% Sales (k tons) 1 581 1 581 1 581 1 581 1 581 1 227 1 228 Average price (EUR/t) 774 778 782 782 782
2016 2017E 2018E 2019E 2020E 2021E
Source: Axia VG Research
Energy: more in house use to reduce revenues but to assist cost efforts
The Navigator group is the country's leading producer of electricity from forestry biomass operating two biomass power stations (Cacia and Setúbal), two natural gas combined cycle power station (Figueira da Foz and Setúbal) and biomass cogeneration plants in each of the three industrial sites (Cacia, Figueira da Foz and Setúbal). The independent biomass power plants in Cacia and Setúbal produce energy that is sold directly to the grid at a regulated and subsidized price, and consecutively bought back for the regular energy price.
Navigator’s annual energy production capacity amounts to 2,500 GWh out of 370 MW of installed capacity, divided over 7 installations of biomass and cogeneration plants.
Table 9. Electricity installed capacity
Site Installation Installed Capacity (MW)
Cacia Renewable Cogeneration Plant (Biomass) 35.2
Renewable Biomass Power Plant 12.5 SFigueira da Foz Renewable Cogeneration Plant (Biomass) 95 o u Natural Gas Cogeneration Plant (combined cycle) 67 r cSetúbal Renewable Cogeneration Plant (Biomass) 66 e Natural Gas Cogeneration Plant (combined cycle) 81 : Renewable Biomass Power Plant 12.5 T Source: The Company
Changes in renewable energy regulation enacted in 2013 have resulted in a decrease of the subsidized prices paid for the energy produced from co-generation plants, with the impact affecting progressively the plants according to the age of each plant. The industrial plant of Cacia experienced the first full year impact of the remuneration changes in 2014, while Figueira da Foz in 2016. As from February 2016, natural gas co-generation at Figueira da Foz has switched to own-consumption basis. The legislation will be applicable to the more recent plants from 2020 onwards.
Because the average sale-price have decreased, between 2012 and 2016 energy sales have registered a compounded annual decrease of 20%. At the same period the output sold to the system was relatively stable registering a 2012-2016 CAGR of -0.6%.
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Evolution of average price per MWh (EUR k) Energy sold and revenues evolution (2012-2015)
107,1 120,0 2 154 2 184 1 961 100,0 1 678 72,9 80,0 65,2 63,1
60,0 44,9 180 157 142 124 40,0
20,0 2012 2013 2014 2015
- Sales (GWh) Revenues (EUR m) 2012 2013 2014 2015 2016
Source: The Company
The continuous decrease in the average price per MWh made it more rational for the company to reduce the purchases of electricity from the grid and operate the affected power plants in a self- consumption basis.
We anticipate a progressive decrease in the portion of energy sold in the market which, combined with the expected decrease in average price per MWh – again in 2020 due to the application of the revised tariff to the more recent plants -, should translate into accumulated revenues of EUR 323m for the segment between 2017 and 2021.
The segment is therefore estimated to register a negative CAGR of c11% between 2017 and 2021, due to progressively lower sale volumes and lower prices. At a group level, this effect is compensated by lower costs due to lower costs of energy purchases.
Table 10. Energy Segment: Assumptions and Forecasts 2015 2016 2017E 2018E 2019E 2020E 2021E 2 292 2 114 2 292 2 292 2 292 2 292 2 292 Output (GWh) 86% 78% 78% 78,0% 60,0% 55,0% 55,0% % sold 63,1 44,9 44,9 44,9 44,9 40 40 Average price Sales (EUR m) 124 74 80 80 62 50 50 Source: AXIA Research
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New growth areas: Tissue (mainly), Pellets & Mozambique
Aiming to boost growth, the Navigator management team has outlined a strategy based on three promising vectors, which are being developed concurrently: (i) Tissue paper; (ii) Pellets in the US; (iii) Mozambique – forestry and pulp plant. The tissue and pellets business are estimated to add more that EUR 1.0bn (cumulatively) to the group’s top line until 2021. The Mozambique plant is a long-term project and also an indication of how the group aims to derive growth in the long term.
The group’s strategy of growing into different segments should allow it to more than counterbalance the trend of the digitalization of the global economy that is impacting the paper business. The company’s expansion into the production of tissue acts as an hedge against a mature market where NVG is already leader (UWF Paper), while it allows the company to continue to grow in a segment where it can still benefit from integrated production and its expertise in the production of timber and pulp. Note that the European tissue market is expected to grow at a healthy pace over the medium term. We estimate revenues from tissue paper to grow from EUR 59.3m in 2016 to EUR 187m in 2021, boosted also by capacity increases.
In parallel, the company’s strategy entails the expansion into another new business area, the production of pellets, a segment with significant growth potential that is also related to its timber expertise. Revenues from this segment from cEUR12m in 2016 should gradually grow to EUR70m in 2021 as the unit’s utilization increases.
Finally, building on the company’s expertise in pulp production Navigator is contemplating setting up a mill in Mozambique that will cater to Asian market needs due to geographical proximity, and where demand is significant and expected to grow. We only account for limited capex on this project, related with forest plantation (not to the construction of a production unit), while we note the promising prospects of such an endeavor that underline the longer-term strategy of the group.
Tissue Paper: most relevant growth vector in the medium term The Navigator is pushing ahead with its strategy to diversify into the tissue paper segment, with the aim of establishing itself as a major player in the European market and one of the most competitive tissue producers in Europe. To this end in the beginning of 2015it acquired a tissue paper manufacturer, AMS BR Star Paper S.A.. The company had a production capacity of 60 tons per year and 65 tons of converting capacity.
The Navigator intends to grow in this segment through building additional capacity, while seeking premium pricing.
According to our estimates, the tissue segment sales should come to amount to c.12% of the company’s total by 2021 from 4.3% in 2016, when total tissue sales amounted to EUR 67.4m (+20.8% y-o-y).
Tissue market: prices led by supply The transition to a paperless economy has been offset by growth in the packaging and tissue sectors, which are acting as safe-havens for P&W and newsprint paper producers.
World tissue paper production has grown by about 1 million tons per year from 2010 to 2014, and is exceeding 30 million tons. Tissue capacity doubled from 2008 to 2014 but overinvestment has resulted in overcapacity and this has pressured prices. It is however important to note that most producers have a regional focus, reaping benefits from a strong position in the focused markets.
The tissue paper market is driven by socio-economic factors (global hygiene, urbanization, disposable incomes and consumer spending, etc) having a strong correlation with GDP per capita growth. Maturing markets in the West are expected to continue to grow, albeit at a slower pace AXIA Research Page 24
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than until now, with quality trends, lifestyle changes and demographic changes (such as population growth) being the key growth drivers of demand in the developed world.
However, the focus in the global tissue market, is moving to the emerging markets which are expected to show strong growth in the long term, especially in Asia, due to higher/increasing disposable incomes, health trends and population growth and where urbanization, improved infrastructures and the retail trade are evolving rapidly. In these emerging regions, tissue paper consumption per capita is low and in the early stage of development.
Long-term demand growth of tissue paper up to 2030 Leading producers of tissue paper (2015)
Source: Poyry Management Consulting
According to SCA, the market leader by installed capacity, the global market for tissue is valued at just over EUR 50.2bn and is growing by 4% annually. Similarly, according to RISI institute, Global Tissue Market is expected to grow above 3.5% in 2017, subject to global economic growth. Demand growth in mature markets is in the low single-digit figures, while it is considerably higher in emerging markets. The highest growth is expected to take place in China and Latin America.
However, this demand growth (about one million tons p.a.) is to be more than offset by the added capacity for the following years (in 2017 c.2.2 million tons are expected to be added). Because of this disproportionate growth, capacity utilization is also expected to fall to around 80-82% globally. Still some projects delays are also expected, which could smooth the capacity increase.
The Navigator forecasts tissue demand to grow 1 to 2% in Europe and between 4 and 5% in the Rest of the World.
Segment Evolution In this segment, the Navigator faces a competitive market with well-established players. The company operates in both consumer tissue and Away from Home (AfH) segments, with consumer tissue accounting for a 75% share of tissue sales.
The Away-from-Home (AfH) segment To gain scale in the tissue segment, the group decided to invest in a tissue paper production line in comprises institutions and companies, Cacia, with nominal capacity of 70 thousand tons per year and to integrate equivalent converting including hospitals, healthcare institutions, large workplaces, capacity, with an estimated investment expenditure of c.EUR 120m over a period of 18 months (EUR industries, restaurants and hotels. The 48m to be spent in 2017 and EUR 72m in 2018). The company announced recently that it was products are distributed by granted the financial incentives that were delaying the project until now and the project is already wholesalers and service companies. undergoing. Consumer tissue includes toilet paper, kitchen rolls, facial tissues, handkerchiefs and napkins. The investment is expected to be completed in 2H18 (August), increasing Navigator’s tissue production capacity to 130k tons per year and 135t tissue converting capacity. Note however that these projects have a ramp-up period of c.3 years.
By choosing to grow in the tissue segment, the group intends to reap the benefits of integration of pulp in tissue production, and be one of the lowest cost producers of tissue in Europe. At the same time the Navigator is more interested in growing in the consumer tissue segment as sales are more highly remunerated vs. the away-from-home segment due to the retailer’s intermediation costs. The AXIA Research Page 25
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use of BEKP fiber allows the company to achieve high quality products in tissue, granting great softness for facials and toilet paper. However, this is a long-term plan as growth in the consumer segment will be achieved through a strategy of brand differentiation, similar to that applied in the UWF paper segment. In our model, we included a slight increase in the average price of finished goods from 2018 onwards, but if the differentiation strategy is successful, it might grant further upside to prices charged for tissue products.
We note that the tissue market is very regional, due to the higher cost of transporting tissue finished goods when compared with the cost of transporting tissue reels. With the abovementioned investments – AMS and Cacia -, the Navigator will serve the Portuguese and Spanish tissue market. Thus, an additional growth prospect for the company in the segment, already acknowledged by the NVG’s management team, is to acquire existing converting capacity from other producers so to be able to serve European markets such as France and Benelux. However there is nothing specific on potential acquisitions at this point in time. As stated by the company’s CEO in a conference call, another key potential market for Navigator, within the tissue segment, is the UK, although for now any focus in the country is hampered by the uncertainty surrounding the Brexit. Note that Cacia’s location, near the port of Aveiro, is optimal to export to Western Europe, granting the Navigator a real opportunity to diversify is product portfolio into a growing market.
Sales in the tissue business segment reached EUR 67.4m in 2016, of which 88% correspond to sales of finished goods. The positive performance of the segment in 2016 - +20.8% y-o-y - was sustained by the increase in capacity realized in 2015 by AMS, but hurt by the fire in the Vila Velha de Ródão mill in May 2016, which had a negative impact on sales in the 2Q16 and 3Q16.
The average sales price is dependent on the sale mix (reels sales vs. finished goods sales), with reels selling at a discount of between 30% and 35% when compared with finished goods. In our model, we considered an average price of EUR 1,405 per ton for finished goods and EUR 949 per ton for reels in 2017. Afterwards, and based on the strategy for brand differentiation, we assume the company is able to charge slightly higher prices between 2018 and 2021.
In our assumptions we also incorporate additional capacity from Cacia, with 2019 being the first full year of operations (beginning construction in the first half of 2017). Thus, after 2019 we expect reels production capacity to stand at 130k tons and converting capacity to stand at 135k tons, with a ramp-up period of 3 years until 2021.
Table 11. Assumptions Tissue Segment 2016 2017E 2018E 2019E 2020E 2021E Capacity (k tons) Reels 60 60 60 130 130 130 Finished Goods 65 65 65 135 135 135 Utilization Rate (%) Reels 78% 97% 98% 75% 86% 96% Finished Goods 64% 91% 98% 76% 86% 96% Average price Reels 897 949 953 958 963 968 (EUR/t) Finished Goods 1405 1405 1412 1419 1426 1434 Source: Axia VG Research
Consequently, total tissue sales are expected to evolve positively until 2021, growing at a CAGR of 22.4% up to EUR 205m in 2021, progressively gaining relevance in the company’s top line. The accumulated revenues from tissue sales are forecasted to total EUR 735m between 2017 and 2021, of which c91% attributable to the sale of finished goods.
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Sales volume per product (2016-2021E; k tons) Tissue sales evolution (2016E - 2021E; EUR m)
130 250,0 116 205 102 200,0 182 159 150,0 59 64 98 42 91 100,0 67,4 15 17 19 9 9 9 50,0
- 2016 2017E 2018E 2019E 2020E 2021E 2016 2017E 2018E 2019E 2020E 2021E
Reels Finished goods Reels Finished Products Total tissue sales
Source: AXIA Research; The Company
Pellets: a new area of growth in a new geographic region On December 2014, the company laid out its strategy to expand into the business of wood pellets in the US, leveraging on its expertise in the field of forestry products and manufacturing. Pellets, is a growing market segment as it offers a renewable and sustainable alternative to fossil fuels. Apart from the growth prospects of the sector, this move allows the Navigator to geographically diversify its industrial base.
Thus, a wood pellet manufacturing facility was built in the US, in South Carolina, with an installed capacity of 500k tons per year – the 3rd largest in the US -, and started operating in September 2016. Wood availability, relatively low cost of energy and easy access to the port (to sell in the EU) are some of the advantages of the location.
This business line is forecasted to account for 5.5% of the company’s total sales by 2021, with upside coming from the company’s pricing power due to product quality. To this end, the company notes that tests have attested the high calorific value and low ash content of the pellets produced in its new plant, thus it expects to be able to charge a premium over index prices.
Market status and outlook The production of wood pellets has increased substantially in recent years due in large part to the aggressive emission policy in the EU. The majority of demand for wood pellets originates from the EU – in 2015 the EU28 accounted for 77% of global pellets demand -, with particular interest from Nordic countries. Major exporters of pallets are the US, Canada and Russia, while Australia, South Africa and some countries in South America have potential to become exporting markets as well.
The advantages of wood pellets include, i) the main feedstock, which is wood waste from primary and secondary saw mills, and ii) the high energy density and consistency of the fuel, which allows international trade to be feasible. Interestingly, the supply of wood waste is driven by the demand for wood-based products, such as paper and lumber, rather than the demand for wood pellets.
U.S. has taken over the role as the leader in the production of wood pellets and has seen tremendous growth over the past few years, growing by 285% between 2010 and 2015. Regarding the supply of wood pellets, the US is expected to remain the main supplier of pellets into the EU. According to the Eurostat, in 2015, imports of wood pellets into the EU totaled 5.8m tons and the US supplied 4.1m tons. While there are currently only 4 producers of pellets with a capacity above 1 Mtpa, by 2020 the number of producers will increase to 7, while 73% of the capacity operated by the 10 largest producers will be located in the US. The estimated production capacity is expected to grow from 9.2 Mtpa in 2015 to 14.6 Mtpa in 2020 in the US.
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At the world scale, global wood pellet production reached c.EUR 28m tons in 2015, from 16m tons in 2010, while published estimates suggest that the annual demand for woody biomass could rise to 305m tons by 2020. Note that this growth in both the heating and industrial pellet markets is occurring despite some challenging conditions, such as: i) Low oil & carbon prices; ii) strong US dollar; and, iii) policy uncertainty regarding renewable incentives.
Global Wood Pellet Production Wood Pellet Market Forecast
Source: REN21, FAO and Hawkins Wright; Poyry Wood Pellet Multiclient
Segment evolution Although revenues from this business segment are not expected to exceed 4% of total group revenues nu 2021, pallets should come to represent a relatively stable stream of cash-flows given that the Company has negotiated supply contracts with fixed price and tenure of 10 years, guaranteeing the sale of around 40% of the new facility´s output. Regarding pricing because of the significant correction in oil prices, prices of pellets registered downward adjustments since the start of the project, currently standing at between USD 140-150 per ton. Note however that the price of pellets varies greatly from client to client and according to its intended use (industrial or residential markets). Additionally, a higher quality product (high calorific value) could allow the company to charge a premium over market prices.
The company was able to lock in higher prices for 40% of its sales, but aims to negotiate fixed price supply contracts for a total of 70% of its output. According to company sources, the company’s commercial focus is currently on both the industrial markets of Europe and potentially Japan / Korea and in the residential markets of Europe and of the US.
In our model we assumed i) a stable price of USD 165 per ton for the 40% fixed-price portion, as the contract was closed in the end of 2014 at a time when prices were higher, and ii) a lower price for the remaining quantity sold according to the forward prices of the index Argus CIF (ARA) for wood pellets.
Table 12. Wood pellets – forward prices
Source: Argus Biomass Markets, Issue 16-034
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Regarding production, there is a ramp-up period that will last until end 2018. While sales in 2016 were negligible we estimate sales for the first full year of operations (2017) to reach c.EUR 37m growing to EUR 70m in 2019. Consequently, accumulated revenues are estimated to total EUR 305m between 2017 and 2021 with the segment forecasted to register a CAGR of 43.3% between 2016 and 2021.
The Navigator expects the production of pellets to exhibit an EBITDA margin of 22% in the first years of operation, growing to 24% afterwards.
Assumptions for the pellets segment Sales volume and turnover (2016E-2021E)
475 475 475 2017E 2018E 2019E 2020E 2021E Capacity 500 500 500 500 500 400 Utilization Rate 50% 80% 95% 95% 95% 250 EURUSD 1,083* 1,1086* 1,1086 1,1086 1,1086 Average price 159 161 164 164 164 58 70 70 70 (USD/ t) 37 * CME Group 2017E 2018E 2019E 2020E 2021E
Sales Revenues (EUR m) Sales Volume (k tons)
Source: AXIA Research; The Company
Mozambique: potentially transformational move As the third (but longer term) growth vector, the Company has noted plans to invest in the development of an integrated project of forest, pulp and energy production in Mozambique. The investment will take more than a decade to fully materialize and currently is in its first phase of development, i.e., forest plantation, which should total 250k hectares. The second phase includes the construction of the pulp plant (with 1.5m tons capacity per year) and biomass energy generation plant, and according to the company a decision can only be expected in 5-years’ time.
The project currently underway comprises the plantation of sustainable eucalyptus. Capital expenditures with forest plantation are budgeted at EUR 15m per year until 2021.
The project is being developed in partnership with the World Bank’s International Finance Corporation (IFC) which acquired a 20% stake in Portucel Mozambique’s share capital. Since total capital expenditure needs regarding the second phase of the project amount to c.EUR 2bn, the Company intends to find an equity partner for these investments.
In any case, delays are expected in the Mozambique project due to the country’s recent economic woes. Both the IMF and the World Bank suspended funding to Mozambique after the discovery in April 2016 of previously undisclosed debt worth USD 1.4bn (10.7% of GDP) and the country is facing a very challenging economic environment, which makes investments in the country difficult to go ahead until the ties between the international institutions and Mozambique are re-established.
In our model we include the projected capex of EUR 15m per year in forest plantation over the next 5 years, as the plantation of eucalyptus is already undergoing and set to proceed as planned but not any expenditure for the construction of the pulp plant.
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Capex, Capital Structure and Dividend Policy
The group’s current investment program is expected to be concluded in 2018, and we estimate that NVG will spend more than EUR 520m during the period 2015-18 for capex (EUR 290m to be spent in 2017-18). Still, net debt-to-EBITDA is not expected to exceed 1.8x (in 2017 and in 2018) before settling below 1% in 2021 supported by strong cash flow generation. At the same time the company should maintain its hefty dividend policy with the payout settling at least 100%. For 2017 and 2018 dividend yield is estimated at 6.1% and 5.8% respectively.
Financing growth
Total CAPEX amounted to EUR235m for 2015 and 2016, while between 2017 and 2021 is estimated to amount to EUR 426m, including the new investments in paper, pulp and in Mozambique.
Specifically the Navigator is forecasted to invest in a new tissue line in Cacia (EUR 120m in total - starting in 2017 concluded in 2018), in an increase in the pulp production capacity in the Figueira da Foz mill (EUR 75m in total - starting in 2017 concluded in 2018) and in the plantation of eucalyptus in (EUR 15m per year). The yearly maintenance capex is estimated at EUR 30m per year.
Breakdown of estimated capex requirements (EUR m) Total capex for 2017-2021 (EUR m)
200 144 147
150
100
50 45 45 45
0 2017E 2018E 2019E 2020E 2021E
2017E 2018E 2019E 2020E 2021E Tissue Pulp Pellets Mozambique Maintenance
Source: Axia VG Research
The expenditure is expected to be supported by the company’s continuing strong operating cash flow. Accumulated Operating Cash Flow in the period 2017-2021 is estimated to amount to c.EUR 1.68bn.
Operating Cash Flow (2017E-2021E; EUR m) Cumulative Capex for 2017-2021 (EUR m)
426 330 381 325 336 291 315 314
144 297
2017E 2018E 2019E 2020E 2021E 2016 2017E 2018E 2019E 2020E
Source: AxiaVG Research
Current capital structure At YE16, NVG's total financial debt amounted to EUR 708m (-EUR 19m y-o-y), of which c90% was non-current debt. Currently, 62% of the company’s debt has a fixed rate and is all denominated in Euros.
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During 2016, the Group restructured its debt, extending maturities and reducing substantially its financing costs, which currently stand at approximately 1.7% (total average cost of debt) with an average debt-maturity of 4.5 years.
The restructuring included the exercise of the call option for the early repayment of its senior secured notes in a total amount of EUR 150m, which will result in net savings (net of the redemption premium) of EUR 16m over the next four years and the subsequent financing of EUR 170m – EUR 100m in bonds and EUR 70m commercial paper – at more favorable market conditions. Additionally, the group has issued new debt with the European Investment Bank – EUR 25m loan maturing in 2028 - and with international banks - bond issue of EUR 45m maturing 2021.
Financial Debt by Maturity (FY16)
225
145
200 125 50 70
20 20 12 13 12 10 10 21 2017 2018 2019 2020 2021 2022 2023 2024-2028 EIB Permanent Commercial Paper Bonds Unused Commercial Paper Used Commercial Paper
Source: The Company
Although no significant financing needs are expected until 2021, the company does not exclude the possibility of negotiating a new loan with the EIB to finance part of the Figueira da Foz mill expansion to take advantage of lower funding costs. Hence we considered an additional amount of debt in 2017 of EUR 40m, or half of the total capex associated with the project, to account for this investment.
Debt levels in 2017 and beyond Net Debt in 2016 decreased by EUR 14m, to EUR 641m with Net Debt/EBITDA improving from 1.68x in 2015 to 1.61x in 2016 on the back of the decrease in total debt.
We anticipate net debt to increase by EUR 78m in 2017 to EUR 718m, on the back of higher debt (mainly the financing the Figueira da Foz mill expansion) and the payment of 2016 dividends amounting to EUR 250m. Consequently, net debt to EBITDA ratio is forecasted to increase to 1.81x in 2017 and 1.838x in 2018, and to start decreasing afterwards settling at 0.88x in 2021.
Note the company’s targeted Net Debt/EBITDA is 2.0x.
The Navigator is currently rated by all major Credit Rating Agencies: Moody’s upgraded the group’s rating to Ba2 in March 2016, attributing a stable outlook and S&P assigns the company a BB rating with a stable outlook since May 2013.
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Net debt and net Debt/EBITDA
800 2,00
600 1,50
400 1,00
200 0,50
0 0,00 2016 2017E 2018E 2019E 2020E 2021E
Net debt Net debt / EBITDA
Source: The Company
A high dividend payout to be maintained At the same time the company intends to maintain its generous dividend policy in the years to come with the dividend payout forecasted to come to 115% in 2016, following Semapa’s proposal to distribute free reserves in addition to the results of the year. Thus, the Navigator is expected to distribute EUR 250m in dividends in 2017. The dividend payout is expected to be maintained at least at 100% in the coming years. Based on our assumptions – 100% payout ratios - we estimate that the company will distribute a total dividend of EUR 913m over the period 2017-21.
Note that the Navigator between 2010 and 2016 has distributed cumulative dividend EUR 1,357m with the company distributing EUR 440m in 2015 and EUR 170 in 2016.
Dividends forecasted (EUR m) The Navigator Company dividend yield*
25,0% 250,0 20,0%
167,7 170,9 161,6 163,2 15,0%
10,0%
5,0%
0,0% 2017E 2018E 2019E 2020E 2021E 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E
* Historical yield based on YE closing price, future yield on current price; Source: AXIA Research, The Company
Navigator’s expected dividend yield for 2017 - 6.1% - compares very favorably with the expected dividend yield of the pulp and paper sector companies between 2017 and 2019 throughout all geographic regions, as well as with the current dividend yield of PSI-20 companies whose average currently stands at 4.4% for FY2017.
Dividend yields Pulp & Paper sector Dividend yields PSI-20 Index
10,00% 9,00% 8,00% 7,00% 2017 2018 2019 6,00% 5,00% Average EMEA 3.0% 3.3% 3.4% 4,00% 3,00% Average NA-LATAm 1.9% 2.0% 1.8% 2,00% 1,00% Average Asia/Pacific 2.2% 2.3% 3.0% 0,00% Navigator 6.1% 5.8% 5.9%
Source: CapitalIQ AXIA Research Page 32
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Assumptions and forecasts
Group revenues are anticipated to grow from EUR 1.577bn in 2016 to EUR 1.61bn in 2017, due to the expected increase of sales from the tissue segment and from pellets. These two new divisions are expected to continue to drive group sales higher in the foreseeable future. Overall group revenues are estimated to grow at a compound annual growth rate of 2.1% over the next 5-years with revenues reaching EUR 1.746bn in 2021.
In terms of revenues evolution per business segment: Pulp revenues are seen flattish y-o-y in 2017 and for the foreseeable future (estimated to register a CAGR of -0.6% between 2017 and 2021) as we account for small volatility in pricing. Note that despite the increase in production capacity forecasted to come online in 2019, the extra pulp will be internally used in the production of tissue, thus the quantity of pulp marketed is estimated to remain stable at c.300k tons. Paper sales are also forecasted to remain relatively stable in 2017 on the back of stable prices, while we are estimating a slight increase in revenues in 2019. Energy’s contribution to total sales is expected to decrease at an annual compound rate of c10% between 2017 and 2021, on the back of lower prices and lower sales volume. That said, in 2017 we expect the division revenues to grow 8.4% y-o-y on the back of a higher production of energy due to the reinstatement of two turbo-generators that were down for some time during 2016. Tissue is forecasted to see its weight in total sales increase from 4.4% in 2016 to c.12% in 2021 benefitting from increased capacity (from 2019 onwards) and higher prices. For 2016 total tissue sales are forecasted at EUR 91m or 36% higher y-o-y. Pellets are expected to account for a maximum of 4% of total sales in 2021 from 0.7% in 2016, on the back of higher prices and sales volumes. Higher output in 2017, as production is ramped up, should lead to revenues for the year of EUR 37m vs. EUR12m in 2016.
Table 13. Total sales evolution per segment (EUR m) % of total sales 2016 2017E 2018E 2019E 2020E 2021E CAGR 2017-2021 (FY16)
Pulp 139 139 136 137 136 136 -0.6% 8.8% y-o-y - 0,2% -1,8% 0,6% -1,0% 0,0% UWF Paper 1227 1 228 1 234 1 241 1 241 1 241 0.3% 77.8% y-o-y - 0,0% 0,5% 0,5% 0,0% 0,0% Energy 80 80 62 50 50 -10.9% 4.7% y-o-y - 8,4% 0,5% -23,1% -18,3% 0,0% Tissue Paper 67 91 98 159 182 205 22.4% 4.3%
Reels 8 8 8 14 16 18 21.9% 0.5%
Finished Goods 59 83 90 145 166 187 22.4% 3.8%
y-o-y - 36% 8% 62% 14% 13% Pellets 12 37 58 70 70 70 17.5% 0.7% y-o-y - 217% 58% 21% 0% 0% Others 59 35 40 40 44 44 5.9% 3.7%
Total Sales 1 577 1 609 1 647 1 709 1 723 1 746 2.1% 100% y-o-y 2,0% 2,3% 3,7% 0,8% 1,3% Source: AXIA Research
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Total costs are estimated to remain stable in 2017 at EUR 1,233m (+0.3% y-o-y), with achieved cost savings offsetting the cost increases related with tissue and pellets production, whilst expenses are expected to grow at a higher pace in 2018 and in 2019, increasing by 3.4% y-o-y and 4.5% y-o-y, mainly related to the increased production of tissue and pulp following the expansion of the respective lines in Cacia and Figueira da Foz.
EBITDA in 2016 was positively impacted by one-offs with a net value of c.EUR 7.5m related mainly with the revaluation of biological assets in Portugal, the reversal of the amount for anti-dumping duty and the impairment recorded on biological assets in Mozambique. Without these non- recurrent items, EBITDA in 2016 would have been broadly equivalent to that recorded in 2015 at c.EUR 390m. Over the 2017-21 period, EBITDA is estimated to remain relatively stable, reaching EUR 422m in 2021 (CAGR of 1.5%). EBITDA is seen at EUR 398m in 2017 (-0.1% y-o-y) in 2017, with the respective margin settling at 24.7%. For 2018 we expect EBITDA to decline 0.8% y-o-y to EUR 394m and to rebound to EUR 400m, in 2019 on the back of added capacity of pulp, tissue and pellets.
As a result of the investment program – cumulative capex of cEUR 425m until 2021 -, we account for increasing depreciation and amortization charges, reaching EUR 162m in 2021 from EUR 127m in 2016. Note that in 2016 Navigator recorded impairments on biological assets in Mozambique of c.EUR 45m.
Net financial expenses are estimated to settle at c.EUR 16m in 2017, and to remain relatively stable until 2020. For 2021 we account in our model the repayment of EUR 215m of debt leading net financial expenses to decrease to EUR 12m for the year.
We set the effective tax rate, at the holding level, at 27.5% for 2017 but also for the coming years. Note however that the company’s effective tax rate over the past 7 years has averaged at 11% due to the reversal of some tax provisions and the fiscal benefits granted by the Government to some of the company’s capital expenditures.
Net profits are seen declining 23% y-o-y in 2017 on the back of higher taxes. On the other hand, net income is expected to grow from 2018 to 2021, benefitting from the stabilization of pulp and paper sales, increased capacity of pulp production and additional capacity in the tissue sector. Net income CAGR over the period 2017-21 is estimated at 1.8%.
Table 14. Key financial estimates 2017-2021E 2016 2017E 2018E 2019E 2020E 2021E
Revenues 1 577 1 609 1 647 1 709 1 723 1 746
y-o-y - 2,0% 2,3% 3,7% 0,8% 1,3%
EBITDA 390* 398 394 400 412 422
y-o-y - 1,9% -0,8% 1,4% 3,0% 2,6%
D&A (167) (150) (155) (159) (160) (162)
Net income 217.5 168 162 163 171 180
y-o-y - -22,9% -3,7% 1,0% 4,7% 5,3%
Source: AXIA Research; * adjusted EBITDA
Finally, we assume a dividend payout ratio of 100% of net profits between 2017 and 2020, following guidance provided by the company of a stable dividend level at pre-2015 levels. In our estimates, total dividend payments amount to EUR 913m, over the 5-year period under analysis, of which EUR 250m in 2017 (payout ratio in 2016 of 115%).
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Table 15. AXIA vs. Consensus (EUR m) Revenues FY2017 FY2018 FY2019
AXIA 1 609 1 647 1 709
Consensus 1586 1681 1756
% diff. 1,5% -2,0% -2,7%
EBITDA FY2017 FY2018 FY2019
AXIA 398 394 400
Consensus 384 397 415
% diff. 3,6% -0,8% -3,6%
EBITDA Margin FY2017 FY2018 FY2019
AXIA 24,7% 23,9% 23,4%
Consensus 24,2% 23,6% 23,6%
% diff. +1.4 pp 1,4 pp -0.1 pp
Net Income FY2017 FY2018 FY2019
AXIA 168 162 163
Consensus 190 187 198
% diff. -11,5% -13,6% -17,6%
Source: AXIA Research, Capital IQ
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Detailed Financials
Income Statement 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E Revenues 1 385 1 488 1 502 1 531 1 542 1 628 1 577 1 609 1 647 1 709 1 723 1 746 O&M (1 002) (1 119) (1 130) (1 215) (1 246) (1 253) (1 230) (1 233) (1 274) (1 331) (1 337) (1 350) EBITDA 400 386 385 350 328 390 398 398 394 400 412 422 Depreciation & Amortization (121) (125) (114) (103) (112) (122) (119) (150) (155) (159) (160) (162) EBIT 278 267 286 234 218 283 230 248 239 241 251 260 Net Financial expenses (20) (16) (16) (14) (34) (50) (21) (16) (16) (16) (16) (12) Income from Associates/Investments - 0,6 0,6 ------EBT 258 251 271 220 184 233 210 231 223 225 236 248 Effective tax rate 18,3% 21,5% 21,9% 4,3% 1,4% 15,4% -3,5% 27,5% 27,5% 27,5% 27,5% 27,5% EAT 211 197 211 210 181 197 217 168 162 163 171 180 Minorities 0,01 (0,01) (0,02) (0,01) (0,03) (0,36) 1 - - - - - Net Income 211 197 211 210 181 196 218 168 162 163 171 180 EPS 0,28 0,26 0,29 0,29 0,25 0,27 0,30 0,23 0,23 0,23 0,24 0,25 DPS - 0,22 0,28 0,28 0,61 0,24 0,35 0,23 0,23 0,23 0,24 0,25 Balance Sheet 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E Total Fixed assets 1 604 1 530 1 399 1 316 1 250 1 321 1 295 1 289 1 281 1 168 1 053 936 Intangible assets & Goodwill 378 380 381 380 380 382 382 382 382 382 382 382 Investments 1 2 2 - - 0 0 0 0 0 0 0 Other 134 157 148 142 138 168 170 170 170 170 170 170 Total non-current assets 2 116 2 068 1 930 1 839 1 768 1 872 1 847 1 841 1 833 1 720 1 605 1 488
Inventories 173 189 212 203 189 213 209 213 218 226 228 231 Receivables 213 242 188 201 189 215 216 219 224 231 232 235 Other 32 55 64 53 63 58 70 70 70 70 70 70 Cash and equivalent 134 267 329 524 500 73 68 30 28 135 255 161 Total current assets 552 753 795 981 940 558 562 532 539 661 785 697 Total Assets 2 668 2 821 2 724 2 820 2 708 2 430 2 409 2 373 2 372 2 381 2 389 2 185
Share Capital 741 725 679 673 671 671 716 716 716 716 716 716 Reserves & Retained Earnings 563 753 803 806 783 535 514 432 426 428 435 444 Minority rights 0 0 0 0 0 9 2 2 2 2 2 2 Total Equity 1 304 1 478 1 481 1 480 1 454 1 214 1 233 1 151 1 145 1 146 1 154 1 163
Debt 730 567 473 772 468 687 639 679 679 679 679 534 Provisions 25 20 5 49 41 59 31 31 31 31 31 31 Other non-current liabilities 203 228 212 146 134 127 100 100 100 100 100 100 Total non-current liabilities 958 814 689 966 644 873 769 809 809 809 809 664
Debt 91 164 220 60 305 41 70 70 70 70 70 (0) Payables 265 285 234 201 212 225 256 262 267 274 275 276 Other current liabilities 49 80 100 113 94 77 81 81 81 81 81 81 Total current liabilities 405 529 554 373 611 343 407 413 418 425 426 357 Total Equity and Liabilities 2 668 2 821 2 725 2 820 2 708 2 430 2 409 2 373 2 372 2 381 2 389 2 185 Cash Flow 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E EBT 258 251 271 220 184 233 210 231 223 225 236 248 Depreciation & Amortization 121 125 114 103 112 122 119 150 155 159 160 162 Net Financial expenses 20 16 16 14 34 50 21 16 16 16 16 12 Non-Cash Adjustments (107) (7) 12 37 (76) (28) (109) 1 - - - - WC Changes - (25) (21) (36) 37 (37) 34 (1) (4) (8) (3) (4) Income tax paid (47) (54) (59) (10) (3) (36) 7 (64) (61) (62) (65) (68) Net Cash from operating activities 244 306 333 328 288 304 282 333 329 329 344 350 Capex (51) (61) (28) (22) (22) (154) (81) (144) (147) (45) (45) (45) Other investing 18 11 37 2 3 (26) 9 0 0 0 1 0 Change in debt 72 (85) (41) 121 (60) (80) (20) 40 - - - (215) Dividends Paid (180) - (165) (201) (201) (440) (170) (250) (168) (162) (163) (171) Other -22 -37 -74 -39 -34 -42 -25 -16 -16 -16 -16 -13 Net increase/(decrease) in cash and equivalent 81 133 62 188 (25) (438) (5) (37) (2) 107 120 (93) Year Start Cash 53 134 267 329 524 500 72 67 30 28 135 255 Year End Cash 134 267 329 518 500 62 67 30 28 135 255 161 Source: The Company, AXIA Research
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2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E EPS 0,28 0,26 0,29 0,29 0,25 0,27 0,30 0,23 0,23 0,23 0,24 0,25 BVPS 1,74 1,97 2,03 2,06 2,03 1,68 1,72 1,60 1,59 1,60 1,61 1,62 DPS - 0,22 0,28 0,28 0,61 0,24 0,35 0,23 0,23 0,23 0,24 0,25
Valuation ratios 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E P/E 8,2 x 6,9 x 6,4 x 10,0 x 12,0 x 13,1 x 10,8 x 16,5 x 17,1 x 17,0 x 16,2 x 15,4 x EV/EBITDA 4,3 x 3,5 x 4,4 x 6,8 x 7,5 x 8,3 x 7,5 x 8,8 x 8,8 x 8,5 x 7,9 x 7,4 x EV/EBIT 6,2 x 5,1 x 6,0 x 10,3 x 11,3 x 11,4 x 13,0 x 14,1 x 14,6 x 14,0 x 13,0 x 12,1 x EV/Sales 1,3 x 0,9 x 1,1 x 1,6 x 1,6 x 2,0 x 1,9 x 2,2 x 2,1 x 2,0 x 1,9 x 1,8 x P/BV 1,3 x 0,9 x 0,9 x 1,4 x 1,5 x 2,1 x 1,9 x 2,4 x 2,4 x 2,4 x 2,4 x 2,4 x Div. yield 0,0% 12,1% 15,0% 9,6% 20,2% 6,6% 10,7% 6,1% 5,8% 5,9% 6,2% 6,5% FCF yield % (vs. EV) 16,2% 17,2% 20,5% 12,2% 14,1% 4,9% 12,3% 6,2% 6,0% 9,7% 10,2% 10,6% ROA 7,9% 7,0% 7,8% 7,4% 6,7% 8,1% 9,0% 7,1% 6,8% 6,9% 7,2% 8,2% ROE 16,1% 13,3% 14,3% 14,2% 12,5% 16,2% 17,6% 14,6% 14,1% 14,2% 14,8% 15,5% ROIC 10,2% 9,6% 10,8% 11,3% 11,3% 11,6% 11,9% 9,0% 8,7% 9,2% 10,3% 11,3%
Growth rates 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E Revenues n.a. 7,4% 0,9% 1,9% 0,8% 5,6% -3,1% 2,0% 2,3% 3,7% 0,8% 1,3% EBITDA n.a. -3,6% -0,1% -9,1% -6,3% 18,7% 2,0% -0,1% -0,8% 1,4% 3,0% 2,6% EBIT n.a. -4,0% 7,3% -18,3% -6,6% 29,6% -18,6% 7,5% -3,4% 0,8% 4,3% 3,6% EBT n.a. -2,6% 7,7% -18,8% -16,1% 26,3% -9,9% 10,4% -3,7% 1,0% 4,7% 5,3% Net Income n.a. -6,4% 7,2% -0,5% -13,6% 8,2% 10,7% -22,9% -3,7% 1,0% 4,7% 5,3%
Profitability ratios 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E EBITDA margin 28,9% 25,9% 25,7% 22,9% 21,3% 24,0% 25,2% 24,7% 23,9% 23,4% 23,9% 24,2% EBIT margin 20,1% 17,9% 19,1% 15,3% 14,2% 17,4% 14,6% 15,4% 14,5% 14,1% 14,6% 14,9% Net Income margin 15,2% 13,2% 14,1% 13,7% 11,8% 12,1% 13,8% 10,4% 9,8% 9,5% 9,9% 10,3%
Leverage Ratios 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E LT Debt / Total Capitaliztion 42,1% 32,7% 27,3% 44,5% 27,0% 39,6% 36,8% 39,1% 39,1% 39,1% 39,1% 30,8% Total Debt / Total Capitalization 47,4% 42,2% 40,0% 48,0% 44,6% 41,9% 40,9% 43,2% 43,2% 43,2% 43,2% 30,8% Net Debt/EBITDA 0,0 x 0,0 x 0,9 x 0,9 x 0,8 x 1,7 x 1,6 x 1,8 x 1,8 x 1,5 x 1,2 x 0,9 x FFO / Total Debt 35,5% 52,7% 59,6% 44,9% 32,8% 51,8% 33,9% 53,3% 52,7% 53,4% 55,0% 79,2% Gearing (Total debt / Debt+Equity) 38,6% 33,1% 31,9% 36,0% 34,7% 36,9% 36,5% 39,4% 39,5% 39,5% 39,3% 31,4% Net Debt / Equity 0,0 x 0,0 x 0,2 x 0,2 x 0,2 x 0,5 x 0,5 x 0,6 x 0,6 x 0,5 x 0,4 x 0,3 x
Coverage Ratios 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E Interest Coverage (EBITDA / Int.) 19,9 x 23,6 x 23,6 x 24,8 x 9,6 x 7,8 x 19,1 x 24,5 x 24,3 x 25,0 x 26,1 x 34,3 x Pretax Interest Coverage (EBIT / Int.) 13,8 x 16,3 x 17,6 x 16,5 x 6,4 x 5,6 x 11,1 x 15,3 x 14,7 x 15,1 x 15,9 x 21,2 x Source:The Company, AXIA Research
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Disclosures
General information This research report was prepared by AXIA Ventures Group Limited, a company incorporated under the laws of Cyprus (referred to herein, together with its subsidiary companies and affiliates, collectively, as “AXIA”) which is authorised and regulated by the Cyprus Securities and Exchange Commission (authorisation number 086/07). AXIA is authorized to provide investment services in the United Kingdom, Cyprus, Greece and in Portugal pursuant to its permissions under the Markets in Financial Instruments Directive and may also provide similar services in other countries, inside or outside of the European Union, subject to the applicable provisions. AXIA Ventures Group Limited is not a registered broker-dealer in the United States (U.S.), and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. In the U.S., this research report is intended solely for persons who meet the definition of “major U.S. institutional investors” in Rule 15a-6 under the U.S. Securities and Exchange Act, as amended, or persons listed under Rule 15a-6(4)) and is meant to be disseminated only through “Axia Capital Markets LLC”, a wholly owned subsidiary of AXIA Ventures Group Limited and associated US registered broker-dealer in accordance with Rule 15a-6 of the US Securities and Exchange Act.
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Persons responsible for this report: Maria Almaça (analyst)
Key Definitions AXIA Research 12-month rating* Buy The stock to generate total return** of and above 10% within the next 12-months Neutral The stock to generate total return**between -10% and 10% within the next 12-months Sell The stock to generate total return** of and below -10% within the next 12 months Under Review Stock’s target price or rating is subject to possible change Applicable Laws / Regulation and AXIA Ventures Group Limited policies might restrict certain types of Restricted communication and investment recommendations Not Rated There is no rating for the company by AXIA Ventures Group Limited * Exceptions to the bands may be granted by the Investment Review Committee of AXIA taking into account specific characteristics of the Subject Company **Total return: % price appreciation equals percentage change in share price from current price to projected target price plus projected dividend yield.
AXIA Ventures Group Limited Rating Distribution as of today
Of which Investment Coverage Universe Count Percent Count Percent Banking Relationships Buy 11 61% 1 1 6% Hold 5 29% Sell Restricted Not Rated Under Review 5 28%
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Axia Ventures Group
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Research
Constantinos Zouzoulas [email protected] +30 210 7414460
Jonas Floriani [email protected] +44 208 068 3516
Argyrios Gkonis [email protected] +30 210 7414462
Maria Almaça [email protected] +351 21 936 4447
Damiani Papatheodotou [email protected] +357 22 742013
Malene Krogh-Fladmark [email protected] +30 210 7414463
Equity Capital Markets
Thanos Adamantopoulos [email protected] +44 207 9876033
Equity Sales / Trading
Stavros Agrotis [email protected] +357 22 742000
Constantinos Koufopoulos [email protected] +30 210 7414422
Harry Smyrnopoulos [email protected] +30 210 7414425
Maria Mitsouli [email protected] +30 210 7414424
Elias Calfoglou [email protected] +30 210 7414429
Athanasia Markidi [email protected] +30 210 7414428
Ioanna Georgiou [email protected] +30 210 7414427
George Baroumis [email protected] +30 210 7414426
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