Pro-Gest - Tons of margin
All,
Please find our unchanged analysis of Pro-Gest here.
Among the widening commodity margins and increased Mantova production there is little to be critical about, except perhaps the rejected Antitrust appeal in the Lazio Administrative Court court, which had been separately communicated and never featured in investors’ base case in the first place. Margins between raw materials and effectively all varieties of paper produced have been increasing markedly in Q121, along with Mantova volumes suggesting a strong Q2. CapEx remained under control.
Mantova:
The mill is producing over 20kt per month and is expected to ramp up another 5kt over the remainder of this quarter (Q221). The plant contributed E2.7m of EBITDA in the first quarter, while still under ramp-up. Tonnage should be double in Q2.
Cash Flow and Liquidity:
ProGest were able to improve liquidity in the quarter by E9m after paying down E12m of short-term facilities, albeit with the help of E4m of new loans.
Positioning:
While we are looking for a near-term favourable exit from the name, its market environment is positive and the company continues to perform well.
Wolfgang
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E: wfelix@sarria.co.uk
T: +44 203 744 7003