Analyst Cadu Schmidt considers CMPC’s Q1 results to be “best-in-class” and outperforming Brazilian peers, according to a UBS report on May 5. The analyst points to CMPC's hardwood cash production cost, which remained stable on a quarterly basis, as higher chemicals/wood costs were offset by a production mix geared toward lowering cost at its Guaíba 2 project. Concerning pulp fundamentals, Cadu believes that although pulp prices are at record-highs, the rally is temporary in nature. Cadu sees the supportive price drivers begin to fade into H2 of this year, with incremental supply coming from the Latin America region, coupled with “demand destruction” from widespread margin pressure within the paper industry. Cadu sees CMPC stock trading at 5.8x EV/EBITDA 2023E, below historical average.
Analyst Thiago Lofiego sees price hike implementation in Tissue segment as CMPC’s key priority while the company begins integration of its recent Carta Fabril acquisition, which is expected to contribute 100kt/year of installed tissue paper capacity in Brazil. According to his May 5 notes based on CMPC's pulp fundamentals, Thiago believes that the company will deliver positive “surprises” for the remainder of this year and for 2023. Under a hypothetical US$700 pulp price scenario for 2022, at US$150/ton decrease until the end of the year, Thiago sees CMPC stock valued at ~4.0x EV/EBITDA.
CMPC’s Pulp/Woods segment Q1 EBITDA of US$382 million EBITDA, though falling 9% from past quarter, beat analyst expectation of US$360 million. Better-than-expected pulp performance was due to higher pulp volumes, which were up more than 3% quarter-over-quarter, and higher prices, with average pulp export prices up by 4.5% from past quarter. On Tissue performance, analysts Analysts Leopoldo Silva and Juraj Domic noted on May 6 that the segment’s EBITDA margin “remained at a worrisome 5%.” Despite recovery to 5.4% (from from 4% in Q4 ), CMPC’s Tissue EBITDA margin remains well below 2020-21 averages of 11%.