Iberpapel: Competitively Advantaged, Vertically Integrated Paper Producer

Santiago Domingo Cebrian of Magallanes Value Investors presented his investment thesis on Iberpapel (Spain: IBG) at European Investing Summit 2021.

Thesis summary:

Iberpapel is a Spanish paper producer with a capacity of ~250 kilotonnes per year. The company’s unique producing asset is Papelera Guipuzcoana de Zicuñaga, which was set up in Hernani in 1935 and has since then engaged in paper manufacturing and marketing, primarily focused on printing and writing paper.

The business model is based on a production process fused with industrial flexibility, productivity, cost leadership, sustainability, and respect for the environment. Iberpapel is vertically integrated, creating a large competitive advantage.

Iberpapel has a net cash position and an important growth project outside the printing and writing paper segment. The company has created shareholder value at a rate of 7+% annually. Based on estimated normalized EBITDA of EUR 37 million, Iberpapel trades at an EV to EBITDA multiple of roughly 4x.

Listen to this session:

slide presentation audio recording

About the instructor:

Santiago Domingo is an investment analyst at Magallanes Value Investors. Magallanes is an independent equity-only asset management, following value investment philosophy and controlled by its founders. Magallanes’ aim is to preserve and increase its clients’ capital by overperforming the market in the long term. Prior to Magallanes, Santiago worked as an equity portfolio manager for Solventis Asset Management, as an analyst for a start-up called OralSurgeryTube and in the Endesa´s financial department. Santiago holds a Bachelor´s degree in Finance and Accounting from University of Zaragoza and a Master´s degree in Institutions and Financial Markets from CUNEF.

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