As i mentioned in the previous post I have taken a position of 5% of my fund in Rottneros mainly because of the weakening SEK. Sitting on the beach (yes my life is hard) I was not in a position to write a full analysis, so here it is.
Rottneros at a glance:
- MCAP: 1 234 million SEK
- Shares Outstanding: 153.4 million
- Largest Shareholder – Arctic Paper 51% of shares outstanding which in-turn is majority owned by Thomas Onstad.
- P/E 7.5
- P/B 1.13
Simple company to understand
The company run two pulp mills located in Rottneros and in Vallvik in northern and middle part of Sweden. Because it is a debt free small company, running two pulp mill plants it’s also easy to understand the drivers of profitability and risk. It’s cash flows depend on a few variables so I will try to map out the main components that determines the value of Rottneros business. The below picture describes the full production process Rottneros is involved in.