Paper & packaging - German producer announces €60/tonne increase in recycled containerboard; buy Smurfit Kappa Group

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On-going strength in corrugated demand, combined with the recent tightening in recycled containerboard inventories, supports the need for increases in recycled containerboard prices. Rising containerboard prices will result in better corrugated prices, which is positive for earnings momentum in the sector. Smurfit Kappa Group remains our top pick based on the quality of its earnings, free cash generation and valuation discount.