ENCE Energía y Celulosa, S.A. (ENC.MC) fair value

ACCE thesis

ENCE is a Spanish integrated producer of eucalyptus pulp, with the bulk of its output going to tissue and specialty paper makers, alongside a growing portfolio of solar power plants and a cellulose-to-energy business. Its structural edge is the eucalyptus plantation base in Spain and Portugal, a fast-growing hardwood that gives it one of the lower-cost fibre supplies in European pulp. Revenue growth is running at 3.1%, but the stock trades on a forward P/E of 66.1 against a 5.5% operating margin and a -12.8% ROE, so the market is pricing in a sharp earnings recovery or a strategic shift in the power business that the current numbers do not yet show. At a 534M EUR market cap with no index membership, the name sits outside most passive flows, which can widen the gap between what the operating business earns and what it is valued at. Worth a deeper look to test whether the solar build-out and pulp pricing can close that gap.