Arcema’s Strategic Buybacks and Low-GWP Refrigerant Push: A Dual Engine for Value Growth

Investors seeking a blend of disciplined capital allocation and ESG-driven growth need look no further than Arkema. The French specialty chemicals giant is executing a two-pronged strategy: repurchasing shares to boost per-share metrics while capitalizing on a $150 billion shift toward sustainable cooling solutions. With its recent buybacks and partnerships like its collaboration with Honeywell, Arkema is primed to deliver outsized returns as regulatory tailwinds and undervaluation converge.

Buybacks Signal Confidence in Undervaluation

Arkema’s share buybacks—15,000 shares at an average price of €68.95 between May 12–16—are not random acts of capital deployment. These purchases, part of a larger program authorized in 2021, reflect management’s belief that the stock is undervalued. The buybacks, which have already reduced the share count by 28,200 shares in May alone, directly amplify earnings per share (EPS) and return on equity (ROE).

The stock’s current valuation at ~10x trailing EBITDA versus peers at 12–15x suggests significant upside. By shrinking the share base, Arkema is compounding value for long-term investors.

Low-GWP Refrigerants: A $150B Tailwind

While share buybacks address the “value” side of the equation, Arkema’s strategic partnership with Honeywell positions it to capture the “growth” side. The collaboration focuses on distributing low-global-warming-potential (GWP) refrigerants like R-454B and R-513A, which are critical to meeting the Kigali Amendment’s HFC phasedown targets.

These refrigerants, with GWP scores as low as 142 (R-516A) compared to legacy refrigerants like R-410A (GWP 2,088), are in high demand as governments worldwide tighten regulations. Arkema’s Forane-branded refrigerants are already displacing high-GWP alternatives in HVAC systems, supermarket chillers, and industrial cooling—a $150 billion market by 2030.

The partnership with Honeywell ensures Arkema dominates the supply chain for these critical solutions. For example, R-454B’s GWP is 466—68% lower than R-410A—while maintaining performance in residential air conditioners. Meanwhile, R-516A’s ultra-low GWP positions it as a long-term replacement for R-134a in commercial systems.

Why This Confluence Creates a Buy Rating

The combination of reduced share count and ESG-driven growth creates a virtuous cycle:
1. EPS Expansion: Share buybacks directly boost EPS, while refrigerant sales—already growing at 10% annually—add to profitability.
2. ESG Leadership: Arkema’s role in decarbonizing cooling systems aligns with ESG mandates, attracting institutional investors seeking climate-resilient assets.
3. Regulatory Tailwinds: The Kigali Amendment’s 2024–2025 deadlines will force industries to adopt low-GWP refrigerants, creating a multiyear revenue ramp.

Risks and the Case for Immediate Action

Risks include overcapacity in refrigerants or delays in regulatory adoption. However, Arkema’s technical expertise and Honeywell’s distribution scale mitigate these concerns. Meanwhile, the stock’s current valuation leaves little room for downside.

The bigger risk is missing the inflection point. As Arkema’s buybacks reduce shares and refrigerant sales accelerate, the stock is likely to reprice higher. Investors who wait for wider recognition may miss the upside.

Final Take: Buy Arkema Now

Arkema’s dual focus on capital discipline and ESG-driven innovation positions it as a standout play in the chemical sector. With a shrinking share base and a $150B tailwind, this is a rare opportunity to profit from both financial engineering and structural growth. Act before the market catches up.

Rating: Buy
Price Target: €85 (12% upside)