First Read Perimeter Solutions SA: 2Q slight miss; new acquisition, expect stronger 3Q

研报英文原文证据摘录

First Read Perimeter Solutions SA: 2Q slight miss; new acquisition, expect stronger 3Q

Forecast returns

Forecast price appreciation 12.8%

Forecast dividend yield 0.0%

Forecast stock return 12.8%

Market return assumption 9.2%

Forecast excess return 3.6%

Company Description

Perimeter Solutions (PRM) is a leading providuer of Fire Safety Materials & Oil Additives. The

company has about $0.5bn in annual sales, of which about 80% are in North America. PRM

has a leading position in fire retardant formulations, which make up around 60% of total

sales, and are used to slow/stop the spread of wildfires. The company also has full lines of fire-

fighting foams (both Class A and B) which make up approximately 10% of sales. The

remaining 30% of sales is P2S5, a raw material used to make ZDDP, an engine oil additive.

Valuation Method and Risk Statement

Our price target for PRM is based on EV/EBITDA multiples compared to the local market.

Potential risks to PRM's Fire Safety segment (~75% of sales) include a downturn in wildfire

activity. The company is leveraged to wildfire fighting demand through its leading position in

markets in North America, Europe, and Australia and these sales will follow wildfire activity in

the markets in which they compete in and is subject to volatile weather events (cyclicality) and

significant seasonality. PRM's Specialty Products Segment (~25% of sales) are sold to a

consolidated customer base. Sales in these markets will be cyclical in line with industrial

production growth trends and population growth. These markets will still likely see more

negative growth in a more severe downturn. PRM's stock will likely continue to generally

follow its earnings growth trend; if earnings should decline substantially, the stock would

likely decline as well.