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Cogra: The rush of households on firewood makes the sector soar on the stock market


(BFM Bourse) – Faced with soaring “traditional” energy prices, the wood energy sector has distinguished itself on the stock market. Some listed stocks in this universe have even gained up to 700% since the beginning of March 2020.

Autumn is coming and with it the drop in temperatures. Faced with soaring prices for “traditional” energy, including gas, fuel oil and electricity, households are looking for alternative solutions for heating. Since the war in Ukraine, individuals are flocking to firewood or wood pellets. Also known as pellets, these small cylinders are made from compressed sawdust.

This pellet rush is not a new phenomenon. For the past two years, an incentive system of government aid (MaPrimerénov, Energy saving certificates, etc.), and the ban on the installation of oil or coal boilers – since July 1, 2022 – fueled strong household demand for wood energy. Between 2020 and 2021, pellet stove sales increased by 41% and pellet boiler sales by 120%, with 180,000 and 32,000 units respectively, according to Propellet, the national pellet heating association.

The recent explosion in energy prices has only amplified the demand for this type of energy, considered as a more ecological and above all less expensive alternative. On one, the price of a one-tonne pallet packaged in a 15 kg bag has gone from around 300 euros to more than 600 or 700 euros. And even if the luck smiles on you to be able to get your hands on these precious sawdust cylinders.

Among the manufacturers of wood energy, there are four companies listed on the stock exchange. They are called Cogra, Eo2, Moulinvest and Poujoulat. Unsurprisingly, the prices of companies in this wood energy sector have experienced dizzying increases, some of which go up to more than 700% since the beginning of March 2020.

Over the period (early March 2020 until September 22, 2022), the stock market prices of these various companies rose sharply:

Cogra, the pioneer of wood pellets

Founded in 1982 on the initiative of Bernard Chapon and specialists in the forestry sector, Cogra is a key player and pioneer in the production of wood pellets. Based in Mende in Lozère, the company specializes in the production of premium pellets, combined with a consultancy and distribution activity for stoves and boilers.

The Lozère company has been listed since November 2011 on Euronext Growth, formerly Alternext. “Financial crisis, nuclear crisis, budget crisis…Fortunately, we can always heat ourselves with wood,” said the somewhat visionary leader of Cogra at the time of the launch of its IPO at the end of 2011. .

If during the last ten years, Cogra has passed completely under the radar of investors, the file has found new life with the support of public authorities for renewable energies. An interest that has recently increased with the looming energy crisis. Until November 2020, the title was indeed vegetating in an area between 5 and 7 euros, before beginning its meteoric rise and experiencing stock market peaks at 19.40 euros, at the height of this summer.

The producer of wood pellets has benefited massively from the enthusiasm of consumers for “wood energy” considered ecological and above all economical. Cogra’s revenues logically caught fire in its staggered 2021-2022 financial year (closing at the end of June), with an increase of more than 50% in its billings, including +67% over the period covering the months of March to June alone. The company was able to respond to the exponential growth in demand thanks to its third factory, which is the first full year of operation, thus bringing total production to 200,000 tonnes. The company has thus far exceeded its target of 10% EBITDA margin (earnings before interest, taxes, depreciation and amortization) set in its Cap 2022 plan.

In the same universe, we can cite the Eo2 group. Founded in 2006 and listed a year later on the Free Market (the former name of Euronext Access), the company based in Malakoff in the Hauts-de-Seine is positioned as one of the main French players in the pellets. Like Cogra, the company was neglected by investors over the last ten years before igniting on the stock market (+92% between its lowest and its highest over two years), driven by the growing interest of households in the wood energy.

Moulinvest, the recovery of wood from the branch to the trunk

Founded in 1916, this discreet company based in the Massif Central is present in all wood trades. Moulinvest manufactures a wide range of structural and roofing wood for the construction sector, as well as solid wood walls for timber frame houses. The Puy-de-Dôme company also offers outdoor landscaping products, stakes for arboriculture and viticulture or even poles for electricity and telephone lines. In 2020-2021, the company had generated a record profit close to 11 million euros. On the activity front, business was also looking good for Moulinvest, which then claimed a turnover up by more than 40%, to around 94 million euros.

The construction timber activity represented 45% of the group’s activity over its past financial year, a positioning that enabled it to take advantage of the rise in construction timber prices. In May 2021, the prices of wood dedicated to construction itself soared to reach the peaks of 1,670 dollars due to a disorganization of logistical flows combined with a strong increase in demand for construction wood. The transformation of wood also induces waste (sawdust and chips) which is then recovered by its subsidiary Moulin Bois Energie into wood pellets for individual and collective heating. This intelligent strategy of enhancing the tree, from the branch to the trunk, has paid off over the past two years.

Like Cogra, the price of Moulinvest took the path of the rise until reaching peaks last spring, at 66.2 euros while the shares were trading at the historic low of 3 euros in March 2020… . That is a vertiginous performance of 2000% in the space of two years… Since then, some (happy) shareholders have taken their profits on this file, the action has fallen back nearly 45% from its stock market peaks. By way of outlook, the group intends to take advantage of strong demand for sawn products intended for construction and development, favored by policies to combat global warming.

Poujoulat, the agile European leader in combustion smoke evacuation systems

The appetite of households for wood energy is not confined to wood pellets. Without dedicated equipment, the purchase of pellets is pointless, not to say useless. And this is where Poujoulat comes in. Founded in 1950, Cheminées Poujoulat is the European leader in metal chimney flues and roof outlets. The French company based in Niort works with the largest appliance manufacturers and professionals in the sector to design and manufacture high-performance, comfortable and safe solutions for individual housing, collectives, the service sector and industry.

The group has seen its sales of wood energy equipment, heat pumps and very high performance boilers rise sharply in Europe. Poujoulat cites the “repeated calls from the public authorities for energy sobriety” which clearly encourage consumers to replace their old heating appliances and to diversify their energy mix.

“This phenomenon is noticeable everywhere in Europe where the consumer’s appetite for alternative solutions to fossil fuels is confirmed”, explains Poujoulat. Over the first three months of its 2022/2023 financial year, the group has thus achieved growth of more than 30%, thanks to consumer appetite for wood energy equipment and the renovation market.

Poujoulat’s stock market valuation has almost doubled since the start of the year, reaching a historic high of 101 euros on 23 August. Its positioning in wood fuel in a context of soaring fossil fuel prices has clearly paid off.

A flash in the pan or a temporary air pocket?

If the values ​​of the sector have experienced a remarkable stock market performance over the past twelve months, they nevertheless seem to have stalled for a month, with a sector which has fallen on average by nearly 10%, notes Pierre Laurent, financial analyst at EuroLand Corporate.

“While profit taking by investors may be one of the explanatory factors, in the same way as the richness of the sector’s valuation multiples, issuers, for their part, show great caution in their communication about months to come, with the main reason being unprecedented tensions, particularly in terms of supply,” continues the specialist.

Cogra also made no secret of this on the sidelines of the announcement of its 2021-2022 annual results. The management did not wish to communicate any quantified objective for the current year given the soaring energy costs and the group’s difficulty in obtaining supplies of raw materials. “Indeed, the pellet producer finds himself faced with an unprecedented situation, in which the supply of raw materials, beyond price considerations, will be increasingly difficult, with some sawyers being forced to pause their production in a context of sharply rising costs (notably energy)” explains EuroLand Corporate in its latest research note devoted to Cogra.

The inflationary context on energy prices will lead, according to Pierre Laurent, some national sawyers to pause part of their production and temporarily dry up the market for its raw material, wood. “Combined with imports also slowing (more and more European countries, faced with the high price of gas, are intensifying domestic consumption of wood energy with the use of pellet plants), the situation could continue to disrupt the supply chain. value over the next few months,” he notes.

In the longer term, the prospects for a sector long neglected by the market are, according to Pierre Laurent, “much more exciting”, “wood (and its players) should be one of the big winners of the inevitable ecological transition. “concludes the specialist.

Sabrina Sadgui – ©2022 BFM Bourse

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