Research Dynamics
/ Key word(s): Research Update
This report is published by Research Dynamics, an independent research boutique Sales and profitability impacted by lower materials cost Segmental performance Chemistry: Net sales increased 7.7% YoY to CHF 62.0 mn mainly on strong demand for deuterated products for use in laboratory analyses and OLED displays and high-value molecular sieves used in the production of ethanol. This was slightly offset by declines in demand from the construction sector. The divisional EBITDA reached CHF 10.4 mn, marking a 10.0% YoY increase, with the corresponding margin expanding 30 bps to 16.7%. The margin growth was supported by the acquisition of Sorbead India and Swambe Chemicals in April 2024, which gave the Chemistry division its own presence in the Indian chemistry and pharmaceutical markets. The division's manufacturing facilities in Rüti, China and the USA were well utilized. In 1HFY24, EBIT amounted to CHF 7.0 mn, a 1.8% YoY increase, resulting in a EBIT margin of 11.3%. Packaging: The Packaging division reported net sales of CHF 114.9 mn, a decline of 13.3% YoY due to lower order volumes resulting from the reduction of customers safety stocks and the decline in the demand for dietary supplements. The division saw its very high order volumes of 2023 return to their lower pre-COVID levels in the 1HFY24. Disruptions to logistics chains such as in the Red Sea shipping route prompted rises in transport costs. The new plant in Brazil further ramped up production and began supplying customers with coated PVC films. These serial deliveries are steadily being expanded. However, with the lower sales volumes combining with lower raw materials prices and higher transport costs, the EBITDA declined by 15.2% YoY to CHF 20.4 mn with corresponding margin of 17.8% (1HFY23: 18.2%). The EBIT decreased by 17.3% to CHF 17.1 mn, with the corresponding margin compressing by 70 bps to 14.9%. Outlook for FY2024 The management reiterated that the CPH Group with its remaining Chemistry and Packaging divisions expects to report an EBITDA in the mid-double-digit millions. Despite the negative net first-half result of CHF -29.8 mn on account of the spun-off Paper division, the group expects to report a positive net result for the year as a whole. The management believes that the group is now active in the chemistry and packaging segments, which both show sizeable potential for further growth. The CPH Group is already very well positioned with its strong Zeochem (chemistry) and Perlen Packaging (packaging) brands; and it can now focus more firmly on these to take full advantage of the above-average growth opportunities offered in niche markets worldwide. Valuation and conclusion We value CPH using DCF and relative valuation techniques. Our intrinsic value of CHF 86.1 per share implies an upside of 28.5% from current levels. For relative valuation, since the Group operates in two entirely different divisions, we compare CPH's divisions with various sets of relevant industry peers. We have employed three parameters - EV/EBITDA, P/S, and P/E - to analyse the relative valuation of the Group. CPH currently trades at an EV/EBITDA multiple of 7.1x (FY2024e), a 20.0% discount to the weighted average multiple of division peers. Additional features: File: CPHN_1HFY24 Result Update_Research Dynamics_22.7.2024 End of Media Release |
1950515 22.07.2024 CET/CEST
