Food and Beverage Sector Ideas

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>>> Symrise (SYIEY)


http://news.morningstar.com/articlenet/article.aspx?id=785937&SR=Yahoo


Star Rating: 5 Stars
Economic Moat: Narrow
Fair Value Estimate: EUR 74.00
Fair Value Uncertainty: Low
Five-Star Price: EUR 59.20


Symrise is the world's fourth-largest supplier of flavors and fragrances, with a market share of 12%. Its narrow-moat rating is based on customer switching costs, which make the business stable and predictable as clients don't change ingredients providers easily due to the risk that they might suffer production disruption as a result or impair brand values through changed taste, flavor, or fragrance profiles. Long-term growth of ingredients is supported by positive demographic trends (including increased urbanization, more processed foods being eaten, more women working), and health and wellness trends. Further, there is upside potential to ROIC once Pinova, its recent acquisition, has been successfully integrated. Symrise has exposure to the high-margin fragrance business, strong market shares in oral care ingredients, and high exposure to strong growth in emerging markets, which account for 46% of sales. With shares trading at a price/fair value of 0.77, the risk/reward profile seems favorable.

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