Arkema (ENXTPA:AKE): Assessing Valuation After New Battery Separator Partnership With Semcorp

Arkema (ENXTPA:AKE) just signed a strategic MoU with Chinese battery separator specialist Semcorp, targeting next generation separator technologies for electric vehicles, energy storage systems and consumer electronics, and supporting Semcorp’s global expansion.

See our latest analysis for Arkema.

The MoU lands at a tricky moment for Arkema, with the share price at €52.3 after a 1 week share price return of 3.56 percent but a much weaker year to date share price return of negative 26.96 percent and a 1 year total shareholder return of negative 23.45 percent. Investors seem cautiously optimistic that battery focused deals could stabilise sentiment after a tough stretch.

If this deal has you rethinking where the next materials story might come from, it could be worth scanning fast growing stocks with high insider ownership for other under the radar names building real momentum.

Yet with Arkema trading below analyst targets and at a steep intrinsic discount despite solid earnings growth, should investors treat this battery pivot as a mispriced turnaround story, or assume the market already sees the recovery coming?

Most Popular Narrative Narrative: 20% Undervalued

With Arkema last closing at €52.3 against a narrative fair value of €65.06, the valuation hinges on a multi year earnings and margin rebuild.

The analysts have a consensus price target of €77.062 for Arkema based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €95.0, and the most bearish reporting a price target of just €56.0.

Read the complete narrative.

Want to see how modest sales growth, rising margins and a lower future earnings multiple still point to a rerating? The narrative’s math might surprise you.

Result: Fair Value of $65.06 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained macro weakness in construction heavy markets and aggressive Asian competition in key chemicals could delay Arkema’s margin recovery and rerating story.

Find out about the key risks to this Arkema narrative.

Another Angle on Valuation

Look past the narrative fair value and Arkema starts to look pricey on earnings. It trades on about 31 times earnings versus 17.4 times for the European chemicals sector and a fair ratio of 23.5 times, which hints at valuation risk if sentiment sours again.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Arkema Narrative

If you see the numbers differently or want to stress test your own assumptions, you can build a personalised Arkema storyline in minutes: Do it your way.

A great starting point for your Arkema research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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