Market's view on Treatt
Published on April 2024
- Glanbia’s acquisition of Flavor Producers at a valuation of $300 million with an adjusted EBITDA of $19.7 million is compared to TET’s current valuation of £285 million with an adjusted EBITDA of £25.9 million, suggesting a premium of approximately 36% over TET’s valuation.
- The acquisition of Flavor Producers by Glanbia is seen as a validation of current market valuations and indicates a supportive buyer environment for such assets.
- There’s a discussion on whether there has been a turning point in inventory cycles which could potentially be a catalyst for increased cash flow.
- Givaudan also reported positive results, reinforcing a favourable outlook for the sector.
- TET is noted to trade at a 50% discount to peers despite potentially growing faster, highlighting a possible undervaluation.
- A price to earnings ratio of 12.5x based on a 100% profit to free cash flow conversion for next year is discussed, with opinions on its feasibility.
- Rapid short covering is observed to be pushing up the stock price.
- There are mentions of speculative trading positions like increasing short positions ahead of the USA CPI announcement.