Corbion Reduced ambitions for PLA after French plant project formally cancelled
The decision to cancel the 2nd PLA plant project in France is understandable in light of the risen capex, high sugar prices and subdued PLA market conditions. Corbion and TotalEnergies are not giving up on PLA but future growth now becomes more uncertain and we no longer assume a 2nd PLA plant to be build in the course of this decade. Despite the PLA plant cancellation, we still appreciate Corbion for the combination of an intrinsically defensive food ingredients business, a market leading technology position (gypsum free LA soon being rolled out), ambitious profit growth targets (15-20% annual EBITDA growth until 2025) and a top notch ESG profile. Forward valuation multiples are attractive and we maintain our Accumulate rating while we reduce our DCF-derived target price from € 38 to € 37.Corbion is an internationally operating company engaged in the development, production, sale and distribution of bakery supplies and food ingredients. Co. is engaged in the Bakery Supplies and Lactic Acid business. Co.'s operations are divided into two segments: Bakery operations and Lactic acid operations. Co.'s Bakery operations comprise the development, production and sale of bakery ingredients and products. Co.'s Lactic acid operations involve the production of lactic acid and lactic acid derivatives which are used in food, pharmaceutical and technical products. Co. operates mostly in Europe and North America. Co.'s brands are Waldkorn, Kate's cakes, Purac, Carel, MeisterMarken.
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