Solvac Significant discount widening presents buying opportunity

Since the start of March 2024, Syensqo has risen by 8.0% while Solvay has rallied 28.0%. However, in stark contrast to its underlying investments, Solvac has declined by -2.8% during the same time period. As a result, we estimate Solvac's discount to have widened to 38.4% which is much higher that the 2yr and 5yr average discount(s) of 24.3% and 20.7% respectively. While lower volumes in the name could be one reason, we also believe that the market has not fully re-calibrated its view of Solvac as having significant stakes in a legacy business with dominant market positions and in a chemicals business that has strong growth prospects. We think that Solvac's discount will contract back to its historical average and see the current situation as a buying opportunity. After having updated our model and applying a 30.0% discount to our est. TEV of €222.9ps, we slightly lower our TP from €160.0 to €155.0 but raise rating to BUY.