Boxboard Update: Sappi PM2 Ramp Progressing; Margin Pressure Persists from North America Boxboard Price Weakness

Research evidence excerpt

Boxboard Update: Sappi PM2 Ramp Progressing; Margin Pressure Persists from North America Boxboard Price Weakness

Truist Securities

CLW: Valuation and Risks

Valuation: Our $12 price target is based on a 7.0-8.0x CY2027 EV/EBITDA multiple, reflecting slightly above average multiples given

currently rising market valuations. Given depressed earnings and cash flow, we currently exclude these metrics from our valuation.

Upside risks to our rating and price target include: 1) improved SBS demand trends in foodservice, folding cartons, liquid packaging, and

other consumer products; 2) positive supply, demand, and trade trends in boxboard; 3) increasing index pricing; 4) the company’s ability

to effectively manage price and input costs; 5) declining US imports of foreign paperboard; 6) better-than-anticipated capital return trends.

Downside risks to our rating and price target include: 1) weaker SBS demand trends in foodservice, folding cartons, liquid packaging, and

other consumer products; 2) unfavorable supply, demand, and trade trends in boxboard; 3) input cost volatility around fiber, labor, energy,

freight, and others; 4) the company’s ability to effectively manage price and input costs; 5) increasing US imports of foreign paperboard;

6) weaker-than-anticipated capital return trends.

GPK: Valuation and Risks

Valuation: Our $11 price target is based on an equal-weight of our: 1) CY27E EPS forecast with a P/E multiple of 8-9x, and 2) CY27E

EBITDA forecast with an EV/EBITDA multiple of 7-8x, and 3) CY27E FCF forecast with a yield of 11-12%. Given current market and

company-specific headwinds and despite a newer lower-cost asset base, we believe multiples in-line with those GPK has historically

achieved are appropriate.