Shaun Heelan of Maat Investment Group presented his in-depth investment thesis on Mayr-Melnhof Karton AG (Austria: MMK) at European Investing Summit 2025, hosted by MOI Global.
Thesis Summary
Mayr-Melnhof Karton is a dominant Austrian paper and packaging producer historically run as a conservative, low-leverage family business (58% foundation-owned). This changed in 2020 when new management, led by CEO Peter Oswald, pivoted to an aggressive growth strategy, undertaking a major capex program and M&A splurge. The company moved into virgin fiber (FBB) cartonboard and expanded its packaging division, funded by debt. This shift coincided with “Goldilocks” COVID-era conditions, which saw demand and pricing explode, leading to peak earnings in 2022 and Mr. Oswald being named CEO of the year.
Following the 2022 peak, MMK faced a confluence of negative factors. The Ukraine war eliminated 10% of industry demand (Russia) and spiked energy costs just as the company’s hedges rolled off. Simultaneously, a massive post-COVID destocking cycle by customers reversed the demand boom. This occurred just as MMK and competitors (like Stora Enso) brought new capacity online, causing industry utilization to collapse to 40-year lows (below 70%) and MMK’s EBIT per ton to turn negative in 2023. With leverage peaking at over 3.5x net debt/EBITDA, the market feared a dilutive rights issue, and the share price fell to an all-time low.
The market is overlooking a decisive “strategic pivot” and the cyclical nature of the industry. The family foundation stepped in late last year, forcing a volte-face: MMK is now de-emphasizing M&A and cutting capex to maintenance levels. The company is actively deleveraging, proven by the sale of its TANN assets for ~€494m (nearly double their 2018 purchase price). Shaun argues the capacity issue is temporary, with utilization already recovering to over 80% and competitors shutting down inefficient plants. He notes MMK has a moat in its “grandfathered” recycled plants, which are protected by NIMBY issues. As a strong signal of a trough, the company initiated its third-ever share buyback (up to 5%, capped at €80), and Shaun expects a substantial dividend increase as leverage falls below 2.0x.
Shaun believes the company is substantially undervalued, with a normalized EV of €4.4bn to €6.2bn, compared to its recent EV of €2.7bn. The valuation is supported by a sum-of-the-parts analysis, valuing the cartonboard assets at €1.4bn-€2.0bn and the packaging division at €3.0bn-€4.2bn. This packaging valuation is validated by the recent TANN asset sale at 11.2x EBITDA, a stark contrast to the entire group’s recent multiple of <6x TTM EBITDA. On a normalized basis, Shaun estimates MMK trades at 4.5x EV/EBITDA. He sees a base case price of €118 (at 6x 2028E EBITDA) and a bull case of €160 (at 8x), with downside protection from the 58% family ownership (no take-under risk) and the new buyback program.
Disclaimer
European Investing Summit 2025 was held from October 28 to November 3, 2025. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
Slides
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