ELE­MEN­TIS (ELM) 281.3p


Gain to date: 20% Orig­i­nal en­try point: Buy at 234.5p, 10 Novem­ber 2016

SPE­CIALTY CHEM­I­CALS busi­ness Ele­men­tis (ELM) is set to grow op­er­at­ing profit across the board de­spite un­planned pro­duc­tion out­ages in its chromium di­vi­sion and raw ma­te­rial cost in­fla­tion.

Ear­lier this year, we were im­pressed by Ele­men­tis’ $360m ac­qui­si­tion of an­tiper­spi­rant ingredients man­u­fac­turer Sum­mitRe­heis. In the last 12 months Ele­men­tis has ral­lied 20%, par­tially driven by the ac­qui­si­tion as it helped to boost sales by 26% to $334.1m in the first half of 2017.

The in­te­gra­tion of Sum­mitRe­heis is on track and the com­pany is un­der­tak­ing pric­ing ac­tions to tackle higher raw ma­te­rial costs that have curbed profit growth in the spe­cial­ity prod­ucts di­vi­sion.

Ele­men­tis also plans to sell the un­der­per­form­ing sur­fac­tants busi­ness early next year.

N+1 Singer an­a­lyst James Tet­ley says Ele­men­tis is on track to meet full year ex­pec­ta­tions and is ‘well po­si­tioned to de­liver an­other year of good growth in 2018’ through or­ganic growth and M&A.

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