苏德扎克（SZUGR）：混合甜味剂-买入

Restricted - External Fundamental Credit ResearchKarine Elias+971 43 621017karine.elias@barclays.comBarclays Bank, DIFCBen Haseler, CFA+44 (0) 20 3555 0089benjamin.haseler@barclays.comBarclays, UKCorporate Hybrid StrategyFranck Bataille+33 (0) 14458 3221franck.bataille@barclays.comBBI, ParisParikshit Budhe+ 91 (0) 22 6175 1815parikshit.budhe@barclays.comBarclays, UK FIGURE 2. SZUGR Sugar - operating result-€300mn-€200mn-€100mn€0mn€100mn€200mn€300mn€400mn€500mn€600mnFY18FY19FY20FY21FY22FY23FY24FY25FY26eOperating IncomeSource: Barclays Research, Company Reportsand vs peers, and recommend buying theSZUGR €700mn €5.95% '30-Perp outright. As oftoday, SZUGR 5.95% NC30 hybrid trades c. 250bp wider (in z-spread terms) than SZUGR 4.125%2032 senior bond. Using SZUGR 5Y CDS as a 5-year senior proxy, SZUGR senior sub would standat almost 300bp, whichofferscompression potential versus peers (Figure 6), especially whenheadline risk reduces. We maintain a Market Weight rating on the issuer, reflective of currentlevels.Execution risk remains high:We see execution risk as high as FY26 guidance assumesEuropean sugar prices recover considerably in H2afterthe July-Sept 2025 contracting round.While management would not quantify the level of price recovery from the c.€200/t lower pricesfrom October 2024, Barclays Equity analysts' interpretation of guidance is that management isbudgeting to achieve a c.€100/t increase. Providing some confidence in the improved prices forH2 26 is the chance of a deficit in European sugar production due to management's assumptionfor a c.15% acreage reduction in sugar beet in Europe (previously, a high single-digit decline).The situation with Ukraine'stariff-freeimport allowance by the EU also remains an unknownswing factor for European sugar prices. As at 15 May 2025, management expected a 0.1mntonne sugar deficit in Europe and S&P forecasted a 1.9mn tonne global surplus. As of 20January 2025, management did not provide FY26 EU sugar balance expectations; however, S&Pforecasted a 1.8mn tonne global deficit, with the 3.7mn tonne swing from January to Mayexplained by ramped up production in India and Thailand. Rapid changes to the level ofproduction undermine the visibility of sugar prices and flowing on from this the expectedrecovery in Sugar earnings for H2 26.Management is also guiding for a significant increase in EBIT for the Crop Energies segment,predicated on higher sales. On the FY25 conference call, however, management conceded that"ethanol prices aredifficultto predict", yet it does "foresee an increase in ethanol prices". Webelieve there are two main potential risks to an EU ethanol price recovery : 1) the US-UK tradedeal could increase competition in the UK ethanol market, however management does notexpect any tail risk to emerge here; and 2) the potential for structurally higher imports to the EUfrom the EU-Mercosur free trade agreement, which was agreed in December 2024. With risksskewed to the downside, we are cautious on the near-term profitability of the group and believethat its ability to meet FY26 earnings guidance is challenged by the need for market prices toalign with the group's expectations, a factor outside of Suedzucker's control.2 FIGURE 1. SZUGR Sugar - salesSource: Barclays Research, Company Reports27 May 2025 Credit ratings: Still decent IG headroomS&P: BBB- / StableOn 16 May 2025, the day following the FY25 results release, S&P downgraded Suedzucker'ssenior unsecured rating from BBB to BBB- and updated the outlook to Stable from Negative,reflecting the agency's expectation that the group will be able to deleverage by FY27 to below4.0x adjusted debt to EBITDA. The perpetual subordinated hybrid notes were also downgradeda notch from BB- to B+.Following the FY25 results and investor call, the agency now expects Suedzucker's creditmetrics to stabilise over the next 12-18 months, rather than the previous pricing in of animprovement to both leverage and FFO to debt. S&P assumes profitability will only begin torebound in the sugar businessafterthe usual contract negotiations in October 2026: "We thinkit will take more time for the company’s credit metrics to recover to previous levels, in part dueto volatile trade policy environment in end markets."FIGURE 3. Suedzucker net leverageSource: Barclays Research, Company ReportsMoody's: Baa2 / NegativeOn 3 June 2024, Moody's upgraded Suedzucker one notch to Baa2 with a Stable outlook. Lessthan four months later on 24 September 2024, the outlook was changed to Negative inreflection of the "sudden deterioration in the company's profitability" and the high level ofvulnerability to the "inherent volatility in the sugar industry".On 19 May 2025, Moody'saffirmedits long-term issuer rating of Baa2 and concurrently assigneda Ba1 rating to the new hybrid. In its report, Moody's stated "the need for more visibility on thecompany's ability to improve its credit metrics... albeit ongoing volatility in European sugarprices pose some challen