奎克好富顿（KWR）：在终端市场逐步走向复苏周期之际实现份额增长与增值并购

2025E2026E2027E-1,868.01,964.02,080.0-312.0344.0378.0-7.889.3711.151,835.81,930.31,996.6 Laurence Alexander * | Equity Analyst(212) 284-2553 | lalexander@jefferies.comDaniel Rizzo * | Equity Analyst(212) 336-6284 | drizzo@jefferies.comKevin Estok * | Equity Associate(212) 778-8516 | kestok@jefferies.comXianrao Zhu * | Equity Associate+1 (212) 778-8742 | xzhu@jefferies.comCarol Jiang * | Equity Associate+1 (212) 284-1714 | cjiang@jefferies.com The Long View: Quaker HoughtonInvestment Thesis / Where We DifferThe investment case for Quaker Houghton is, in our view, fundamentally a callon: 1) pricing power; 2) ability to mitigate rising raw-material costs, namelyoil; 3) ability to leverage international platforms, especially in BRIC countries;4) successful assimilation of Houghton purchase; 5) growth in the steel andauto production end-markets; and 6) ability to cultivate existing customerrelationships to expand the service platform.Base Case,$115, +5%•Organic sales growth tepid in 2025•Continued revenue growth/penetration in BRICcountries and Asian markets•Share gains add 200-300bps in annual volumegrowth through 2027•Limitedvisibilityonproduction•2026E EPS: $8.45; Target Multiple 13.6x; PriceTarget: $115.Sustainability MattersTop Material Issue(s):1) Business Model Resilience:By focusing on essential process efficiencyneeds at metal processing and industrial facilities, and maintaining high levels of customer service andformulation flexibility, Quaker Houghton has been able to take share consistently while still maintainingmargins in a fairly narrow range.Company Target(s):1)Increase female diversity globally and US ethnic diversity to 25%-27% by 2030;2)By 2030, 100% of products classified not carcinogenic, mutagenic or reprotoxic;3)By 2030, reduce useof fossil-based raw materials 30%;4)Carbon-neutral by 2030 and carbon net-zero in the value chain by2050;5)Cut waste and water intensity by 20%; 6)Shift >75% of supply chain to sustainability metrics.Questions to Management:1)Relative operating leverage to EVs, hybrids and ICEs?2)Impact onmargins and competitive advantage of shift to more sustainable feedstocks?3)Any capex burden fordecarbonization?4)Short- and medium-term milestones achieved/on track? If missed, would this affectthe 2030 goal?ESG Sector Deep Dive: ChemicalsPlease see important disclosure information on pages 4 - 9 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. steel,automotiveUpside Scenario,$264, +141%•Robust demand leads to 10% steel industrydemand growth•Volumes continue to improve:each 1%ofvolume gain yields $0.05-$0.08 in EPS•Customer utilization rates return to 90%+,potentially adding $0.80-$1.25 to EPS•Peak EPS: $12; Peak Multiple: 22x; Price Target:$264 Downside Scenario,$100, -9%•Recession lowers sales at a 30%-40%incremental margin•Raw-material costs are not successfully passedthrough, compressing margins•No incremental benefit from M&A or uses ofFCF•Shares trade in line with long-term average ofsector trough multiples•Trough EPS: $5; Trough Multiple: 20x; PriceTarget: $100Catalysts•Steel demand improves with an increase ininfrastructure spending, industrial end marketsaccelerate•Continued pass-through of raw materials tocombat cost inflation (typically 1-2Q lag) 2 Exhibit 1 - KWR Income Statement.($ in M)Sales% ChangeCost of Goods SoldGross ProfitGross Margin% ChangeSelling, General & Admin.SG&A/Sales% ChangeResearch & DevelopmentR&D/Sales% ChangeOperating ProfitOperating Margin% ChangeInterest ExpenseEquity in Earnings of AffiliatesOther IncomePretax IncomePretax Margin% ChangeTaxesTax RateNet income attributable to noncontrolling interest(2)0Net IncomeNet Margin0% ChangeBasic Shares Outstanding0% ChangeFully Diluted Shares Outstanding0% ChangeBasic EPS% ChangeFully Diluted EPS% ChangeSource: Jefferies estimates, Company DataPlease see important disclosure information on pages 4 - 9 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Company DescriptionQuaker HoughtonQuaker Houghton develops, produces, and sells specialty chemical products for a variety of heavy industrial and manufacturing applications, as wellas consulting services. The company primarily supplies products and services to the steel, automotive, mining, aerospace, tube, pipe, coatings, andconstruction materials industries, selling either directly to customers through its consulting program or through third-party distribution channels. Keyproducts include rolling lubricants, surface cleaners, metal fluids, hydraulic fluids, corrosion preventatives, and greases.Company Valuation/RisksQuaker HoughtonOur $115 price target implies 13.6x 2026E EPS and is predicated on our mid-cycle and peak valuation models and peer multiples. Key risks includeraw-material volatility (mostly vegetable oils, animal fats, and mineral oils) and shocks to end-market demand.Analyst Certification:I, Laurence Alexander, cer