Læs hele analysen af Novozymes her.
Investeringsanalyse, 20. januar, Stefan Quennville
Novozymes is the world's largest producer of industrial enzymes, controlling about half of this $4 billion market. Enzymes are naturally occurring proteins that act as catalysts to accelerate biochemical reactions and have applications across a number of industrial processes, including in the production of washing detergents, food and beverages, ethanol, agricultural inputs, and pharmaceuticals. The company offers over 700 proprietary enzyme solutions that enable its customers to produce more or higher value products with fewer inputs (raw materials, energy, etc.). This value proposition allows the company to develop long-term and highly profitable customer relationships.
The company has grown over the last decade by leveraging its extensive expertise with enzymes and microorganisms to develop industrial-scale process solution in an expanding number of end markets. We expect this innovation to continue and believe that the firm can continue to grow its business by addressing new opportunities, including the emerging biomass conversion (2G biofuels) and bio-agriculture industries. Additionally, the firm can continue to grow on its current strengths by further displacing chemicals in the detergent market (surfactants and builders represent 70%-75% of the detergent ingredient market compared with only 6%-12% for enzymes) and increasing its presence in biopharma.
With a growing number of 2G biofuel plants using its solution, we think the firm may become the industry standard, and its 2013 partnership with Monsanto appears to position the firm quite well in the growing bio-agriculture sector. We think the firm has created a wide moat business, as demonstrated by its R&D leadership, approximately 50% market share and 20%-plus returns on invested capital. However, the company’s bright prospects have been recognized by the market, and we believe that at current prices, Novozymes’ shares are fully valued.
Bulls and Bears say
Bulls say
- Novozymes is the dominant player in the industrial enzymes market, allowing it to generate high margins and returns on capital.
- Second-generation biofuels are poised to grow significantly as new plants are being built, creating significant new demand for Novozymes’ products.
- Growing demand in emerging countries will continue to allow opportunities for Novozymes to gain share in the detergent and food and beverage markets.
Bears say
- The company’s focus on the ethanol production market is dependent on U.S. energy policies that could be subject to sudden political change.
- Novozymes' largest end markets--household care and food and beverage--are maturing, and growth rates will likely be lower than in the past.
- Current high valuation multiples incorporate high expectations for growth and margins. With increasing competition and expansion into new markets, the company may not be able to meet such high benchmarks.
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