- Spot 50% below its 2021 high, currently at both price and valuation support levels.
- Underperformed SXOP mainly on disappointing MBCC synergies, despite organic growth in both 2023 and 2024 compared to its peers contracting.
- Improving construction backdrop from receding tariff uncertainty, data centre growth and more favourable fiscal and monetary conditions globally.
Sika has underperformed the construction sector, trading ~50% below its 2021 high and ~30% below its 2024 high, driven mainly by its MBCC acquisition and weak construction markets. The MBCC deal sparked concerns over its high cost, as MBCC shed assets for anti-trust compliance, while modest synergy forecasts disappointed investors. Management’s focus on integration and elevated leverage limited bolt-on acquisitions, dampening growth optimism amid weak European markets, US slowdowns from tariff uncertainty, and ongoing pricing and volume pressures in China.
Despite the challenges, Sika continues to expand capacity while also outperforming its peers, achieving organic growth in both 2023 and 2024 compared to a contraction for its peers. Europe’s construction market appears to be bottoming, driven by rate cuts, German stimulus and EU Green Deal investments in sustainable construction, while in the Americas, despite resilient infrastructure growth, tariff uncertainty and high rates have been curbing residential growth. We anticipate a strong US recovery on post-tariff clarity, further boosted by the fast growth in data centres. In APAC, although China’s growth still lags, analysts expect the region to expand from a shift towards higher-quality construction and electrification trends, further supported by strong momentum in Southeast Asia and India.
SIKA now trades at 5Y lows on both price and valuation, levels which tend to coincide with re-ratings, amid signs of an improving backdrop. Although volatility is rich, given the risk of ongoing weakness at its 3Q25 results on 24 October, we prefer limited loss structures and propose long Mar26 190 calls costing 3.4% of underlying (Spot ref 174, Fut ref 174).