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Sappi Limited (SPPJY)
:SPPJY
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Sappi
(OTC:SPPJY)
Rating:56Neutral
Price Target:
$1.50
▼(-8.54%Downside)
Sappi (SPPJY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.00B
Dividend Yield6.13%
Average Volume (3M)40.00
Price to Earnings (P/E)5.5
Beta (1Y)1.07
Revenue Growth4.00%
EPS GrowthN/A
CountryUS
Employees12,329
SectorBasic Materials
Sector Strength73
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)-0.03
Shares Outstanding604,641,500
10 Day Avg. Volume0
30 Day Avg. Volume40
Financial Highlights & Ratios
PEG Ratio-0.24
Price to Book (P/B)0.39
Price to Sales (P/S)0.00
P/FCF Ratio-2.70
Enterprise Value/Market Cap2.63
Enterprise Value/Revenue0.12
Enterprise Value/Gross Profit3.69
Enterprise Value/Ebitda1.05
Forecast
1Y Price Target
$1.50Price Target Upside-8.54% Downside
Rating ConsensusHold
Number of Analyst Covering0
Sappi Business Overview & Revenue Model
Company DescriptionSappi Limited provides materials made from woodfiber-based renewable resources in Europe, North America, and South Africa. The company offers dissolving pulp; graphic papers; packaging and specialty papers, including flexible packaging papers, label papers, functional paper packaging products, containerboards, paperboards, silicone base papers, dye sublimation papers, and inkjet papers; and casting and release papers. It also provides specialty chemicals and food ingredients; generates biomass energy, biogas, and hot water; offers fuel rods; and owns and manages forests. The company was formerly known as South African Pulp and Paper Industries Limited and changed its name to Sappi Limited in 1973. Sappi Limited was founded in 1936 and is headquartered in Johannesburg, South Africa.
How the Company Makes MoneySappi makes money primarily through the production and sale of dissolving pulp, paper, and paper-based products. The dissolving pulp segment is a significant revenue driver, with products used extensively in the textile industry for manufacturing viscose staple fibers. The Paper segment generates revenue from coated and uncoated fine paper, as well as packaging and specialty papers used in publishing, advertising, and packaging industries. Sappi's Forestry division supports its operations by supplying timber and other raw materials, contributing to cost efficiencies and sustainability. Additionally, the company benefits from strategic partnerships and investments in innovative bioproducts, enhancing its revenue streams and market presence.
Sappi Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q2-2025)
| % Change Since: -8.89%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with both positive strides in project completion and strategic debt management, but significant challenges with market conditions, maintenance disruptions, and price pressures. Despite strategic achievements, the cautionary guidance for the next quarter indicates a challenging environment.Q2-2025 Updates
Positive Updates
Successful Bond Refinancing
Successfully completed a refinancing of 2026 bonds, replaced with 2032 bonds with good demand and pricing.
Packaging Segment Growth
Volumes in the Packaging segment were higher than previously, indicating growth despite broader market challenges.
Somerset Project Completion
The Somerset project is now complete, doubling capacity to 470,000 tonnes of SBS, aligning with strategy to reduce exposure to graphic paper.
Positive Liquidity Position
Refinanced 2026 bonds with next major debt due in 2028, providing a favorable liquidity outlook.
Commitment to Debt Reduction
A strong commitment to reducing debt, with plans to keep CapEx levels below $350 million for the next two years.
Negative Updates
Market Deterioration and Price Pressure
Market conditions deteriorated across all segments with selling prices under pressure, particularly due to anticipated U.S. tariffs.
Impact of Maintenance Shuts
Extended maintenance shuts at South African mills resulted in lower production and higher fixed costs, impacting financial performance.
Negative Fair Value Adjustment
There was a negative fair value adjustment on plantations in South Africa, which impacted financial results.
Energy Cost Increases
Higher energy costs in Europe and South Africa due to inefficient use of resources during maintenance shuts.
Dissolving Pulp Price Decline
Dissolving Pulp prices decreased significantly by quarter-end, with further declines anticipated.
Company Guidance
In the recent call, Stephen Binnie outlined several key metrics and developments impacting the company's financial performance and strategic direction. The company experienced a deterioration in market conditions, leading to a decline in earnings, which was anticipated due to significant maintenance shuts at the Somerset project and two South African mills, resulting in a $20 million impact and an additional 13 million tonnes of production loss. Sales volumes remained stable, with the Packaging segment showing growth, but reduced production led to higher fixed cost absorption and lower inventories. On a 12-month basis, cash generated from operations remained strong, with net debt to EBITDA rising to 2.4 due to increased CapEx. The company successfully refinanced its 2026 bonds, replacing them with 2032 bonds. Year-on-year, the main shortfall was attributed to higher fixed costs linked to production shutdowns and negative fair value adjustments on South African plantations. Energy costs rose in Europe and South Africa due to operational inefficiencies, while pulp and wood costs declined. The company's CapEx for the year is estimated at $550 million, primarily due to the Somerset project, with plans to reduce it to below $350 million in the coming years to focus on debt reduction. Despite challenges, the company remains committed to its long-term debt reduction strategy, aiming for substantial debt reduction from Q4 onwards.Sappi Financial Statement Overview
Summary
Sappi's financial statements reveal a company facing challenges. While operational efficiencies have enhanced EBIT and EBITDA margins, revenue growth is inconsistent. The balance sheet shows stable equity but is burdened by significant debt. Cash flow is strained due to high capital expenditures, impacting liquidity.Income Statement
Sappi's income statement shows a mixed performance with a TTM gross profit margin of approximately 12.9% and a net profit margin of 3.2%. The company experienced a decline in revenue from 2023 to 2024, but showed a slight recovery in the TTM period. EBIT and EBITDA margins improved significantly in the TTM period, indicating better operational efficiency. However, overall revenue growth has been inconsistent, reflecting challenges in the industry.65
Positive
Balance Sheet
Sappi's balance sheet reflects moderate stability with a debt-to-equity ratio of 0.74, showing manageable leverage. The equity ratio stands at about 41.7%, indicating a solid proportion of equity in the company's capital structure. Return on equity for the TTM was 7.3%, suggesting decent profitability relative to shareholders' equity. However, the debt levels remain relatively high compared to historical figures, posing a potential risk.60
Neutral
Cash Flow
The cash flow analysis reveals some concerns, with a negative free cash flow in the TTM period. This is largely due to substantial capital expenditures exceeding operating cash flow. The operating cash flow to net income ratio of 1.36 indicates that operating cash flow covers net income adequately, but the free cash flow to net income ratio is negative, signaling potential liquidity challenges if capital spending continues at the current rate.55
Neutral
| Breakdown | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.46B | 5.81B | 7.30B | 5.26B | 4.61B |
| Gross Profit | 776.00M | 907.00M | 1.37B | 549.00M | 399.00M |
| EBITDA | 497.00M | 731.00M | 1.08B | 444.00M | 283.00M |
| Net Income | 33.00M | 259.00M | 536.00M | 13.00M | -135.00M |
Balance Sheet | |||||
| Total Assets | 6.21B | 5.80B | 6.23B | 6.19B | 5.46B |
| Cash, Cash Equivalents and Short-Term Investments | 317.00M | 601.00M | 780.00M | 366.00M | 279.00M |
| Total Debt | 1.74B | 1.69B | 1.94B | 2.31B | 2.24B |
| Total Liabilities | 3.63B | 3.35B | 3.87B | 4.22B | 3.82B |
| Stockholders Equity | 2.58B | 2.44B | 2.36B | 1.97B | 1.63B |
Cash Flow | |||||
| Free Cash Flow | -349.00M | 223.00M | 514.00M | 33.00M | -91.00M |
| Operating Cash Flow | 124.00M | 605.00M | 882.00M | 407.00M | 260.00M |
| Investing Cash Flow | -430.00M | -395.00M | -376.00M | -378.00M | -517.00M |
| Financing Cash Flow | -80.00M | -501.00M | -43.00M | 33.00M | 138.00M |
Sappi Technical Analysis
Neutral
1.64
Price Trends
1.75
Negative
1.88
Negative
2.23
Negative
Market Momentum
-0.04
Negative
45.57
Neutral
35.35
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPPJY, the sentiment is Neutral. The current price of 1.64 is below the 20-day moving average (MA) of 1.65, below the 50-day MA of 1.75, and below the 200-day MA of 2.23, indicating a bearish trend. The MACD of -0.04 indicates Negative momentum. The RSI at 45.57 is Neutral, neither overbought nor oversold. The STOCH value of 35.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SPPJY.
Sappi Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $6.16B | 15.67 | 24.41% | 1.22% | 8.09% | 55.08% | |
65 Neutral | $2.00B | 7.33 | 31.83% | 3.67% | 0.11% | 46.54% | |
64 Neutral | ₹126.83B | 31.56 | 7.86% | 0.89% | 4.07% | -3.89% | |
63 Neutral | $485.88M | 33.74 | -8.15% | ― | -15.03% | -233.06% | |
56 Neutral | $1.00B | 5.46 | 7.53% | 6.13% | 4.00% | ― | |
55 Neutral | $11.68B | 15.71 | -2.72% | 0.50% | 14.78% | -111.06% | |
54 Neutral | $254.78M | ― | -17.96% | 8.60% | -1.37% | 60.42% |
* Basic Materials Sector Average
Performance Comparison
SPPJY
Sappi
1.62
-1.25
-43.55%
CLW
Clearwater Paper
30.84
-25.25
-45.02%
LPX
Louisiana-Pacific
88.48
-8.06
-8.35%
MERC
Mercer International
3.96
-3.52
-47.06%
SUZ
Suzano Papel e Celulose SA
9.47
0.53
5.93%
SLVM
Sylvamo Corp
49.56
-23.87
-32.51%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.