Earlier in the week, we looked at the upcoming DuPont electronics business spinoff and what investors are getting with the new Qnity Electronics, which has a strong foothold in the semiconductor industry. Now, here is a look at what will be left of the new DuPont after the planned Nov. 1 split and the stocks starting to trade separately two days later. With electronics out of the picture, the new DuPont will focus on four key markets: health care, water, and diversified industrials. The revenue split is about 25% health care, 24% construction, 22% water, 16% industrials/aerospace, printing and packaging, as well as 13% automotive. Health care DuPont’s health-care business has been a consistent mid-single-digit organic sales grower with exposure to medical packaging, medical devices, biopharma/pharma, and protective garments. According to the company, more than 90% of the top 25 U.S medical device companies use DuPont technology to deliver their most advanced products. The company sizes up health care as a $13 billion addressable market that is growing faster than gross domestic product. It’s led by megatrends such as single-use systems, occupational safety requirements, higher performance materials, and medical device miniaturization. Water DuPont is a leading player in the water industry, specializing in end markets like industrial water, municipal and desalination, life sciences and specialty, and residential and commercial. The business also plays an important role in the semiconductor fabrication process. Over 60% of ultrapure water for semiconductor processes is purified with DuPont’s exchange resins. The company views its water franchise as a consistent mid-single-digit organic sales grower operating within a $7 billion addressable market that is growing faster than GDP, led by trends like freshwater scarcity, growth of water-intensive industries, increasing regulation, and sustainability. Among these trends, management views water scarcity and tightening regulatory requirements as the most favorable, with the company’s portfolio aligned to both. Remember, DuPont nixed its planned spinoff of water and decided to retain the business within the new DuPont to enhance the attractiveness of the new company. Industrials The industrial side is the more cyclical part of the business whose fortunes are more closely linked to the broader economy. Here, Dupont has exposure to construction, automotive, industrial and aerospace, and printing and packaging. One area of leadership is in automotive: all top 10 global auto original equipment manufacturers (OEMs) use DuPont’s adhesives. The transition to electric vehicles plays into its hand, with EVs featuring about double the DuPont content compared to internal combustion engine vehicles. In aerospace, 97% of aircraft builds use the company’s Vespel parts. The company views its industrial exposure as a $21 billion addressable market, but growth is heavily dependent on GDP and the broader economy. Some…
Read More: DuPont prepares to spinoff electronics. What investors get with the