Arkema Delivers Another Strong Beat and Guidance Upgrade but Slowdown Coming; Shares Undervalued

No-moat Arkema reported second-quarter EBITDA of EUR 705 million, 47.5% above 2021 and 16% above the company compiled consensus. With very strong year-to-date performance, Arkema upgraded 2022 EBITDA guidance to around EUR 2.1 billion (17%-22% growth at constant scope), which is about 5% above consensus and well above our estimate. Despite the strong results, shares were trading flat intraday, worst of the group. The market likely expects a major slowdown (similar to our expectation), but this is now pushing more into 2023 than the second half of 2022. Consequently, we expect to raise our 2022 estimates but will reduce our 2023 forecast, likely resulting in minimal change to our EUR 105 fair value estimate. At current levels, the shares look undervalued.