Svenska Cellulosa Aktiebolaget SCA: Risk Reward Update

Research evidence excerpt

Svenska Cellulosa Aktiebolaget SCA: Risk Reward Update

UpdateM

RiskRisk RewardReward– Svenska- SvenskaCellulosa AktiebolagetCellulosaSCA (SCAb.ST)Aktiebolaget SCA

(SCAb.ST)Earnings headwinds persist

PRICE TARGET SKr 110.00 EQUAL-WEIGHT THESIS

Our valuation is based on a simple average of EV/EBITDA and P/NPV. We use an EV/EBITDA ▪Greater forest self-sufficiency may prove a

multiple of 19.0x, in line with SCA's 8-year average and adjusted for the Forest FV effects. drag as roundwood prices unwind

Our target P/NPV is 1.0x with a WACC of: (1) 4.4% for Forest, (2) 7.7% for Wood Products, ▪Footprint benefits from significant

Board and Paper, and (3) 6.4% for Renewable Energy. We assume 1% terminal growth for all reinvestment and shift away from graphic

segments. paper

FCF prospects SKr 118.50 ▪Sub-par

Consensus Price Target Distribution SKr 92.00 SKr 150.00

MS PT Consensus Rating Distribution

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

41% Overweight

59% Equal-weight

RISK REWARD CHART 0% Underweight

MS Rating

SEK Source: Refinitiv, Morgan Stanley Research

SKrSKrSKr 215.00(+112.24%)215.00215.00(+112.24%)(+112.24%)

SKrSKrSKr 110.00(+8.59%)110.00110.00(+8.59%)(+8.59%)

100 SKrSKrSKr 101.30101.30101.30

50 SKrSKrSKr 65.00(-35.83%)65.0065.00(-35.83%)(-35.83%)

JUN '25 DEC '25 JUN '26 JUN '27

Key: Historical Stock Performance Current Stock Price Price Target

Source: Refinitiv, Morgan Stanley Research

BULL CASE SKr 215.00 BASE CASE SKr 110.00 BEAR CASE SKr 65.00

Peak margins Gradual cyclical recovery Trough margins

Our bull case assumes peak-cycle margins We value the stock on a simple average of Our bear case assumes trough-of-cycle

by division, equating to a group EBITDA EV/EBITDA (on 2025-26 average estimated margins by division, equating to a group