Pulp love i.e. Stora, UPM, Metsä etc.

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New plywood company WISA pulls a “Mandatum” - but only halfway?

The arrival of a new plywood company on the Hesuli (Helsinki Stock Exchange) listings from under UPM’s wing might not be just an ordinary day. Based on current information, UPM shareholders will receive a slice of WISA shares according to their ownership. The problem is that many of UPM’s owners are multinational institutional entities that primarily hold large-cap companies in their portfolios. Will they be interested in a small-cap company? UPM is in many index portfolios, but WISA likely won’t be to the same extent.

When Mandatum split from Sampo—in the same manner as WISA from UPM—the result was a massive wave of selling for the reasons mentioned above. Shares were being offloaded “head wet” (frantically), as noted on this forum :grin:. The share price sank accordingly.

Since then, however, Mandatum’s path on the stock exchange has been paved with gold. The company has large reserve funds in its vaults, which are distributed to shareholders as some of the market’s best dividends—for years to come. Secondly, “Manta” has a strong grip on the expanding wealth management industry and has been able to present impressive growth figures.

WISA doesn’t have fairytale dividends to distribute, nor can it show strong growth figures. Consequently, the “frantic offloading of shares” is at risk of happening, but the kind of antidotes Mandatum had are not available.

It was surprising that in UPM’s press release, the justifications for creating WISA weren’t really presented. And against the aforementioned background, it’s worth asking how the most important task of a limited company—increasing shareholder value—is being handled here? The risk is obvious that it could go the other way.

Of course, for a long-term owner, a temporary dip in the share price might not matter much, and if the price gets low enough, one could even top up their position.

Still, UPM ought to come forward and properly justify why this move is being made. Specifically from the perspective of shareholder value creation.

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Here are Viljakainen’s pre-game thoughts, as Stora Enso reports its results tomorrow. :slight_smile:

We expect the company’s operational result to have remained at a modest level, even though a slight upward trend is observable in certain areas. The market situation has remained challenging, especially in industrial businesses, and the ramp-up of the Oulu consumer board machine has likely continued to weigh on the figures. Stora Enso has no valid guidance in place, so the main focus of the report will be on the market outlook, over which the macro reflections of the Middle East crisis are casting dark clouds at the very least.

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There is a separate thread for Stora at Stora Enso sijoituskohteena - #83 käyttäjältä Sierain , it would be good if UPM and Metsä also had their own threads for company-specific discussions, while this thread could be for general discussion.

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As a counterargument, one could defend such a common chemical forest industry chain, as basic industry companies are cyclical and significantly dependent on external conditions as well as the actions of competitors.

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that’s what I wrote regarding this thread, isn’t it?

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Here are Antti’s quick comments on Stora Enso’s Q1 results. :slight_smile:

Stora Enso released its Q1 report this morning, which proved to be operationally better than market fears regarding the Q1 result. Stora Enso does not provide earnings guidance, and in its Q2 outlook, the company continued to emphasize the difficult market environment and new cost pressures created by geopolitical uncertainty. We also estimate that the loss from the Oulu consumer board machine is not narrowing significantly during Q2. According to our preliminary interpretation, the report does not create at least significant upward pressure on our or the consensus near-term forecasts, despite the Q1 operational result being better than market expectations.

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Here is the latest company report on Stora Enso from Viljakainen. :slight_smile:

In our view, the overall picture of Stora Enso’s Q1 report was fairly neutral, even though the risk level related to the operating environment is somewhat elevated. Following the report, we only slightly lowered our net profit forecasts for Stora Enso for the coming years, mainly due to the interest expenses of the company’s recent hybrid loans. On an earnings basis, we do not believe Stora Enso’s share is priced particularly attractively, but we see value hidden in the balance sheet (Q1’26 TOT P/B 0.7x). The share is also inexpensive relative to the longer-term sum-of-the-parts valuation, and the planned demerger could unlock this undervaluation.

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Stora Enso’s planned mega-sawmill investment has taken another step forward. Operations are clearly being centralized at “mega-sites” in Imatra and Oulu, where strategic moves have also been observed on the sawmilling side.

If this project is realized, Stora Enso’s Honkalahti sawmill and likely some other smaller units will be closed, with this new facility replacing them.

“Stora Enso stated last spring that there are no plans to increase wood procurement or logging due to the potential new sawmill.”

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My guess is Honkalahti and Uimaharju. I’m wondering out of interest if they’ll also need to invest in power generation at the Imatra plants at the same time if the sawmill comes. I believe an environmental permit for a bio-boiler was already applied for ~5 years ago.

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