Klabin SA

“Klabin possesses genuine competitive advantages in Brazilian packaging — irreplaceable timberland, vertical integration, and scale — but roughly 30% commodity pulp exposure, 3.9x net leverage with USD-denominated debt on a BRL-earning business, near-WACC returns on capital, and a valuation (~18.8x EV/EBITDA) that already prices in a near-doubling of EBITDA combine to make current entry unattractive. The risk of permanent capital impairment in a synchronized BRL devaluation and pulp downturn is plausible, not theoretical. This is a business worth monitoring at materially lower prices and/or after meaningful deleveraging, but not one that meets the bar for long-term ownership today.”