16. December 2020 | 10:33 CET
DOW, Henkel, Royal Helium - Chemistry learns sustainability
The chemical sector is entering a new era. Value chains are being reshaped as sustainability, along with economic and geopolitical shifts, new technologies, and changing consumer demands challenge the bottom line and future profitability of companies. Covid-19 has led to even greater complexity and caused significant shifts in supply and demand. However, sustainability factors and ESG criteria also offer growth and differentiation opportunities for companies that redefine their value chains and business models, adapt to the circular economy, seize the opportunities of digital technology, and upskill their employees to the best of their abilities.
time to read: 3 minutes by André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Dow Inc.- chemical giant on new paths
Dow Inc., formerly known as Dow Chemical, recently announced that it has joined with companies from around the world to form a new consortium under the acronym CELAB: "Toward a Circular Economy for Labels." CELAB is a well-intentioned industry initiative started by self-adhesive label manufacturers with the goal of creating a greater circular economy for their products by improving and promoting the recycling of matrix and release paper substrates.
With the formation of CELAB, Dow joins other industry leaders to facilitate collaboration on a global scale, promote regional initiatives and implement universal adoption of industry best practices for greater sustainability. Success is guaranteed through the collaboration between industry players across the value chain. Dow Inc. is the 2019 merger of Dow Chemical and Du Pont de Nemours, which currently employs 37,000 people in agricultural chemicals, plastics and speciality chemicals.
With a price-to-sales ratio of just 1 and a dividend yield of 5.3%, Dow Inc. is an absolute standard old economy stock. With a share price of USD 53.7, it is aiming for new highs in a positive trend.
Henkel - Washing 4.0
Henkel has opened a state-of-the-art, fully automated warehouse for laundry detergents and household cleaners at its production site in Montornès del Vallès, in Spain near Barcelona. The Company made an investment of EUR 22 million in the 24,000-square-meter warehouse, which will serve as an essential distribution hub for southern Europe. The new logistics centre is another example of Henkel's strategy to combine Industry 4.0 and smart factory concepts. The facility will be based on digitization and robotization. It will use cutting-edge technology in logistics and will define new environmental standards. In this way, the Company is improving the resource efficiency of its supply chain, time-to-market and streamlining processes. Henkel aims to become a climate-neutral company by 2040.
Henkel's share price recovery is still a long way from the 2017 highs of around EUR 125, with the share price recently rising from EUR 68 to EUR 89. However, earnings growth is expected to return to 15% in 2021. In the last 3 years, this had slumped by almost 40%. The Company has a market value of EUR 39 billion and is currently practicing breaking out of a three-year downtrend. With a target price of EUR 106, Goldman Sachs is already positive - we hope this is a good sign…
Royal Helium - With full cash into the new year
Royal Helium Ltd. is focused on the exploration and development of a significant helium production project in southern Saskatchewan. Helium is an essential industrial gas for the chemical industry. With over 400,000 hectares of prospective land held under permits, leases and applications, Royal is one of the largest helium landholders in North America.
Royal Helium's projects have been methodically studied for over two years for their production potential and reviewed by geologists and engineers. A feasibility study will now be carried out, and the project will be developed further, as the demand for helium has grown by leaps and bounds. To take the next steps, RHI has entered into an agreement with a consortium of underwriters led by Cormark Securities Inc. for a private placement of 20 million units at a price of 22 cents per unit. This amount flushes around CAD 5 million into the coffers, which means that the Company is financed through for the future work and can tackle the year 2021 dynamically.
The Company currently has a capitalization of only CAD 15.2 million at a price of CAD 0.26 per share. The outlook remains very promising, not least because there are currently only a few new helium developments, and demand is leading to rising prices. Potential buyers are likely to have already positioned themselves in the recent capital increase.