Elementis’ shares have drifted recently, underperforming peers despite reporting a very solid Q3 performance just three weeks ago. The shares now trade at a marked discount to the peer group, having de-rated since the start of the year. We expect an in line outturn to FY17 and believe Elementis is well set to deliver continued profit growth in FY18 with the potential for non-core disposals to enhance cash generation. End market conditions are generally favourable in Specialties (US and China coatings exposure both positive, oilfield recovery continues, personal care growth well in excess of GDP). Meanwhile, Chromium looks to be through the worst of a challenging competitive environment. We consider recent share price weakness a buying opportunity with the shares now trading on an FY18 P/E rating of <17x, a 10% discount to the peer group.