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
Event update
5 July 2021
Company Data
Price: 
CHF 68.4 
Market Cap: 
CHF 410.4mn 
Free Float: 
39.7% 
No. of shares: 
6.0mn 
Avg. traded volume (30 day): 
1,375 
Bloomberg: 
CPHN SW 
Reuters: 
CPHNEB 
ISIN: 
CH0001624714 
Source: SIX Swiss Exchange and Bloomberg
Share Price Development
Source: Bloomberg
Key Financial Data
2019 
2020 
2021E 
2022E 

Sales 
524.7 
445.2 
446.1 
473.2 
EBITDA % 
16.8% 
12.4% 
8.0% 
13.6% 
EBIT % 
10.8% 
5.5% 
0.8% 
6.8% 
Net Margin % 
9.2% 
10.5% 
0.2% 
4.6% 
Basic EPS 
8.06 
7.82 
0.13 
3.65 
Diluted EPS 
8.06 
7.82 
0.13 
3.65 
DPS 
1.80 
1.80 
1.80 
1.80 
Equity Ratio % 
62.6% 
66.8% 
66.3% 
66.8% 
Capex 
(22.0) 
(13.5) 
(41.2) 
(31.4) 
P/Sales 
0.8x 
0.9x 
0.9x 
0.9x 
P/E 
8.7x 
8.8x 
NM 
18.9x 
EV/EBITDA 
4.8x 
7.5x 
11.6x 
6.5x 
Source: Research Dynamics, Company data 
Next Events
2021 HalfYear Report (to 30 
21 July 2021 
June) 

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
CPH to undertake 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.
Expansion in lithium molecular sieves capacity to tap the demand for portable oxygen concentrators
The COVID19 induced acceleration in respiratory diseases has led to a spike in demand for portable oxygen concentrators. To meet this growing demand, CPH is looking to increase the capacity of lithium molecular sieves at Zeochem's Louisville production plant in the USA. The lithium molecular sieves are used to concentrate medical oxygen and are also required in oxygen production for industrial applications. The total output of the plant will be increased by ~700 tonnes a year by investing into the expansion of additional capacities at the existing facility.
Purmol capacity expansion to tap new and existing growing applications
Purmol, a molecular sieve powder that finds its usage in numerous applications is next on the expansion list. Prumol is useful in preventing bubble formation in polyurethane floor coverings. In addition, Purmol is useful in the new and fast growing area of its application in window technology. Earlier, aluminium spacers were provided together with a molecular sieve in multiplepane windows to prevent fogging on the panes, now plastic spacers are gaining prominence. Plastic spacer provides better thermal insulation, and the molecular sieve desiccant can be used in powder form into the plastic. The company is looking to increase the annual capacity of Purmol by ~800 tonnes by installing a new calciner at its Zvornik site in Bosnia & Herzegovina.
Investment program
CPH stated that the necessary investments for the two expansion projects are expected to amount to just over CHF 10 million until operations are up and running by mid2022. Assuming an even split, this adds CHF 5 million for 2H2021E and CHF 5 million for 1H2022E. Our current forecasts are for CAPEX amounts of CHF 40 million and CHF 30 million for this year and next, respectively. Ahead of the halfyear 2021E results due 21 July, we are leaving our forecasts unchanged.
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 ~33.5% 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 0.9x (FY2021E), a significant 36% 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 shortterm, we expect the uncertainty to continue. Specifically, the Paper Division is expected to be under pressure due to an unfavourable 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 Pacakaging Division to emerge even strsonger 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 simplification of the corporate structure should improve investor sentiment going forward. Moreover, we expect the grouplevel cost optimisation initiatives to offer support to the company's stock price.
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
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 
5.7x 
10.4x 
7.0x 
0.9x 
0.9x 
0.8x 
10.2x 
96.9x 
21.4x 

Paper peers: 

Holmen 
17.8x 
16.7x 
16.7x 
2.8x 
3.7x 
3.7x 
15.2x 
28.2x 
28.8x 

Stora Enso 
9.3x 
9.0x 
8.7x 
1.0x 
1.4x 
1.4x 
12.5x 
15.0x 
14.5x 

Altri 
8.1x 
6.7x 
7.6x 
1.7x 
1.6x 
1.6x 
14.4x 
9.7x 
12.8x 

Metsa Board 
10.6x 
7.6x 
7.8x 
1.2x 
1.6x 
1.5x 
14.4x 
12.2x 
12.9x 

UPMKymmene 
8.9x 
10.5x 
10.1x 
1.5x 
1.9x 
1.9x 
15.7x 
18.1x 
18.1x 

Norkse Scogindustrier 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 

James Cropper 
15.8x 
0.6x 
NM 
1.1x 
0.0x 
0.0x 
35.1x 
44.6x 
22.3x 

OJI Holdings 
7.9x 
NM 
NM 
0.4x 
0.4x 
0.4x 
13.1x 
7.7x 
8.8x 

Chemistry peers: 

Honeywell Int. 
14.3x 
19.1x 
17.3x 
3.3x 
4.4x 
4.1x 
22.8x 
27.6x 
24.4x 

Clariant 
12.3x 
NA 
NA 
1.4x 
NA 
NA 
40.3x 
NA 
NA 

Arkema 
6.2x 
7.8x 
7.6x 
0.8x 
1.0x 
1.0x 
14.7x 
15.5x 
14.3x 

WR Grace & Co. 
15.3x 
11.8x 
10.5x 
2.2x 
2.4x 
2.2x 
69.1x 
18.3x 
15.2x 

Packaging peers: 

Meadvestwaco 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 

MacFarlane Group 
9.2x 
0.1x 
0.1x 
0.7x 
0.0x 
0.0x 
16.5x 
13.1x 
12.4x 

Gerresheimer 
11.6x 
12.3x 
11.2x 
1.7x 
2.0x 
1.9x 
20.7x 
21.2x 
18.7x 

West Pharmaceutical Services 
31.6x 
34.6x 
31.2x 
7.2x 
10.1x 
9.3x 
52.1x 
51.5x 
47.8x 

Convertidora Industrial 
4.3x 
2.9x 
2.6x 
0.2x 
0.2x 
0.1x 
11.9x 
NA 
NA 

PSB Industries 
4.5x 
12.1x 
7.1x 
0.4x 
0.7x 
0.6x 
15.5x 
46.2x 
29.9x 

Astrapak Ltd 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
NA 

Bilcare Ltd 
47.6x 
NA 
NA 
0.1x 
NA 
NA 
2.3x 
NA 
NA 

Median 
10.6x 
9.8x 
8.7x 
1.2x 
1.6x 
1.5x 
15.5x 
16.8x 
16.6x 

High 
47.6x 
34.6x 
31.2x 
7.2x 
10.1x 
9.3x 
69.1x 
51.5x 
47.8x 

Low 
4.3x 
0.1x 
0.1x 
0.1x 
0.0x 
0.0x 
2.3x 
46.2x 
8.8x 

Premium (disc) to peers 
(46%) 
7% 
(19%) 
(28%) 
(42%) 
(45%) 
(34%) 
477% 
29% 
Source: Thomson Eikon (as on 2nd 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 
10.2x 
9.9x 
8.5x 
1.1x 
1.4x 
1.4x 
17.4x 
16.1x 
17.4x 
CPH 
5.7x 
10.4x 
7.0x 
0.9x 
0.9x 
0.8x 
10.2x 
96.9x 
21.4x 
Premium (disc) to peers 
(44%) 
5% 
(17%) 
(20%) 
(36%) 
(38%) 
(41%) 
501% 
23% 
Source: Thomson Eikon (as on 2nd July 2021)
CPH 3
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 
74 
78 
Paper sales 
246 
264 
301 
293 
210 
209 
213 
Packaging sales 
119 
130 
153 
153 
162 
164 
183 
Net Sales 
435 
470 
534 
525 
445 
446 
473 
Cost of Sales 
(267) 
(309) 
(311) 
(298) 
(255) 
(273) 
(279) 
Gross profit 
168 
161 
222 
227 
190 
173 
194 
Personnel cost 
(89) 
(84) 
(92) 
(93) 
(93) 
(95) 
(90) 
Outsourced maintenance/repairs 
(18) 
(17) 
(19) 
(20) 
(17) 
(18) 
(16) 
Other operating expense 
(25) 
(26) 
(28) 
(26) 
(25) 
(25) 
(24) 
Total operating costs 
(131) 
(127) 
(139) 
(139) 
(135) 
(137) 
(130) 
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 
357.2 
356.7 

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 
437.4 
436.7 

69.6 
78.5 
78.3 
73.3 
78.6 

72.1 
72.4 
52.9 
63.6 
67.4 

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 
97.0 
100.1 

697.6 
800.5 
702.7 
704.2 
695.1 
706.7 

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 
21.9 

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 
61.6 
66.0 
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 
233.2 
233.6 
Total equity and liab. 
672.4 
697.6 
800.5 
702.7 
704.2 
695.1 
706.7 
Source: Research Dynamics, Company data
CPH 
4 

Switzerland  Industrial Goods & Services 

Cash Flow Statement 

CHF mn 
FY16 
FY17 
FY18 
FY19 
FY20 
FY21E 
FY22E 

Net profit for the period 
(7.7) 
16.2 
42.3 
48.5 
47.0 
0.8 
22.0 

Noncash adjustments: 
33.9 
(1.5) 
26.3 
31.2 
(2.2) 
32.3 
32.1 

Change in CA and CL: 

(Increase)/ decrease in 
(13.1) 
13.6 
(8.6) 
(10.2) 
(4.1) 
5.0 
(5.3) 

inventories 

Decrease in trade accounts 
(0.5) 
(7.7) 
5.0 
(1.3) 
20.5 
(10.7) 
(3.9) 

receivable 

Increase/ (decrease) in 
1.6 
15.8 
(1.1) 
(2.8) 
(9.0) 
4.9 
4.4 

trade accounts payable 

Other changes in working 
7.7 
(4.2) 
0.4 
(4.3) 
2.8 
 
 

capital 

CFO 
21.9 
32.2 
64.3 
61.0 
55.0 
32.3 
49.4 

Investments in tangible 
(20.7) 
(32.3) 
(22.3) 
(21.9) 
(17.5) 
(40.0) 
(30.4) 

fixed assets 

Disposals of tangible fixed 
20.5 
15.4 
6.3 
0.8 
5.2 
 
 

assets 

Investments in intangible 
(1.2) 
(2.4) 
(2.2) 
(1.0) 
(1.3) 
(1.1) 
(1.1) 

assets 

Investments in business 
(18.5) 
 
(27.9) 
 
(1.6) 
 
 

activities 

Repayment of longterm 
 
 
 
100.9 
(0.3) 
 
 

financial receivables 

CFI 
(19.9) 
(19.3) 
(46.0) 
78.9 
(15.3) 
(41.2) 
(31.4) 

Increase/ (Decrease) in 
0.1 
1.0 
(4.3) 
(123.4) 
(4.4) 
(0.3) 
(0.3) 

shortterm financial 

liabilities and receivables 

Increase/ (Decrease) in 
19.0 
(0.6) 
(3.0) 
(1.1) 
 
(3.7) 
(3.7) 

longterm financial 

liabilities 

Increase in other long 
(0.4) 
0.2 
2.1 
(0.2) 
(0.4) 
4.4 
 

term liabilities 

Dividends to shareholders 
(3.6) 
(3.9) 
(3.9) 
(10.9) 
(10.8) 
(10.8) 
(10.8) 

CFF 
15.2 
(3.3) 
(9.1) 
(135.6) 
(15.6) 
(10.4) 
(14.8) 

Exchange (losses)/gains 
0.1 
0.2 
(0.3) 
(0.2) 
(0.9) 
 
 

Net change in cash 
17.2 
9.8 
8.9 
4.1 
23.2 
(19.3) 
3.2 

Opening cash balance 
53.1 
70.3 
80.1 
89.0 
93.1 
116.3 
96.9 

Closing cash balance 
70.3 
80.1 
89.0 
93.1 
116.3 
96.9 
100.1 

Source: Research Dynamics, Company data 

Key Ratios 

FY16 
FY17 
FY18 
FY19 
FY20 
FY21E 
FY22E 

Growth Ratios 

Sales Growth 
4% 
8% 
14% 
(2%) 
(15%) 
0% 
6% 

Chemistry division 
11% 
9% 
5% 
(2%) 
(6%) 
1% 
6% 

Paper division 
(1%) 
7% 
14% 
(3%) 
(29%) 
(1%) 
2% 

Packaging division 
9% 
9% 
17% 
0% 
6% 
1% 
12% 

Operating Profit Growth 
NM 
(51%) 
NM 
10% 
(56%) 
(86%) 
NM 

Net Income Growth 
NM 
NM 
165% 
14% 
(3%) 
(98%) 
NM 

Profitability Ratios (%) 

Operating margin (before 
1% 
1% 
10% 
11% 
6% 
1% 
7% 

impairment) (% ) 

Chemistry division 
2% 
5% 
8% 
6% 
6% 
7% 
7% 

Paper division 
(2%) 
(5%) 
10% 
12% 
(1%) 
(9%) 
1% 

Packaging division 
8% 
7% 
10% 
11% 
13% 
13% 
13% 

EBITDA Margin % 
8% 
7% 
16% 
17% 
12% 
8% 
14% 

Net Margin (%) 
(2%) 
3% 
8% 
9% 
11% 
0% 
5% 

Return Ratios 

Profit Margin 
(2%) 
3% 
8% 
9% 
11% 
0% 
5% 

Asset Turnover 
0.7x 
0.7x 
0.7x 
0.7x 
0.6x 
0.6x 
0.7x 

Financial Leverage 
1.7x 
1.8x 
1.9x 
1.8x 
1.5x 
1.5x 
1.5x 

Dupont ROE (%) 
(2%) 
4% 
11% 
11% 
10% 
0% 
5% 

ROCE (%) 
1% 
1% 
10% 
10% 
4% 
1% 
6% 

ROA (%) 
(1%) 
2% 
6% 
6% 
7% 
0% 
3% 

Leverage Ratios 

Debt  Equity Ratio 
0.4x 
0.4x 
0.6x 
0.3x 
0.2x 
0.2x 
0.2x 

Net Debt  Equity Ratio 
0.2x 
0.2x 
0.4x 
0.1x 
0.0x 
0.0x 
0.0x 

Interest Coverage 
1.4x 
0.7x 
11.8x 
9.1x 
9.1x 
0.7x 
9.5x 

Liquidity Ratios 

Current Ratio 
2.4x 
2.3x 
1.6x 
2.8x 
3.0x 
2.7x 
2.7x 

Quick Ratio 
1.7x 
1.7x 
1.3x 
2.0x 
2.2x 
2.0x 
1.9x 

Valuation Ratios 

EV/EBITDA 
11.4x 
12.5x 
5.1x 
4.7x 
7.5x 
11.6x 
6.5x 

P/E 
NM 
26.3x 
9.9x 
8.5x 
8.8x 
NM 
18.9x 
Source: Research Dynamics, Bloomberg, Company data
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CPH Chemie + Papier Holding AG published this content on 06 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 July 2021 06:33:00 UTC.