CLARIANT: Far from "fair value"!

When will confidence return to the shares of the specialty chemicals group CLARIANT? The company is trying very hard and doing an excellent job, well understood in a rather "nasty" environment with raw material (+25%) and energy costs (+35%) rising sharply in 2022. Do investors miss the other reality? We think so: on the one hand, CLARIANT has been able to more than compensate for the high input costs through price increases; on the other hand, raw material costs, which have exploded over two years, should return to normal in the current year; initial trends are already a fact. All in all, the gross margins of European chemical companies should therefore also improve accordingly! With an estimated EBITDA margin of approx. 16%, CLARIANT is also not doing badly and, compared to the peer group (similar companies), the share shows a discount of over 30%. The share is a clear buy at the current level! We are aware that the rather unexpected, massive drop in the share price is due to the exorbitant write-downs in 2022; the amount of just under CHF 450 million is unfortunately no small matter, but at least the sale of the U.S. oil chemicals business is off the books and the worst should be over with regard to the Romanian bioethanol plant according to the CEO. Nevertheless, the Podari plant remains in the red in 2023, even though this technology is very promising from an environmental point of view... investors are skeptical... CLARIANT is confident.

In our opinion, the malus of the bio-ethanol plant should not be overestimated, because, as is well known, the real growth drivers come from the core areas, which are now excellently positioned. But CLARIANT must deliver again in the current year! The bottom line is that the many restructuring measures and also cost savings through streamlining of personnel structures must now become visible! Those who are not yet invested should rather "get in" below CHF 15. Our price target remains at CHF 21.50!