Recticel: Quo vadis, Recticel?
After Recticel turned down Kingspan’s takeover approaches, we still see scope for strategic newsflow. Recticel is still looking for a buyer for Automotive Interiors, and we would not exclude that the Kingspan saga has altered the relationship with Eurofoam JV partner Greiner in such a way that it serves as a trigger for strategic change for Flexible Foams. Although probably far from being decided at this stage, we would not exclude that Recticel over time evolves into a pure Insulation play. We believe such a transformation could enhance shareholder value, as Recticel seems well undervalued from a SOTP perspective and seems to persistently get some kind of holding discount. A question mark is the short term earnings momentum, given perceived weakness in a number of important end-markets like bedding, furniture and automotive. To reflect the tougher short term momentum, we decided to lower our rating from BUY to Accumulate while maintaining our € 10 target price.Recticel is engaged in the production of a variety of polyurethane foams that are used in the furniture, technical, automotive, bedding and insulation industries. The Flexible Foam Business Line covers the manufacture, conversion and marketing of flexible polyurethane foam. The types of flexible foams are classified as Comfort, Technical Foams and Composite Foams. Co. is also engaged in the manufacture of foams used in mattresses and slat bases. In addition, Co. manufactures rigid polyurethane and phenolic foams for thermal insulation. Co.'s automotive activities include: manufacturing moulded seat cushions, window encapsulation and manufacturing interior trim components.
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