Research Dynamics
Research Dynamics – Report on CPHN: Investor Day Update

This report is published by Research Dynamics, an independent research boutique


FY 2023 targets reaffirmed amidst uncertain markets and focus on implementation of sustainability strategy

Investor Day summary
During this year’s investor day hosted in Zurich on 26 September, CPH Group reaffirmed its targets for 2023e amidst considerably uncertain markets. More importantly, management provided an update on the implementation of the strategic objectives relating to the Group as well as its individual divisions, Chemistry, Packaging and Paper. In addition, a special focus was put on the Group’s sustainability strategy which shall help to achieve net zero emissions by 2050.

Group: The group is well on track with the implementation of its long-term strategy, which has resulted in an increase of the non-paper related activities to close to half of revenues, an increase in sales outside of Europe to around 25% of Group total and a significant reduction of the dependency on the Swiss franc. Given the strong market positions of the three divisions in their respective markets and further development along the long-term strategy including tailwinds from the megatrends of Healthcare, Energy and the Circular Economy, management is confident to further deliver on shareholder returns in the long-term.

This said, 2023 will continue to be challenging, especially with regard to the paper division where a further reduction in sales is anticipated due to a substantial decrease in demand within the paper industry. On Group level, it is expected that growth from the other divisions will not be able to compensate for this impact on revenues. Nevertheless, the decrease in prices of certain raw materials is expected to offer some relief. The company continues to anticipate EBIT and net results in the higher double-digit million range.

Valuation and conclusion
We value CPH using DCF and relative valuation techniques. Our intrinsic value of CHF 97.8 per share is the same as the previous target price (CHF 97.8) and implies an upside of 17.6% from current levels. For relative valuation, since the Group operates in three entirely different divisions, we compare CPH’s divisions with different 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 5.0x (FY2024e), a significant 34.3% discount to the weighted average multiple of division peers.