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1、,Credit,GlobalMarketsResearch,EmergingMarkets,10,000,8,462 8,556,5.2,4.5,6.0,5.0,4.0,1.0,4000,2000 1,131,109,Global Emerging Markets BrazilPaper&Packaging1 November 2012,FibriaSolid quarter;Maintain Hold onvaluation and sector outlookFibria reported overall solid 3Q12 results.The company has continu
2、ed to benefitfrom a weaker currency with EBITDA increasing 4.2%qoq and 20.4%yoy.Mostimportantly,the sale of Losango should significantly add to the companysdeleveraging efforts with pro-forma estimated net leverage in the 3.5x-4.0 x rangein 4Q12.We maintain our Hold recommendation on the bonds based
3、 on valuationand on the challenging outlook for the sector.Stable sales volumes quarter-over-quarter despite the seasonality effectFibrias pulp production was up 3.7%qoq and 2.0%yoy to 1,322 thousand/tsupported especially by reduced maintenance downtimes in the quarter.Salesvolumes,in turn,were flat
4、 qoq despite the seasonality effect and up 2.0%yoy to1,268 thousand/t.Exports continued to make most of Fibrias sales volumesrepresenting 90.0%of the companys total sales in the period.Main exportmarkets in 3Q12 were Europe with 41.0%of the companys total exports followedby North America with 26.0%,
5、Asia with 23.0%and Latin America with 10.0%.This marks a small shift in pulp volumes to Asia potentially from Europe as Asiaaccounted for 20.0%of Fibrias exports in 2Q12 while Europe made up 43.0%.Revenues and EBITDA continued to benefit from a weaker BRLDespite the flat sales volumes in 3Q12,the co
6、mpanys revenues registered aquarterly increase of 4.4%to BRL1.6bn(USD767m)supported by the 3.0%devaluation of the BRL in the quarter.Adjusted EBITDA totaled BRL573m(USD283m)in 3Q12 presenting a quarterly expansion of 4.2%and annual growthof 20.4%(in BRL terms).The qoq increase in EBITDA was largely
7、driven by higherrevenues,but margins were stable at 36.8%reflecting a 3.0%increase in Fibriascost of goods sold(COGS).On a yoy basis,Fibrias EBITDA margin improvedapproximately 400bps supported by higher revenues and lower COGS.Overall,thecompany continues to deliver cost growth at below inflation l
8、evels and this islargely positive,in our view.For 4Q12,provided that pulp prices remain stable,given that Fibria has no maintenance downtimes scheduled for the period,webelieve the company could potentially deliver another solid quarter.Deleveraging process should continue although at a reduced pace
9、Despite the 3.0%BRL depreciation in 3Q12,Fibrias total debt decreased toapproximately BRL11.0bn(USD5.4bn)from BRL11.9bn(USD5.9bn)in 2Q12reflecting the USD541m tender of FIBRIA 9.25%20.Although this has impactednegatively the companys cash balance(down 28.4%qoq in BRL terms),theeffect on its leverage
10、 was positive with gross and net leverage reducing to 5.8xand 4.5x in 3Q12 from 6.6x and 4.7x in 2Q12 respectively.For the purposes ofcovenant calculation,net leverage stood at 4.2x,below the 4.5x threshold.Mostimportantly,the Losango sale should result in additional BRL615m(USD303m)ina single insta
11、llment of BRL488m(USD241m)once the transaction is approved byBrazils M&A regulator CADE and in two other installments of BRL122m(USD60m)and BRL5m(USD2.5m)respectively upon other applicablegovernment approvals.On a pro-forma basis,after the payment of the firstinstallment and using the 2012 EBITDA fo
12、recast of DB equity analysts,weestimate Fibrias 4Q12 net leverage in the 3.5x-4.0 x range.In addition,management has indicated that more deleveraging measures are underconsideration,potentially including other debt tenders.Overall,we believe Fibriasdeleveraging process should continue supported by b
13、etter operationalperformance in 4Q12 and upcoming measures in 2013.However,following thesignificant steps taken into 2012,the pace should now reduce,in our view.,ResultsResearch TeamNatalia CorfieldResearch Analyst(+1)212 Denis ParisienResearch Analyst(+1)212 250-R debt and LTM leverage9,543 9,478 8
14、,9668,0004.8 4.76,000 4.23.04,0002.02,0000 0.03Q11 4Q11 1Q12 2Q12 3Q12Net debt(BRLm)LTM net lever.(x)Operating trend1,5001,3001,1009003Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12Pulp production(kt)Pulp sales(kt)Sales(BRLm)Net price(BRL/ton)Maturity profile(BRLm)8000 7,16260002,3991,181709 6620Please
15、 refer to p.2 for risk disclosures.,Deutsche Bank Securities Inc.All prices are those current at the end of the previous trading session unless otherwise indicated.Prices are sourced from localexchanges via Reuters,Bloomberg and other vendors.Data is sourced from Deutsche Bank and subject companies.
16、DeutscheBank does and seeks to do business with companies covered in its research reports.Thus,investors should be aware that the firmmay have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a singlefactor in making their investme
17、nt decision.DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,1 November 2012,Paper&Packaging FibriaWe maintain our Hold recommendation on Fibrias notesFIBRIA 7.5%20 is currently trading at an indicative mid-yield of 5.70%,mid z spread of446bps and mid-price of 110
18、.8 while FIBRIA 6.75%21 is being offered at indicative mid-yieldof 5.06%,mid z spread of 376bps and mid-price of 111.38.At current levels,we prefer the20s over the 21s as we believe the 20s could still experience considerable spread tighteningwhile upside potential seems more limited for the 21s.Tha
19、t said,we maintain our neutralstance on both notes based on the challenging outlook for the sector as a whole that couldcounterbalance Fibrias positive deleveraging measures and on the recent rally experiencedby both notes with the 21s trading closer to IG notes.Some of the risks that could weigh on
20、the performance of the notes include the upcoming pulp supply(start up of Eldorado andMontes del Plata)and faltering Chinese and European demand.Figure 1:Major issues outstanding,Mid,Mid,Spd,IssueFIBRBZ 7.5%May20FIBRBZ 6.75%21 Mar21,Amount o/sUSD1356mUSD750m,Mdy/S&P/FiBa1/BB/BB+Ba1/BB/BB+,price110.8
21、8111.38,yield5.705.06,OAS455376,Z-spread446368,to sov376292,Dur5.756.36,Source:Deutsche Bank,indicative dataUpside/downside risks to our recommendation include(but are not limited to):currencyvolatility;supply/demand developments;pulp price and input cost movements;executionrisks related to the appr
22、oval of the Losango sale by regulators and government.,Page 2,Deutsche Bank Securities Inc.,1 November 2012,Paper&Packaging FibriaValuation trends,Figure 2:One year evolution of bond prices115.0110.0105.0,Figure 3:One year evolution of bond yields8.58.07.5,7.0100.06.5,95.090.085.0,6.05.55.0,FIBRBZ 7
23、.5 20,FIBRBZ 6.75 21,SUZANO 5.875 21,FIBRBZ 7.5 20,FIBRBZ 6.75 21,SUZANO 5.875 21,Source:Deutsche BankFigure 4:One year evolution of bond Libor spreads650.0600.0550.0500.0450.0400.0350.0,Source:Deutsche Bank,FIBRBZ 7.5 20Source:Deutsche BankDeutsche Bank Securities Inc.,FIBRBZ 6.75 21,SUZANO 5.875 2
24、1,Page 3,1 November 2012,Paper&Packaging Fibria,Figure 5:Yield versus durationMid yield6.0,5.8,MAGGBZ 7.875 20,SUZANO 5.875 21,5.6,FIBRBZ 7.5 20,5.4HYPEBZ 6.5 215.25.0FIBRBZ 6.75 214.8,4.64.44.24.0,Gerdau 7.0 20,ODB 7.0 20,CSN 6.5 20,Gerdau 5.75 21,5.5,5.6,5.7,5.8,5.9,6.0,6.1,6.2,6.3,6.4,6.5,6.6,Dur
25、ationSource:Deutsche Bank,Page 4,Deutsche Bank Securities Inc.,1 November 2012,Paper&Packaging FibriaOperating dataFigure 6:Pulp prices,Pulp(USD/ton)BHKP ChinaBHKP EuropeNBSK EuropeNBSK US,QTD*636.98753.53775.19843.30,3Q12*642.32767.22787.98860.17,2Q12*660.01771.71845.78895.84,3Q11*696.39826.11992.2
26、01000.38,qoq-2.7%-0.6%-6.8%-4.0%,yoy-7.8%-7.1%-20.6%-14.0%,30-Oct-12644.30761.17781.62846.83,31-Dec-11562.35651.86833.71890.00,YTD14.6%16.8%-6.2%-4.9%,*period average.Source:Deutsche Bank,FOEX,Bloomberg Finance LPFigure 7:September PPPC pulp shipment dataSource:Deutsche Bank(Oct.23rd research alert
27、of Josh Milberg)Figure 8:Pulp operating data,Production(000t)Pulp ProductionSales Volume(000t)PaperPulpDomestic SalesExport SalesTotal Domestic SalesTotal Export SalesTOTAL SALES VOLUMERevenues(BRLm)PulpDomestic SalesExport SalesNet Price(BRL/ton)PulpDomestic SalesExport Sales,3Q101,2933Q10341,16011
28、61,0451461,0481,1943Q101,4421201,3223Q101,2431,0391,266,4Q101,3304Q10301,2541011,1531291,1551,2844Q101,4361061,3304Q101,1451,0431,154,1Q111,3191Q11361,2591161,1431471,1481,2951Q111,4141171,2961Q111,1231,0101,134,2Q111,2712Q11311,2301291,1011561,1041,2602Q111,3421231,2182Q111,0919561,107,3Q1112963Q11
29、341,2441291,1151601,1181,2783Q111,3311221,2093Q111,0709451,085,4Q1112994Q1101,4081331,2751331,2751,4084Q111,3801231,2574Q11980927986,1Q121,3321Q1201,3131301,1831301,1831,3131Q121,2591061,1531Q12958814974,2Q121,2752Q1201,2651321,1331321,1331,2652Q121,4751211,3542Q121,1669131,196,3Q121,3223Q1201,26812
30、71,1411271,1411,2683Q121,5381351,4033Q121,2121,0551,230,qoq3.7%qoqNM0.2%-3.7%0.7%-3.7%0.7%0.2%qoq4.3%11.7%3.6%qoq3.9%15.6%2.8%,yoy2.0%yoyNM2.0%-1.1%2.3%-20.1%2.0%-0.7%yoy15.6%10.8%16.0%yoy13.3%11.6%13.4%,LTM5,228LTM05,2545234,7315234,7315,254LTM5,6524855,167LTM1,0799271,097,Source:Deutsche Bank,comp
31、any data,Deutsche Bank Securities Inc.,Page 5,1 November 2012,Paper&Packaging Fibria,Figure 9:Pulp volumes(000t)1,5001,4001,3001,2001,1001,0003Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12,Figure 10:Pulp monetization1,6001,5001,4001,3001,2001,1001,0009008003Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12,
32、Pul p productionSource:Deutsche Bank,company data,Pul p s ales,Sa l es(BRLm)Source:Deutsche Bank,company data,Net pri ce(BRL/ton),Figure 11:Capex trend(BRLm)350300250,200150100,256,295,223,268,271,237,185,222,237,50,7,18,27,58,42,27,22,14,17,0,3Q10,4Q10,1Q11,2Q11,3Q11,4Q11,1Q12,2Q12,3Q12,Page 6,Sour
33、ce:Deutsche Bank,Expa ns ion capex,Ma i ntenance ca pexDeutsche Bank Securities Inc.,1 November 2012,Paper&Packaging Fibria,Summary FinancialsFigure 12:Summary financials(BRLm),Income Statement(R$m)Total RevenuesCOGSGross Profit,3Q111,449.0(1,308.0)141.0,4Q111,399.0(1,340.0)59.0,1Q121,274.0(1,230.0)
34、44.0,2Q121,491.0(1,249.0)242.0,3Q121,556.0(1,280.0)276.0,qoq4.4%2.5%14.0%,yoy7.4%-2.1%95.7%,20107,050.0(5,285.0)1,765.0,20115,855.0(5,125.0)730.0,LTM5,720.0(5,099.0)621.0,Gross Margin,9.7%,4.2%,3.5%,16.2%,17.7%,150.7072 800.69403,25.0%,12.5%,10.9%,Gross interest expenseSG&ACash Flow(R$m)EBITReported
35、 EBITDAEBITDA MarginChange in WCChange in Net WABroad OCF(w chg in NWA)Net Interest paidNet capexAcquisitionsCash dividends paidBroad Free Cash Flow(FCF w chg in NWA)Net change in debtNet cash generationBalance Sheet(R$m)S-T DebtL-T DebtTotal DebtReported Cash and cash equivalentsNet Debt,(168.0)(13
36、8.0)3Q11139.0476.032.9%192.0(202.0)816.0(128.0)(334.0)511.8-865.8866.01,199.83Q11989.010,325.011,314.01,771.09,543.0,(174.0)(172.0)4Q1133.0390.027.9%(193.0)(47.0)574.0(125.0)(247.0)-201.010.0220.04Q111,092.010,232.011,324.01,846.09,478.0,(170.0)(132.0)1Q12(102.0)377.029.6%(273.0)(153.0)509.0(127.0)(
37、217.0)-163.0(292.0)12.01Q121,057.09,975.011,032.02,066.08,966.0,(182.0)(149.0)2Q12341.0550.036.9%120.029.0760.0(137.0)(251.0)-367.0850.0887.02Q122,188.09,694.011,882.03,420.08,462.0,(166.0)(153.0)3Q12106.0573.036.8%94.0155.0384.0(130.0)(256.0)-1.0(927.0)(831.0)3Q121,131.09,824.010,955.02,399.08,556.
38、0,-8.8%2.7%qoq-68.9%4.2%-6.3-21.7%434.5%-49.5%-5.1%2.0%NMNM-99.7%NMNMqoq-48.3%1.3%-7.8%-29.9%1.1%,-1.2%10.9%yoy-23.7%20.4%397.5-51.0%NM-52.9%1.6%-23.4%NMNM-99.9%NMNMyoy14.4%-4.9%-3.2%35.5%-10.3%,(729.0)(649.0)20101,109.02,749.039.0%180.0183.02,459.0(539.0)(1,047.0)-858.0(2,410.0)(1,442.0)20102,065.0
39、9,958.012,023.02,205.09,818.0,(682.0)(605.0)2011379.01,980.033.8%22.071.01,279.0(501.0)(1,158.0)-(381.0)(699.0)(401.0)20111,092.010,232.011,324.01,846.09,478.0,(692.0)(606.0)LTM378.01,890.033.0%(252.0)(16.0)2,227.0(519.0)(971.0)-732.0(359.0)288.0LTM1,131.09,824.010,955.02,399.08,556.0,Credit Ratios,
40、3Q11,4Q11,1Q12,2Q12,3Q12,qoq bps yoy bps,2010,2011,LTM,Interest CoverageRep.EBITDA-Capex/InterestS-T Debt/Total DebtReported Cash/S-T DebtRun-rate Gross leverageTotal debt/LTM Rep.EBITDA(x)Rep.run-rate Net LeverageR debt/LTM EBITDA(x)LTM OCF/Total Debt(%)Working Capital turnover(days)CAPEX(%)Revenue
41、s,2.83x0.85x8.7%1.79x5.94x5.02x5.01x4.23x10.3%11523.1%,2.24x0.82x9.6%1.69x7.26x5.72x6.08x4.79x11.7%11917.7%,2.22x0.94x9.6%1.95x7.32x6.37x5.95x5.17x13.0%11417.0%,3.02x1.64x18.4%1.56x5.40 x6.63x3.85x4.72x20.5%9316.8%,3.45x1.91x10.3%2.12x4.78x5.80 x3.73x4.53x22.5%9516.5%,43.026.7(809.0)55.8-62.1-83.1-1
42、1.3-19.21.92-38.2,61.8106.4158.333.0-116.377.9-127.929.512.2-20-659.8,3.77x2.33x17.2%1.07x4.37x4.37x3.57x3.57x20.5%8814.9%,2.90 x1.21x9.6%1.69x5.72x5.72x4.79x4.79x11.7%10819.8%,2.73x1.33x10.3%2.12x5.80 x5.80 x4.53x4.53x22.5%10617.0%,Capital Structure 3Q12(R$m),amount,as%total,Liquidity,Fibria 3Q12 R
43、evenue Breakdown,Pre-PaymentFormer Aracruz ShareholdersBonds,2,957.90.04,929.8,11.3%0.0%18.9%,CashCommited credit linesTotal,2,399.0781.73,180.7,BNDESNCEOthers,1,862.4657.3547.8,7.1%2.5%2.1%,S-T DebtSurplus/(Deficit),1,131.02,049.7,Pulp-Dom9%,Total DebtShareholders EquityTotal CapitalizationDebt Mat
44、urity Profile,R$m as of 3Q12,10,955.015,109.026,064.0,42.0%58.0%100.0%,Equity Value,10,0008,0006,000,7,162,Market Cap.as on 10/29/12Net DebtMinority Interest(BV),9,860.08,556.037.0,4,0002,000-,1,1312012,109,1,1812014,709,6622016,Enterprise ValueEV/LTM EBITDA,18,453.09.76x,Pulp-Exp91%,Local Currency*
45、4Q10 numbers are pro-formaSource:Deutsche Bank,company dataDeutsche Bank Securities Inc.,Foreign Currency,Page 7,1 November 2012,Paper&Packaging Fibria,Figure 13:Summary financials(USDm),Income Statement(USDm)Total RevenuesCOGSGross ProfitGross MarginGross interest expenseSG&ACash Flow(USDm)EBITRepo
46、rted EBITDAEBITDA MarginChange in WCChange in Net WABroad OCF(w chg in NWA)Net Interest paidNet capexAcquisitionsCash dividends paidBroad Free Cash Flow(FCF w chg in NWA)Net change in debtNet cash generationBalance Sheet(USDm)S-T DebtL-T DebtTotal DebtReported Cash and cash equivalentsNet DebtCredit
47、 RatiosInterest CoverageRep.EBITDA-Capex/InterestS-T Debt/Total DebtReported Cash/S-T DebtRun-rate Gross leverageTotal debt/LTM Rep.EBITDA(x)Rep.run-rate Net LeverageR debt/LTM EBITDA(x)LTM OCF/Total Debt(%)Working Capital turnover(days)CAPEX(%)Revenues,3Q11886.1(799.9)86.29.7%(102.7)(84.4)3Q1185.02
48、91.132.9%(86.2)(288.0)663.5(78.3)(204.2)313.0-694.0(663.3)(255.5)3Q11526.25,493.86,020.0942.35,077.73Q112.83x0.85x8.7%1.79x5.17x4.41x4.36x3.72x13.5%10923.1%,4Q11776.4(743.7)32.74.2%(96.6)(95.5)4Q1118.3216.427.9%(96.4)(19.9)312.3(69.4)(137.1)-105.346.0151.84Q11585.05,481.06,066.0988.95,077.14Q112.24x
49、0.82x9.6%1.69x7.01x5.10 x5.86x4.27x14.6%11417.7%,1Q12720.3(695.4)24.93.5%(96.1)(74.6)1Q12(57.7)213.129.6%(128.9)(67.0)268.3(71.8)(122.7)-72.6(27.0)119.41Q12578.65,460.46,039.01,130.94,908.01Q122.22x0.94x9.6%1.95x7.08x5.88x5.76x4.78x15.3%10917.0%,2Q12758.4(635.3)123.116.2%(92.6)(75.8)2Q12173.4279.836
50、.9%(13.8)(49.0)450.4(69.7)(127.7)-250.5(125.8)(32.2)2Q121,088.94,824.35,913.21,702.04,211.22Q123.02x1.64x18.4%1.56x5.28x5.91x3.76x4.21x27.0%9516.8%,3Q12767.3(631.2)136.117.7%(81.9)(75.4)3Q1252.3282.636.8%39.771.0194.8(64.1)(126.2)-5.9(507.1)(453.1)3Q12558.14,848.05,406.11,183.94,222.33Q123.45x1.91x1
