Stock Analysis & Valuation Carbios SAS (ALCRB.PA)

• Previous Close: €10.00
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	63.05	531
Intrinsic value (DCF)	7.11	-29
Graham-Dodd Method	0.80	-92
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Carbios SAS is a pioneering green chemistry company headquartered in Saint-Beauzire, France, specializing in the development of industrial bioprocesses for the biodegradation and biorecycling of polymers. Founded in 2011, Carbios is at the forefront of enzymatic recycling technologies, offering innovative solutions like EVANESTO, an enzymatic biodegradation solution for polylactic acid (PLA)-based single-use plastics, and enzymatic recycling of polyethylene terephthalate (PET). The company's proprietary technologies enable the transformation of plastic waste into high-quality materials, addressing the global plastic pollution crisis. Carbios has formed strategic partnerships, including a notable collaboration with Novozymes to produce enzymes for PET recycling. Operating in the specialty chemicals sector, Carbios is positioned as a leader in sustainable plastic recycling, catering to industries such as food packaging, disposable tableware, and medical applications. With a strong focus on environmental sustainability, Carbios is driving the transition toward a circular economy in the plastics industry.

Investment Summary

Carbios SAS presents a high-risk, high-reward investment opportunity in the emerging green chemistry sector. The company's innovative enzymatic recycling technologies position it as a potential leader in sustainable plastic waste management. However, with a market cap of approximately €105.5 million and negative net income of €-33.1 million in the latest fiscal year, Carbios is still in the growth phase, requiring significant capital expenditures (€-62.6 million) to scale its operations. The company's high beta of 2.155 indicates substantial volatility, making it suitable for investors with a high-risk tolerance. The lack of dividends and current negative EPS (-€1.97) suggest that profitability may still be years away. Nonetheless, Carbios's strategic partnerships and first-mover advantage in enzymatic recycling could yield substantial long-term returns if its technologies achieve widespread adoption.

Competitive Analysis

Carbios SAS operates in a niche but rapidly growing segment of the specialty chemicals industry focused on sustainable polymer recycling. The company's primary competitive advantage lies in its proprietary enzymatic technologies, which offer a more efficient and environmentally friendly alternative to traditional mechanical recycling methods. Unlike conventional recyclers, Carbios's enzymatic processes can break down PET and PLA plastics into their base monomers, enabling the production of virgin-quality recycled materials. This technological edge is bolstered by strategic collaborations, such as the partnership with Novozymes, which provides access to high-performance enzymes at scale. However, Carbios faces competition from both established chemical recyclers and emerging biotech firms. The company's small scale and negative cash flow (-€30.2 million operating cash flow) pose challenges in competing with larger, well-capitalized players. Additionally, the nascent state of enzymatic recycling means market adoption is still uncertain, requiring continued R&D investment. Carbios's ability to secure additional partnerships and scale its technology cost-effectively will be critical in maintaining its competitive positioning.

Major Competitors

• Loop Industries Inc. (LOOP.TO): Loop Industries specializes in depolymerization technology for PET plastic and polyester fiber waste. Unlike Carbios, Loop uses a chemical (non-enzymatic) process, which can handle a broader range of contaminated plastics but may face higher energy costs. Loop has partnerships with major brands like PepsiCo and L'Oréal, giving it strong market visibility. However, the company has faced scrutiny over the scalability of its technology, similar to challenges Carbios may encounter.
• Dow Inc. (DOW): Dow is a global chemical giant with initiatives in advanced recycling, including partnerships to develop pyrolysis-based recycling for mixed plastics. Dow's massive scale and existing infrastructure give it an advantage in commercialization, but its focus on non-enzymatic methods may be less sustainable long-term compared to Carbios's biological approach. Dow's broad product portfolio also dilutes its focus on specialized recycling solutions.
• BASF SE (BAS.DE): BASF is investing in chemcycling, a pyrolysis-based process for plastic waste. The company's strength lies in its global reach and extensive R&D capabilities, but its technology is less selective than Carbios's enzymatic methods. BASF's focus on mixed plastic waste gives it a different market niche, though it may compete for the same end customers seeking sustainable plastic solutions.
• Novozymes A/S (NVZMY): Novozymes is Carbios's partner in enzyme production but also a potential competitor in the broader bioindustrial space. Novozymes has unparalleled expertise in enzyme optimization and manufacturing at scale, which benefits Carbios. However, Novozymes could theoretically develop competing recycling technologies independently, given its vast enzyme portfolio.