EQS Group-News: Research Dynamics / Key word(s): Research Update
This report is published by Research Dynamics, an independent research boutique
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 high-quality molecular sieves market. The expansion of the existing capacities is expected to be completed by mid-2022e.
Expansion in lithium molecular sieves capacity to tap the demand for portable oxygen concentrators
The COVID-19 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
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.
End of Media Release