Is Arkema’s Battery Separator Pact With Semcorp Altering The Investment Case For Arkema (ENXTPA:AKE)?

• Earlier this month, Semcorp announced it had signed a Memorandum of Understanding with Arkema to accelerate innovation in battery separator technologies and support Semcorp’s international expansion across Electric Vehicles, Energy Storage Systems and Consumer Electronics.
• Because separators are central to battery safety, efficiency and lifespan, this collaboration highlights Arkema’s increasing exposure to high-performance materials used in electrification and energy storage applications.
• We’ll now examine how Arkema’s support for Semcorp’s next-generation battery separators could influence the company’s investment narrative around specialty materials.

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Arkema Investment Narrative Recap

To invest in Arkema you need to believe in its shift toward higher value specialty materials that can offset exposure to cyclical end markets and margin pressure. The Semcorp MoU modestly reinforces the near term catalyst around higher value electrification materials, but does not fundamentally change the key risk that weak demand in construction and automotive, coupled with macro uncertainty in Europe and North America, may keep volumes and profitability under pressure.

Among recent announcements, the May 2024 partnership with solid state battery player ProLogium stands out as closely related to the Semcorp MoU. Taken together, these collaborations underline Arkema’s push into advanced battery materials, which could gradually diversify earnings away from more cyclical, lower margin activities if execution stays disciplined and demand for electrification materials holds up.

Yet despite these partnerships, investors still need to be aware of the risk that prolonged macro weakness could...

Read the full narrative on Arkema (it's free!)

Arkema's narrative projects €10.3 billion revenue and €464.5 million earnings by 2028. This requires 2.9% yearly revenue growth and about a €273.5 million earnings increase from €191.0 million today.

Uncover how Arkema's forecasts yield a €65.06 fair value, a 28% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members offer 9 fair value views for Arkema, ranging from €44.06 to €112.93, underscoring very different expectations. When you weigh those against the risk of structurally weak construction and automotive demand, it becomes even more important to compare several perspectives on Arkema’s earnings resilience.

Explore 9 other fair value estimates on Arkema - why the stock might be worth 13% less than the current price!

Build Your Own Arkema Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free Arkema research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Arkema's overall financial health at a glance.

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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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