This report has been issued for information purposes only and is not intended to constitute investment advice. It is based on estimates and forecasts of third parties regarding revenues, earnings and business developments. Such estimates and forecasts cannot be independently verified by reason of the subjective character. CPH Chemie + Papier Holding AG gives no guarantee, representation or warranty and is not responsible or liable as to its accuracy and completeness.
This report is not a prospectus within the meaning of art. 652a CO or art. 27 et seq. of the SIX Listing Rules. This document is neither an advice on investment, nor a recommendation or invitation for purchasing, holding or selling any securities, money market instruments or derivatives and no investment decision should be based on this report. This report speaks as of its date. Neither CPH Chemie + Papier Holding AG nor Dynamics Group AG assume any responsibility to update the report.
CPH Chemie + Papier Holding AG
Switzerland  Industrial Goods & Services
1H21 Result update
23 July 2021
Company Data
Price: 
CHF 65.00 

Market Cap: 
CHF 390.0mn 

Free Float: 
67.6% 

No. of shares: 
6.0mn 

Avg. traded volume (30 day): 
951 

Bloomberg: 
CPHN SW 

Reuters: 
CPHNEB 

ISIN: 
CH0001624714 

Source: SIX Swiss Exchange and Bloomberg 

Share Price Development 

150 

125 

100 

75 

50 

Sep20 
Nov20 
Jan21 
Mar21 
May21 
Jul21 
CPH 
SPI 

Source: Bloomberg 

Key Financial Data 

2019 
2020 
2021E 
2022E 

Sales 
524.7 
445.2 
485.6 
514.6 

EBITDA % 
16.8% 
12.4% 
7.4% 
12.5% 

EBIT % 
10.8% 
5.5% 
0.7% 
6.2% 

Net Margin % 
9.2% 
10.5% 
0.2% 
4.2% 

Basic EPS 
8.06 
7.82 
0.13 
3.63 

Diluted EPS 
8.06 
7.82 
0.13 
3.63 

DPS 
1.80 
1.80 
1.80 
1.80 

Equity Ratio % 
62.6% 
66.8% 
65.5% 
66.1% 

Capex 
(22.0) 
(13.5) 
(46.4) 
(36.2) 

P/Sales 
0.8x 
0.9x 
0.9x 
0.8x 

P/E 
8.7x 
8.8x 
NM 
18.9x 

EV/EBITDA 
4.8x 
7.5x 
11.0x 
6.5x 

Source: Research Dynamics, Company data 

Next Events 

Investora Equity Conference in 
15 Sep 2021 

Zurich 

ZKB Equity Conference 
3/4 Nov 2021 
Analysts
Doris Rudischhauser dru@researchdynamics.ch
Alexandre Müller amu@researchdynamics.ch
Tel: +41 43 268 3232
Capex plans in place to tap emerging opportunities
Chemistry and Packaging divisions continue to perform well
CPH reported 5.1% YoY growth (+5.7% excluding currency impact) in net sales to CHF 243.7mn. The Chemistry and the Packaging Divisions continue to perform well and offset the weak performance in the Paper Division. The group EBITDA declined by 40.4% YoY to CHF 20mn largely due to a significant drop in the EBITDA of the Paper division. Group EBITDA margin declined 630bps to 8.2%. Group EBIT declined by 67.8% YoY to CHF 5.7mn (1H20: CHF 17.8mn) and the corresponding margin compressed to 2.4% (1H20: 7.7%). On account of significant margin pressure, the net profit attributable to shareholders declined by 78.3% to CHF 5.8mn.
Segmental performance
Paper: Net sales declined 3.2% YoY (excluding currency: 3.1%) to CHF 105.4mn. The division's 1H21 sales volume was higher as compared to 1H20 when the machines were kept idle due to the imposition of lockdown measures. However, persisting over capacities dragged the paper prices lower, thereby pressuring the realizations and effectively net sales. Consequently, the division's EBITDA loss came in at CHF 1.5mn (CHF 12.5mn), whereas EBIT came down to a negative CHF 10.1mn (CHF 2.3mn). While the enduser demand recovered, the sharp jump in the recovered paper prices to their historical highs has had an adverse impact on raw material cost. Consequently, EBIT declined significantly, despite optimization and costsaving initiatives.
Packaging: Net sales improved 4.7% YoY (excluding currency: +3.8%) to CHF 90.8mn
(1H20: CHF 86.7mn). Demand for packaging material suffered slightly compared to 1H20 due to the absence of the usual seasonal flu, which resulted in lower demand for medicines and effectively packaging products from pharmaceutical companies. The division reported lower volume in Europe and North America, however, it was more than offset by doubledigit growth in LATAM and Asia. EBITDA declined 28.4% YoY to CHF 11.5mn, and margins compressed by ~600bps to 12.7%. EBIT dropped by 35.5% to CHF 8.4mn and the margin contracted by 570bps YoY to 9.3%. Higher raw material and transportation costs and the delay in passing on the costs resulted in lower profitability.
Chemistry: Net sales increased 31.1% YoY (excluding currency impact: +36.7%) to CHF 47.5mn due to improvement in demand. The growth was aided by a surge in the demand for molecular sieves, in which the company has developed a leading position through its innovative offerings. The molecular sieve powders (above all medical oxygen) also showed encouraging trends, while the demand from the energy industry has yet to pick up to pre pandemic levels. EBITDA went up ~100% to CHF 9.8mn (CHF 4.9mn) and EBIT to CHF 7.4mn (CHF 2.5). Both EBITDA and EBIT margins improved 700bps and 870bs to 20.8% and 15.7%, respectively.
Cautious outlook for 2021
The world economy is expected to rebound in 2021, however, the economic revival may have a varying degree of impact on each division, and specifically, the demandsupply equation should dictate the fortunes in our view. The management too has provided a cautious outlook for FY2021e that primarily reflects challenges surrounding the Paper Division.
Paper: With the closure of 3.3mn tons of graphic printing paper capacity over 202021, the paper prices may inch up in 2H21. However, this will not be sufficient to offset the elevated raw material prices. Accordingly, for FY2021 the division's net sales are expected to be slightly higher than the 2020 level, but EBIT is expected to be negative.
Packaging: In response to the jump in raw material prices, the company will be gradually adjusting the product prices up. The company is also looking at expanding its product offerings in the overseas market and setting up a new coating plant in Brazil, which is expected to be commissioned in 2Q22. For FY2021, the company expects the division's net sales to be slightly above and EBIT margin below its 2020 levels.
Chemistry: The company expects the size and pace of the global economic growth to dictate the business trends in the Chemistry Division. The division is expected to clock higher net sales and doubledigit EBIT margin.
Important disclosures are on the last page of this report. CPH Chemie + Papier Holding AG is a research client of Research Dynamics. The equity research reports are prepared for information purposes only.
CPH 2
Switzerland  Industrial Goods & Services
Group: Group net sales are expected to increase as a whole, while EBIT is expected to be substantially below at singledigit figure. However, the group results are expected to come slightly positive.
Other Highlights
Expansion at Chemistry division: CPH's Chemistry Division, Zeochem, is set to expand the capacity of two of its molecular sieve product lines to meet the growing demand. The expansion would entail an investment of just over CHF 10mn and will help further consolidate Zeochem's leading technological position in the highquality molecular sieves market. The expansion of the existing capacities is expected to be completed by mid2022e.
Sustainability offerings: The Paper Division is at the forefront of offering sustainable products. The division is gradually reducing the use of fossil fuel and was able to cut CO2 emissions by ~90% over 20132020. By 2021, it will be the first company globally to offer carbonneutral paper. This is expected to be a key differentiating factor in driving the demand for its paper products in the mediumtolong term for the company.
MidTermFinancial Targets: Notwithstanding shortterm cautious outlook, management has confirmed the following midterm financial targets:
 Organic net sales growth of >3% per annum
 EBITDA Margin >12% (from >10% previously)
 Equity ratio >50%
 Liquidity of atleast CHF 3050mn
 Operating investment of CHF2025mn per annum
Valuation and conclusion
We value CPH using DCF and relative valuation techniques. Our intrinsic value of CHF 91.3 per share, which is similar to our previous target price (CHF 91.3), implying an upside of ~40% from current levels. For relative valuation, since the Group operates in three entirely different divisions, we compare each of CPH's divisions with different sets of relevant industry peers. We have employed three parameters  EV/EBITDA, P/S, and P/E  to analyze the relative valuation of the Group. CPH currently trades at a P/S multiple of 0.8x (FY2022E), a significant 43% discount to the weighted average multiple of division peers.
The global economy is expected to recover gradually from 2021e, with the IMF forecasting 6% growth in 2021. While this bodes well for the business in general, in the short term, we expect the uncertainty to continue. Specifically, the Paper Division is expected to be under pressure due to an unfavorable operating environment. However, the Packaging and Chemical Divisions are expected to be the key beneficiary of a revival in the economic activity and should offset the expected weakness in the Paper Division to some extent. Specifically, we believe the Packaging Division to emerge even stronger in the ongoing economic revival as it has all positive levers in place to capture upcoming opportunities. Equally complimenting it will be the Chemistry Division which is expected to benefit from the emerging trends that the company is looking to tap through timely capacity expansion. Operations aside, management's focus on offering sustainable solutions and simplifying the corporate structure should improve investor sentiment going forward. Moreover, we expect the cost optimization initiatives to offer support to the company's stock price.
CPH 3
Switzerland  Industrial Goods & Services
Exhibit 1: CPH  Comparison with division peers
Company 
EV/EBITDA 
P/S 
P/E 

3 year 
3 year 
3 year 

average 
CY2021E 
CY2022E 
average 
CY2021E 
CY2022E 
average 
CY2021E 
CY2022E 

CPH Chemie & Paper 
5.5x 
10.3x 
6.7x 
0.9x 
0.8x 
0.8x 
9.9x 
118.6x 
19.9x 

Paper peers: 

Holmen 
17.9x 
17.9x 
18.0x 
2.8x 
4.0x 
3.9x 
15.5x 
30.7x 
31.4x 

Stora Enso 
9.4x 
8.7x 
8.5x 
1.0x 
1.4x 
1.4x 
12.6x 
13.5x 
14.4x 

Altri 
8.1x 
6.2x 
6.5x 
1.6x 
1.4x 
1.4x 
14.3x 
8.8x 
9.5x 

Metsa Board 
10.6x 
8.0x 
8.3x 
1.2x 
1.7x 
1.6x 
14.4x 
12.6x 
13.8x 

UPMKymmene 
8.9x 
11.2x 
10.8x 
1.5x 
2.0x 
1.9x 
15.9x 
18.4x 
18.7x 

Norkse Scogindustrier 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 

James Cropper 
15.9x 
0.2x 
0.2x 
1.1x 
0.0x 
0.0x 
36.0x 
48.3x 
24.1x 

OJI Holdings 
7.9x 
NM 
NM 
0.4x 
0.4x 
0.4x 
13.0x 
7.7x 
8.6x 

Chemistry peers: 

Honeywell Int. 
14.4x 
20.1x 
18.1x 
3.3x 
4.6x 
4.3x 
23.0x 
29.0x 
25.5x 

Clariant 
12.3x 
NA 
NA 
1.4x 
NA 
NA 
41.2x 
NA 
NA 

Arkema 
6.2x 
7.3x 
7.2x 
0.8x 
0.9x 
0.9x 
14.9x 
14.2x 
13.2x 

WR Grace & Co. 
15.4x 
11.9x 
10.6x 
2.2x 
2.4x 
2.3x 
71.9x 
18.4x 
15.2x 

Packaging peers: 

Meadvestwaco 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 

MacFarlane Group 
9.1x 
0.1x 
0.1x 
0.7x 
0.0x 
0.0x 
16.5x 
12.5x 
11.8x 

Gerresheimer 
11.6x 
11.8x 
10.7x 
1.7x 
1.8x 
1.7x 
20.8x 
19.4x 
16.9x 

West Pharmaceutical Services 
32.0x 
35.4x 
31.9x 
7.3x 
10.3x 
9.5x 
52.6x 
52.7x 
48.9x 

Convertidora Industrial 
4.3x 
2.9x 
2.6x 
0.2x 
0.2x 
0.1x 
11.5x 
NA 
NA 

PSB Industries 
4.5x 
NA 
NA 
0.4x 
NA 
NA 
15.0x 
NA 
NA 

Astrapak Ltd 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 

Bilcare Ltd 
47.5x 
NA 
NA 
0.1x 
NA 
NA 
2.3x 
NA 
NA 

Median 
10.6x 
8.7x 
8.5x 
1.2x 
1.5x 
1.5x 
15.5x 
18.4x 
15.2x 

High 
47.5x 
35.4x 
31.9x 
7.3x 
10.3x 
9.5x 
71.9x 
52.7x 
48.9x 

Low 
4.3x 
0.1x 
0.1x 
0.1x 
0.0x 
0.0x 
2.3x 
7.7x 
8.6x 

Premium (disc) to peers 
(48%) 
19% 
(21%) 
(28%) 
(45%) 
(48%) 
(36%) 
546% 
31% 
Source: Thomson Eikon (as on 22nd July 2021)
Exhibit 2: CPH  Comparison with weighted average of division peers
EV/EBITDA 
P/S 
P/E 

3 year 
3 year 
3 year 

average 
CY2021E CY2022E 
average CY2021E 
CY2022E 
average 
CY2021E 
CY2022E 

Weighted peer multiples 
10.3x 
8.6x 
8.2x 
1.1x 
1.4x 
1.4x 
17.4x 
16.0x 
15.2x 

CPH 
5.5x 
10.3x 
6.7x 
0.9x 
0.8x 
0.8x 
9.9x 
118.6x 
19.9x 

Premium (disc) to peers 
(46%) 
21% 
(18%) 
(21%) 
(41%) 
(43%) 
(43%) 
643% 
30% 
Source: Thomson Eikon (as on 22nd July 2021)
CPH 4
Switzerland  Industrial Goods & Services
DETAILED FINANCIAL STATEMENTS
Income Statement
CHF mn (except per share) 
FY16 
FY17 
FY18 
FY19 
FY20 
FY21E 
FY22E 
Chemistry sales 
69 
75 
79 
78 
73 
85 
90 
Paper sales 
246 
264 
301 
293 
210 
225 
240 
Packaging sales 
119 
130 
153 
153 
162 
175 
185 
Net Sales 
435 
470 
534 
525 
445 
486 
515 
Cost of Sales 
(267) 
(309) 
(311) 
(298) 
(255) 
(313) 
(310) 
Gross profit 
168 
161 
222 
227 
190 
173 
205 
Personnel cost 
(89) 
(84) 
(92) 
(93) 
(93) 
(94) 
(95) 
Outsourced maintenance/repairs 
(18) 
(17) 
(19) 
(20) 
(17) 
(18) 
(19) 
Other operating expense 
(25) 
(26) 
(28) 
(26) 
(25) 
(25) 
(26) 
Total operating costs 
(131) 
(127) 
(139) 
(139) 
(135) 
(137) 
(140) 
EBITDA 
37 
34 
83 
88 
55 
36 
64 
Depreciation 
(31) 
(30) 
(30) 
(30) 
(29) 
(31) 
(31) 
Amortisation 
(1) 
(1) 
(1) 
(1) 
(1) 
(1) 
(1) 
Operating profit (EBIT) 

before impairment 
6 
3 
52 
57 
25 
3 
32 
Impairment 
0 
0 
0 
0 
0 
0 
0 
Operating profit (EBIT) 
6 
3 
52 
57 
25 
3 
32 
Finance costs 
(6) 
(8) 
(7) 
(6) 
(5) 
(5) 
(3) 
Finance income 
1 
2 
1 
0 
0 
0 
0 
Total financial income 

(expenses) 
(5) 
(7) 
(6) 
(6) 
(5) 
(5) 
(3) 
Profit before taxes (before 

exceptional items) 
1 
(4) 
46 
51 
20 
(1) 
29 
Nonoperating items 
(4) 
23 
0 
1 
19 
4 
0 
Income taxes 
(4) 
(3) 
(3) 
(3) 
8 
(2) 
(7) 
Profit attributable to the 

parent 
(8) 
16 
42 
48 
47 
0.8 
22 
Basic EPS 
(1.3) 
2.7 
7.1 
8.1 
7.8 
0.1 
3.6 
Diluted EPS 
(1.3) 
2.7 
7.1 
8.1 
7.8 
0.1 
3.6 
DPS 
0.7 
0.7 
1.8 
1.8 
1.8 
1.8 
1.8 
Source: Research Dynamics, Company data
Balance Sheet
CHF mn 
FY16 

Assets 

Noncurrent assets 

PPE 
384.6 

Intangible assets 
3.1 

Longterm financial assets 
10.0 

Longterm financial receivables 
0.0 

Other noncurrent assets 
52.6 

Total noncurrent assets 
450.3 

Current assets 

Inventories 

Trade accounts receivable 

Other receivables 

Prepaid expenses and accrued 

income 
4.8 

Shortterm financial receivables 

0.1 

Liquid funds and Securities 
70.4 

Total assets 
672.4 
Shareholders' Equity and Liabilities Share capital Capital reserves
Profit reserves
Net result for the year
Noncurrent liabilities
Longterm financial liabilities
Pension scheme liabilities
Other longterm liabilities
Longterm provisions
Current liabilities
FY17 
FY18 
FY19 
FY20 
FY21E 
FY22E 

384.1 
376.1 
366.4 
352.6 
362.4 
366.6 

4.8 
5.8 
5.6 
5.6 
5.4 
5.3 

10.0 
10.0 
10.0 
10.0 
10.0 
10.0 

0.0 
0.0 
0.0 
0.0 
0.0 
0.0 

56.4 
55.3 
54.0 
64.8 
64.8 
64.8 

455.3 
447.2 
436.0 
432.9 
442.6 
446.6 

69.6 
78.5 
78.3 
83.2 
83.3 

72.1 
72.4 
52.9 
59.9 
63.4 

13.1 
14.0 
17.2 
17.2 
17.2 

7.0 
9.2 
8.6 
6.7 
6.7 
6.7 

0.0 
100.3 
0.0 
0.0 
0.0 
0.0 

80.2 
89.0 
93.1 
116.3 
93.9 
96.2 

697.6 
800.5 
702.7 
704.2 
703.4 
713.5 

30.0 
12.0 
12.0 
1.2 
1.2 
1.2 

0.8 
15.0 
4.2 
4.2 
4.2 
4.2 

346.4 
336.2 
375.2 
418.5 
454.6 
444.5 

16.0 
42.3 
48.3 
46.9 
0.8 
21.8 

143.5 
120.5 
116.8 
109.7 
106.0 
102.3 

0.6 
1.3 
0.7 
1.2 
1.2 
1.2 

0.0 
0.8 
0.6 
0.4 
0.4 
0.4 

51.8 
50.0 
47.5 
31.5 
31.5 
31.5 
Trade accounts payable 
53.1 
69.5 
69.7 
66.3 
56.8 
69.9 
72.9 
Other payables 
8.3 
3.3 
4.1 
3.6 
4.6 
4.6 
4.6 
Accrued liabilities and deferred 

income 
16.5 
17.2 
20.0 
16.3 
16.8 
16.8 
16.8 
Shortterm financial liabilities 
7.0 
9.8 
125.8 
5.9 
8.1 
7.8 
7.5 
Shortterm provisions 
7.6 
5.6 
1.2 
3.8 
3.3 
3.3 
3.3 
Total liabilities 
291.6 
301.3 
393.3 
261.4 
232.4 
241.5 
240.5 
Total equity and liab. 
672.4 
697.6 
800.5 
702.7 
704.2 
703.4 
713.5 
Source: Research Dynamics, Company data
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CPH Chemie + Papier Holding AG published this content on 26 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 July 2021 08:47:07 UTC.