Suzano Rallies as Pulp Prices, Paper Volumes Boosts 2Q Earnings

Published 9 August 2024, 10:54:19 [BFW]
By Leda Alvim

(Bloomberg) -- Shares in Suzano SA gain as much as 3.9% in Sao Paulo on Friday after the world’s largest wood pulp supplier reported “strong” results for the second quarter, boosted by higher pulp prices and paper volumes.

• The stock traded at 54.41 reais as of 11:44 a.m. in Sao Paulo

ANALYST COMMENTARY

Lucror Analytics

• “Robust” Ebitda growth, boosted by higher volumes for paper, rising prices for pulp, and a stronger USD against the BRL, writes analyst Filipe Botelho
• Notes that free cash flow was positive given the strong results and decreasing capex
• Highlights that leverage fell in USD terms given the growing Ebitda

XP Inc. (Buy, PT 

• Neutral results, highlighted by the pulp division’s performance given higher selling prices and volumes, writes analyst Lucas Laghi
• “Solid” cost performance to mitigate a short-term decline in pulp prices, adds Laghi
• “Suzano is well positioned due to its robust cost structure, the Cerrado approach and the even more depreciated BRL, which should support lasting FCF generation and profitability,” he adds
• Notes that current share price already implies lower pulp prices, which provide a margin of safety in terms of valuation

BTG Pactual (Buy, PT 82 reais)

• “Solid” earnings which surpassed expectations by a wide margin, writes analyst Leonardo Correa
• Beat is mainly explained by solid cost control and stronger pulp exports
• “The company is aggressively repurchasing shares (buying R$1bn in July alone), which underscores how cheap (derated) the stock currently is, providing an unmatched IRR at this point, in our opinion,” he says
• Adds that free cash flow potential is looking “significant”