Recticel: Selling Automotive Interiors & Eurofoam stake is probably not the endgame
After Recticel turned down Kingspan’s takeover approaches last year, it is now accelerating its transformation with the divestment of Automotive Interiors and its 50% stake in Eurofoam. The combined cash proceeds of € 210m not only will give Recticel a net cash position (valuable in these uncertain economic times), but also demonstrate there is significant scope for a revaluation as they add more than €1 per share to our SOTP’s derived fair value, bringing the latter to € 11 per share. We continue to believe the endgame might very well be that Recticel will evolve into a pure Insulation play and further strategic steps in that direction could definitely unlock the valuation upside. We expect investors will gradually embrace that idea and we reiterate our BUY rating while we up our target price from € 9 to € 10, with the discount vs our SOTP derived fair value mainly due to the uncertainty on timing of the expected strategic transformation.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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