Research Dynamics
Report on CPH by Research Dynamics: Guidance update
EQS Group-News: Research Dynamics / Key word(s): Research Update This report is published by Research Dynamics, an independent research boutique FY2018 guidance is in line with our estimates Public bond issue increased to CHF 100mn from CHF 85mn The proceeds from this additional issue will be used to refinance the group’s 2014 bonds of CHF 120 mn with a coupon of 2.75% due to be redeemed on 10 July 2019. Through this bond issuance, CPH has ensured a timely refinancing of the previously issued bonds at a lower coupon rate. The company is also paring its debt burden by repaying a portion of the original bonds using its own funds. Lower-cost refinancing of debt coupled with a repayment of CHF 20 mn is collectively expected to result in a savings of ~CHF 1.0 mn in net annual interest cost, assuming an effective tax rate of 20%. The company should realise the full benefits of these savings from FY2020 onwards, given that the debt matures only in July 2019. Valuation and conclusion CPH currently trades at a P/S multiple of 1.0x (FY2018E), a significant 42% discount over the weighted average of division peers. In the medium-term, we expect this discount to narrow and the stock to witness a revaluation, considering strong growth prospects in key markets, improved operating efficiencies from the new production facilities and expansion of its Packaging and Chemistry divisions.The Paper division should benefit from its local market leadership, advanced technology and continued operational improvements, although the business environment with overcapacities and decreasing demand for newsprint paper remains challenging. Additional features: Document: http://n.eqs.com/c/fncls.ssp?u=APIILRWPPH Document title: CPHN_Guidance Update_15.10.2018
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