TheChek News Flow

Laurent Chekroun | 20 Mar 2026 | Prices as of 19 Mar close

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FT makes the structural case: conglomerates trade at persistent SoP discount, management spread thin, cheap ETFs kill the diversification rationale. Below are the trades with yesterday's closing prices.

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I. PURE-PLAY RERATING

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- HON US close: $234.51

- SpinCo (HONA) targets Q3 2026 listing; Form 10 filed; $16bn notes priced Mar 16

- Investor Day June 3 Phoenix — next de-risking event

- SpinCo comps: Safran/Heico/TransDigm 22-28x EV/EBITDA vs HON blended ~17x

- Implied SpinCo upside: 25-35% to comp range

- Short RemainCo: automation + building, softer industrial cycle

- Risk: Middle East disruption flagged by mgmt — pushing ~high-single-digit Q1 revs to Q2

- SIE prev close: €218.10 (intraday Mar 19 touched €210, -21% from €275.75 ATH Feb 12)

- Margins near-doubled since 2018 spin programme (7% → 13.5%E 2026)

- Residual SoP discount ~12%; DI inventory correction inflecting

- Pair vs SAP neutralises German tech beta

- Risk: China DI ~35% of segment; German recession

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II. COCOA PAIR — CORE TRADE

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- HSY US: ~$235 | MDLZ US: ~$57

- Cocoa futures -40% from peak

- HSY ~85% chocolate — full input cost tailwind

- MDLZ: biscuits/gum/cheese ~50% revs dilute cocoa benefit; hedged into 2026

- MDLZ mgmt explicit: cocoa normalisation materialises in 2027, not 2026

- FY26E gross margin uplift: HSY ~380bps vs MDLZ ~90bps

- HSY raised FY26 adj EPS guidance $8.36 (+32% YoY) at Q4 earnings

- Spread near 18M wides on relative PE

- Horizon: 6-9M

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III. BASF GY — SoP ARBITRAGE + CARRY

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- BAS GY close: €46.13 (-4.5% Mar 19 — post FY guidance miss)

- 2026 EBITDA guidance €6.2-7.0bn vs consensus €7.02bn → entry point

- Trades 7.5x EV/EBITDA vs chem peers 11-14x standalone → 25-30% SoP discount

- Dividend yield ~4.9% at €46.13 (€2.25/sh) as carry

- Catalyst: activist entry or Ludwigshafen restructuring inflection

- Hedge: short LXS GY (close €11.82; -57% past 12M; Q1 results out today)

- Note: LANXESS reporting Mar 19 — watch for post-earnings short entry

- Horizon: 12-24M, patient

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IV. PE EXIT WATCH

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- Close: €63.22 (ex-div Mar 16; €1.80/sh)

- Advent/Cinven seeking TK Elevator exit

- Elevator comps: 18-22x EV/EBITDA — TK Elevator EBITDA ~€1.5bn → EV €22-28bn

- Kone most logical strategic buyer (European footprint overlap)

- 52W range €45.42-€63.02 — at top; add on any pullback

- Horizon: 6-18M, process-driven

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V. STRUCTURAL SHORT

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- Close: ~$22.00 (52W high $33.35; -35% YTD)

- CEO Cahillane paused split plans Feb 2026 — no near-term catalyst

- Q4: sales -3.4%, $9.3bn impairment, full-year EPS guidance cut

- Volume -2 to -3% YoY; D/EBITDA ~4x; brands in secular decline

- FT: "splits are no cure if portfolio stuffed with brands people aren't keen to buy"

- Short on any rally above $24 driven by activist/split speculation

- Analyst consensus $26 → 18% above current — risk to manage

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VI. SYSTEMATIC OVERLAY

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- Desai et al.: +30% CAR in 3Y post-spin

- Basket: HONA (Q3 listing) / Solventum / Vestis / Technip Energies

- Rebalance quarterly; academic alpha 8-12% annualised

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PRICE TABLE (19 Mar 2026 close)

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Name Ticker Price Note

HON HON US $234.51 HONA spin Q3 2026

Hershey HSY US ~$235 Raised FY26 EPS guide

Mondelez MDLZ US ~$57 Cocoa hedge 2026; norm 2027

Kraft Heinz KHC US ~$22 Split paused; -35% YTD

BASF BAS GY €46.13 EBITDA miss; -4.5% Mar 19

Siemens SIE GY €218.10 -21% from ATH; DI recovery

LANXESS LXS GY €11.82 -57% 1Y; Q1 results today

Kone KNEBV FH €63.22 Ex-div Mar 16; near 52W high

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SUMMARY

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Trade Direction Horizon Catalyst

HON SpinCo L HONA / S RemainCo 12-18M Listing + Jun 3 Inv Day

Siemens L / S SAP 6-12M DI orders

HSY/MDLZ L/S mkt neutral 6-9M H2 margin delivery

BASF L / S LANXESS 12-24M Activist / restructure

Kone Long M&A premium 6-18M PE exit process

KHC Short on rally 6-12M Volume miss / split fomo

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Laurent Chekroun

Makor Capital Markets | Graham Advisors SARL

For institutional clients only