EMS-Chemie : Superior business model, but harvest is challenging when it rains
We are initiating coverage of EMS Chemie with a Neutral rating and a target price of CHF 560. The family-controlled and asset-light (superior ROCE of ~35%) Engineering Plastics pure play has undergone a major expansion capex phase, creating capacity to grow into. The currently challenging automotive market (60% of its end market) mutes the momentum needed to unlock our estimated CHF 95m (18% of CHF 539m EBIT 2024) incremental EBIT contribution in the short term, expected in full only in 2028 (CHF 638m, css CHF 637m).EMS currently trades at 19.6x EV/EBITDA 2026, a 13% discount compared to 8 years historical trading of 22.8x but double European chemicals at 8.7x which we see as fair in the current context of the auto market.
EMS-Chemie Holding is a holding company. Through its subsidiaries, Co. engages in the engineering, production and marketing of polymers, fine chemicals and chemical intermediates. Co. also builds industrial plants for chemical processing, develops products for military and civil applications, and operates electric power stations.
Oddo Securities provides securities brokerage and research services. The company offers equity, economic, and derivatives research and credit analysis services. It focuses on insurance, automotive, building materials, pharmaceuticals, telecommunications, information technology, and agri-food industries.
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