SUZ - Suzano's Price Declines Despite Imminent Contribution From New Cerrado Mill

2024-07-26 10:24:49 ET

Summary

• Suzano's price falls, possibly from the International Paper bid not going through, but in the meantime their massive Cerrado pulp facility has become operational.
• The new facility adds 25% to their already massive production, and does so at lower unit production costs.
• EBITDA growth will be considerable, and cash generation will improve in a return to deleveraging form for Suzano, which quarterly produces around 33% of net debt in OpCF.
• They also reinstated the dividend last year as a sort of pilot, with substantial scope for dividend growth and payout as deleveraging resumes with Cerrado CAPEX now done.
• Significant growth potential, bolstered by a tangible deleveraging return and dividend, comes at a very low TTM PE of around 9x. Markets don't seem to be factoring in the return coming on all that Cerrado CAPEX.

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