Inbox: Mayr-Melnhof - Es fehlen die Trigger

Akt. Indikation:  112.60 / 113.80
Uhrzeit:  13:03:45
Veränderung zu letztem SK:  -0.70%
Letzter SK:  114.00 ( 1.79%)

Reflecting the good share price performance (ytd total return +25%, all-time high reached in early November) we downgrade Mayr-Melnhof to HOLD from BUY on valuation grounds. We set a fractionally higher target price of EUR 124 (EUR 123). While the strength of the business model remains undisputed and the company remains a core defensive play, we currently struggle to identify a further (short-term) catalyst. 3Q figures were bang in line with our estimates from the top to the bottom line and the company appears on track to deliver on the full-year target of earnings coming close to the 2016 record result. In order to reach our EBIT estimate of EUR 213 mn, Mayr-Melnhof requires a largely flat EBIT in 4Q. While 4Q comps in MM Packaging are punchy (margin 11.7%), the opposite is true for MM Karton (margin 5.6%). We point out that the company has stepped up investments in the current year, which could reach about EUR 145-150 mn. Apart from a bolt-on takeover of a packaging plant in Poland, the company also invested in the expansion of the sites in Vietnam, Iran and Jordan as well as in the Dutch cartonboard plant (to further improve the quality of the virgin fibre board production). Against this backdrop we are confident that earnings growth can be restored as of next year. However, we think this is well discounted in the share price, mirrored by a marked multiple expansion.