Stora Enso sells 175,000 hectares of Swedish forest
Finally, the news we've been waiting for has arrived: Stora Enso is selling part of its forest. Stora Enso is selling 175,000 hectares of its Swedish forest land – equivalent to 12.4 % of its total holdings – for an EV of EUR 900 million, or approximately SEK 9.8 million. It's a deal that in one fell swoop reduces net debt by EUR 790 million, and highlights the potential of Stora Enso's entire asset base.
A deal with low yield, but high signal strength
The return on sales is not something that makes the market rejoice with cash flow joy – with an EBITDA loss of EUR 25 million per year, of which EUR 15 million is the cash flow impact, the simplified dividend yield lands at a modest 1.9 %. But that's not why the share went up.
The real value of the deal lies in what it reveals: that the market is undervaluing Stora Enso’s forest assets. According to Carnegie, the sale price is slightly above the company’s book value – a rarity in the sector. This suggests that the remaining forest, which is still on the books at EUR 6.3 billion, may carry a higher intrinsic value than previously assumed. On a book-end basis, the forest is equivalent to EUR 11.70 per share – almost the entire market capitalisation. It is a reminder that Stora Enso’s industry can still be bought at a bargain price, if you just value the forest for what it is worth.
Potential split next step?
A split of Stora Enso into a pure forest owner (Stora Enso Forest) and an industrial branch (Stora Enso Industry) would not only increase transparency – it would also likely increase valuation.
The deal shows the market that the valuation of forests has a strong floor, and Stora Enso has one of Europe's largest holdings. When the company shows that it can sell at book value, or better, while maintaining long-term access to the wood via 15+15-year agreements, then the market gets a concrete benchmark. It is also a statement of strength from CEO Hans Sohlström, who is now showing strength of action after months of strategic searching.
No positive contribution to Model Portfolio Opportunity yet
Stora Enso is part of Incirrata's Model Portfolio Opportunity, and despite a positive reaction to the deal, has not yet made any positive contribution to the portfolio (which is in total up 9% so far this year). The second part of our original case in Stora Enso, with peace in Ukraine and, by extension, access to Russian wood which can be expected to lift margins, has not yet played out. But if there is anything we have learned from 2025, it is that things can move quickly in world politics.
Model portfolio Opportunity
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