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Increasing Trend in Paper Prices

The trend of increasing prices for pulp, paper and packaging will increase the net profit of paper companies in the future. The increase was supported by low supply and increasing demand trends. Trimegah Sekuritas estimates that Indah Kiat's core profit will increase to US$ 314 million this year compared to last year's profit of US$ 259 million. This is supported by the low supply of pulp due to a number of manufacturers of this product postponing factory maintenance in the second half of this year. Meanwhile, the trigger for the increase in paper selling prices came from a decrease in global paper factory production volumes in order to increase returns on capital investments.

Apart from these factors, pulp prices usually increase in the final quarter of each year. This is expected to have a positive impact on increasing the company's profits until the end of this year. The selling price of the company's pulp products is estimated at US$ 474 per ton, paper at US$ 710 per ton, and packaging paper and others is expected to reach US$ 571 per ton. This price target reflects the company's PE estimate of around 13.6 times in 2021. The increase in the target price has taken into account the increase in the target selling price for paper which has a positive impact on the profits of the Paper Company and Paper Exporter like PT Pacs. (www.pacsper.com)