Roquette Frères | Buy SUN/Hybrids | Going into pharma creates opportunities for investors Buy

Research evidence excerpt

Roquette Frères | Buy SUN/Hybrids | Going into pharma creates opportunities for investors Buy

ITDA, though the repositioning will be gradual. FCF generation remained solid in 2025 at EUR301m

despite the challenging environment, and we expect a similar outcome in 2026, supported by working capital discipline and

capex control, supporting a credible deleveraging path toward the 2.3-2.7x target by end-2027.

▪ We initiate coverage of the only SUN, the ROQFRE EUR600m 3.774% 2031 (Z-spread 105bps, YTW 3.9%), with a Buy

recommendation. The notes trade wide relative to BBB peers, reflecting post-acquisition leverage and a limited market history,

and we view the risk/reward as attractive at these levels given the credible deleveraging path thanks to strong cash generation

despite top-line pressure.

▪ We initiate coverage of both ROQFRE hybrid bonds, the 5.494% PNC2029 (reset spread 325bps) and the 6.000% PNC2032

(reset spread 310bps), with a Buy recommendation. The rationale mirrors that of the SUN, with higher structural risk

compensated for by wider spreads. Both instruments trade at the upper end of the BB+/BB hybrid curve, between Grand City

Properties and Aroundtown/Stellantis, with Stellantis commanding the highest spreads. The wider levels reflect the

challenging operating environment, significant post-acquisition leverage, a limited hybrid track record, and a private

ownership discount, all of which we view as well-priced at current levels. The main risk is slower deleveraging, which would

elevate extension risk on the hybrids.

Market leader in plant-based solutions

▪ Roquette Frères is one of the world's leaders in plant-based ingredients and pharmaceutical excipients, serving customers

across more than 150 countries with over 11,000 employees worldwide.