Initiating Coverage of Syensqo With a EUR 115 Fair Value Estimate and Narrow Moat Rating

Belgium-based Syensqo was spun out of Solvay in 2022 as a new specialty chemicals leader and is focused on high-performance polymers, composite materials, and specialty surfactants. The separation was finalized in December 2023, marking the beginning of Syensqo's growth strategy for 2024-28. During this period, the company should see strong demand on the back of megatrends such as "lightweighting," electrification, advanced connectivity, and sustainable sourcing. Syensqo aims to deliver organic sales growth of 5%-7% on average, a mid-20s EBITDA margin, and midteen returns on capital employed, while maintaining a healthy balance sheet. The company prioritizes customer partnerships, value-based pricing, and cost reductions, including site optimization and manufacturing efficiency enhancements.