The significant upgrade in our FY21-22 EPS forecasts is driven by: 1) improved revenue and margin expectations for the Protective Films division, from €285m previously to €385m and a recurring operating margin of 11.0% versus 7.9% in our previous estimates. We see a very supportive trading environment as the rapid recovery of the industrial activity and low inventory levels post-pandemic put CPF in a prime position to leverage the strong demand of industrial goods and construction materials, with margins benefiting from the division's high-end product portfolio and state-of-the-art production capacity.
2) Higher top-line expectations for CHS, reaching €120m in FY21 versus €85m previously, as demand for PPE may be stronger than anticipated through Q2-Q3 in response to the recrudescence of the sanitary crisis in India, which puts the global efforts in curbing the pandemic under threat.
Based on these changes, we see our group recurring operating income forecast increasing from €40.2m to €66.61m in FY21, which puts us 61% above consensus estimates, and our FY21 EPS increasing from €0.68 per share to €1.21. For FY22, the gradual cool-down of this "restocking effect" should see CPF's revenues and margins normalising, but still coming above our previous forecasts.
