JPMorgan starts Smurfit Kappa at 'overweight'

The bank said that overall, the companies have more similarities than differences, and it sees multiple short and long-term positives for both.

"These tailwinds appear to have become stronger over the last 12 months," JPM said. "We see somewhat greater re-rating potential at SMDS, given an expected end to M&A-related exceptionals from FY22 onwards.

"On SKG, while the rating is higher, the ability to invest organically at 17% return on capital employed is attractive."

JPM noted that demand growth has accelerated to around 6% in the fourth quarter, with paper prices also recovering. It said this should translate into higher box prices from the second quarter of this year onwards.

Meanwhile, the mid-term outlook on supply/demand is also supportive.

"Both groups benefit from e-commerce, being circa 15% of volume, though clearly growing fast. In addition, corrugated boxes are seen as being a more sustainable alternative to plastic packaging, providing a ‘slow burn’ tailwind to growth."