SCA: Q2‘26: Beat to expectations but not enough to move FY‘26 estimates higher, in our view.

Research evidence excerpt

SCA: Q2‘26: Beat to expectations but not enough to move FY‘26 estimates higher, in our view.

Detlef Winckelmann AC Europe Equity Research

(44-20) 3493-5190 22 July 2026 J P M O R G A N

detlef.winckelmann@jpmorgan.com

Investment Thesis, Valuation and Risks

SCA (Neutral; Price Target: Skr102.00)

Investment Thesis

We placed an OW recommendation on SCA in July 2025 as we saw: 1) the market applying

a lower than peer multiple on its industrial assets when it actually had the best quality

industrial assets, 2) softwood pulp markets in a better S/D environment than the hardwood

grade and 3) a potential forest valuation unlock once Stora Enso separately lists its Swedish

forest assets. However, since that note, we have seen pulpwood and sawlog prices fall by

20% in Sweden and Finland due to weak industrial and energy demand. Unfortunately, this

directly weighs on our valuation of forest assets in general, which directly impacts the value

of SCA and hence our Neutral rating on the stock now. Softwood pulp is still in a better

position than hardwood pulp over the medium term, but near-term headwinds are likely to

push softwood pulp prices, and profitability, lower. While our EBITDA estimates are ~13%

below consensus, we highlight that (1) the earnings of the forest (higher multiple segment)

where we are not materially below consensus is more important to the investment case and

(2) we would expect consensus to move lower over the coming weeks as they adjust for

higher costs.

Valuation

We value SCA in two parts. For the forest assets, we conduct a DCF of the cash flows of the

forest assets using a discount rate of 4% (JPMe: 80% of current share price). The industrial

assets are valued using an EV/EBITDA valuation, with SCA’s industrial assets valued at

7.5x.