Right now is a Belgian company in the chemical sector, currently listed on the Brussels Stock Exchange and arising from the spin-off of Solvay in December 2023. With businesses in Europe, North America, South America and Aisa-Pacific, it is structured into four main segments: Electrification, Aerospace, Connectivity and Efficient Resources.
Syensqo became independent from Solvay through a spin-off just 11 months ago. A business with breadth and diversification with enormous potential on its own and ranging from products for the aerospace sector, cars, agriculture, batteries, construction, consumer goods, electronics, food industry, green hydrogen, health, industrial applications or resources, environment and energy and all revolving around the chemical sector. 90% of Syensqo’s products are among the top 3 in the world in their sector and it is very notable that 20% of its turnover is generated with products with less than 5 years of life, and from a total portfolio of more than 1,800 patents, 600 were filed in the last five years. This highlights Syensqo’s commitment to innovation and major future trends.
LATEST PUBLISHED RESULTS OF SYENSQO
In the second quarter of 2024, Syensqo’s turnover fell, in comparable terms, by 5.1%, impacted by the drop in sales prices, with a stable sales volume level. The operating margin moderates to 22.1% from 23.8% a year ago, and the profit figure contracts by 24.4%, to 159 million euros.
In the first half of 2024, the sales drop is 8.1% in comparable figures and the profit – 32.6%. If non-recurring items are included, profit falls 57%. Figures that together meet the forecasts of the company itself and the market.
At the end of 2023, Syensqo’s liquidity amounted to €2.8 billion, including €1.2 billion of cash and cash equivalents and €1.6 billion of undrawn revolving credit facilities. In addition, Syensqo has access to a €1 billion Belgian Treasury bill program. As of June 2024, the net financial debt is 1,900 million euros and represents only 1.3v of the annualized EBITDA, so the level of solvency is comfortable and it has the capacity to finance its growth without balance sheet tensions.
MEDIUM AND LONG TERM FORECASTS
The company expects a smooth recovery in a number of end markets affected by ongoing macroeconomic uncertainty, most notably in the automotive, agricultural, industrial and medical sectors, while anticipating continued strong growth in the aerospace and defense markets. Thus, for the last months of 2024, the chemical company expects to return to year-on-year volume growth, driven by higher volumes in all business units, particularly in Novecare.
In summary, its outlook for the full year 2024 now points to underlying EBITDA in the range of €1.4 billion to €1.475 billion; capital expenditures in the range of 600 to 650 million euros; free cash flow in the range of 400 to 450 million euros.
In the long term, the growth potential of sales remains intact (expected average annual increase of 5% to 7% from 2024 to 2028), as does profitability (expected to increase slightly).
Syensqo historical quote
FUNDAMENTAL ASSESSMENT OF SYENSQO
It is an innovative company, with a young product portfolio, a solvent balance sheet, financing capacity and strong long-term growth potential. 2024 is developing as a transition year and projections for 2025 and beyond are promising. Positioned in businesses that are clear megatrends, such as electrification, the aerospace sector, connectivity or efficient resources. Maintains a good strategy focused on prioritizing growth without eroding ratings investmen grade and generate good profitability for the shareholder. It pays a dividend and has repurchases of its own securities underway.
Under the average market estimate for the end of 2024, it is not trading expensive compared to other competitors. The market pays 12.5v PER for Syensqo, compared to an average among its peers of 21.37v; PCF of 6.23v for Syenqo, which compares with 13.44v for the sector average.
|
2024e |
PER |
CBA |
PEG |
PCF |
DFN/EBITDA |
Divi-Yield |
|
Right now |
12,5 |
-15,50% |
– |
6,23 |
1,6 |
1,86% |
|
Givaudan |
35,56 |
18,19% |
1,95 |
28,29 |
2,28 |
1,64% |
|
Wacker Chemie |
21,07 |
-31,25% |
– |
8,48 |
0,76 |
2,61% |
|
Arkema |
9,59 |
1,18% |
8,12 |
5,79 |
1,47 |
4,26% |
|
Symrise |
34,81 |
28,74% |
1,2 |
23,12 |
2,2 |
0,99% |
|
Clariant |
14,67 |
-1,45% |
– |
8,73 |
1,82 |
3,64% |
|
MEDIAS |
21,37 |
-0,02% |
3,76 |
13,44 |
1,69 |
2,50% |
Ratios calculated with the price at the close of 10/15/2024 and own estimates (EI) based on market consensus.
Under fundamental assessment criteria, the recommendation is positive for Syensqo securities for a long-term investment horizon.
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