Research Dynamics Reports on CPHN: Event Update

On June 20, 2024, the separation of CPHN's Paper, Chemistry, and Packaging businesses was approved. The Extraordinary General Meeting saw a 98.2% shareholder approval rate. Each shareholder in CPH Group AG will receive one share of the new Perlen Industrieholding AG for each share held, effective June 27, 2024. Trading for Perlen Industrieholding AG commenced on June 25 at CHF 24.50 per share, valuing the company at CHF 150 million. CPH Group AG's trading opened at CHF 71.00 per share, valuing it at CHF 426 million.

Earlier this year, CPH’s Board decided to spin off the more volatile Paper business to focus on Chemistry and Packaging. The new entity, Perlen Industrieholding AG, aims to specialize in Paper and real estate in Perlen, Switzerland.

The separation follows the strategic focus on differentiation (Chemistry and Packaging) versus cost leadership (Paper). Notably, there's no impact on daily operations or market presence for these divisions. CPH Group AG continues on the SIX Swiss Exchange, while Perlen Industrieholding AG trades on OTC-X and LPZ-X.

Post-separation, CPH's Chemistry and Packaging divisions showed growth with CAGRs of 12.2% and 11.6% from 2019-2023. However, the spin-off may temporarily affect CPH Group's financials negatively due to a CHF 20.0 million non-cash expense connected to goodwill recycling, impacting the EBITDA for H1 2024. Overall, for 2024, the operating result is expected to be in the low-double-digit million range.

Long-term prospects for the Packaging and Chemistry divisions remain positive, with margin improvements expected between 16-18%, supporting solid earnings growth. CPH is valued at CHF 86.1 per share, indicating a 30.8% upside from current levels.