Materials
EM Spreads initiates coverage on Braskem with an Overweight recommendation. They believe the company’s large domestic footprint, political relevance and partial government ownership make a default event less likely near term, but the credit now hinges less on fundamentals and more on political and strategic decisions involving Petrobras, the federal government and Braskem’s ability to strengthen liquidity. They see asymmetric risk-reward at distressed prices, with outcomes contingent on a secured-liquidity bridge, PRESIQ approval, direct support measures and broader policy backing for Brazil’s petrochemical sector. They favour exposure to the lower-priced bonds within the curve for better downside protection and see greater value in the 2030s at $38.3, 32.1% YTM, 3.1-yr duration.
Edition: 223
- 31 October, 2025
Global Chemicals: PVC - some green shoots emerging?
Materials
Slowing demand on the back of a weak housing and construction end-market has put downward pressure on PVC prices and margins with Asian PVC prices declining 53% from their 2021 highs and US prices down over 60%. However, it is not all doom and gloom. Hassan Ahmed sees demand growing at an AAGR of 3.5% (2023-2027), outstripping capacity growth of 2.3%. Tightening global utilisation rates should lift pricing and margins from current depressed levels in the near- to medium-term, thereby buoying corporate earnings. Amongst Alembic’s coverage universe Braskem and Westlake (both rated Buy) are most exposed to the PVC cycle.
Edition: 197
- 18 October, 2024
Materials
The shares have underperformed peers by a whopping 77% since Mar 2019 - Hassan Ahmed believes this is unwarranted and argues that the company’s geographic and feedstock diversity, along with improving fundamentals, isn't appreciated by investors. He continues to believe that a takeover is the most likely outcome and sees the recent bid as a win:win for shareholders and acquirers: shareholders would be able to sell at almost double the current share price while the acquirers would obtain relatively new and world-class assets at a replacement value of 0.54x. He increases his 12-month TP to R$35.
Edition: 162
- 09 June, 2023
Chemicals: Recent declines are overdone
Materials
Chemical equities' performance is worse than anything we have seen in recessionary periods over the last 60 years, suggesting limited downside and significant upside for some. Sector balance sheets and cash flows are far better positioned today than in 2008/09. For 2023, Hassan Ahmed prefers companies that may benefit from catalysts (Tronox and Braskem), secular changes within their markets (Olin), or have high China / Europe exposure (Covestro and Tronox). He sees PureCycle as a high-risk / high-return play - TP $30 (300%+ upside).
Edition: 151
- 06 January, 2023
Materials
Shares have underperformed a basket of their closest Western peers by 36% since March 2019 - there is a continuing, erroneous perception that Braskem is a Brazil-based, naphtha-biased polyethylene story, while ignoring the company's equal capacity of PE and PP, Brazil composing ~50% of EBITDA, and 40% feedstock exposure to NGLs. Braskem has meaningfully improved its operating rates, which, combined with cost management, has resulted in a significant (sustainable) boost in EBITDA margins. The shares trade at 0.40x replacement value and Hassan Ahmed continues to expect the company to be acquired. 12-month TP BRL50.00 (45% upside).
Edition: 141
- 05 August, 2022
Chemicals: Macro stars aligned
Materials
Global economic stimulus, a weakening USD, rising vaccination rates and lean inventories are perfectly aligned for continued commodity chemical strength, with higher oil prices providing an additional tailwind. Multiple compression at Olin, Chemours, Huntsman and Tronox seems excessive, particularly when compared to earnings growth prospects. FCF yields at Venator, Braskem and Trinseo are very attractive. For 2022, Hassan Ahmed prefers companies that may benefit from activism/M&A-like catalysts (Braskem, Huntsman and Tronox), secular changes within their markets (Olin), or have underappreciated proforma earnings power (Trinseo and Westlake).
Edition: 126
- 07 January, 2022
Materials
A misunderstood story; raises TP from BRL65 to BRL75 (30%+ upside) - share price underperformance relative to peers is unwarranted; geographic and feedstock diversity, along with improving fundamentals, isn't appreciated by investors. Braskem has meaningfully improved its operating rates, which, combined with cost management, has resulted in a significant (and sustainable) boost in EBITDA margins. The shares trade at 0.57x replacement value and Alembic continue to believe Braskem is an attractive acquisition target.
Edition: 122
- 29 October, 2021
Best Deleveraging Names for LatAm
Bonds
2021 should be a transitional year as companies recover from the effects of Covid-19. While Lucror Analytics expect many companies to deleverage substantially y-o-y, some bonds have limited upside potential from current levels, given that they have already racked up significant gains. Hence, they have chosen eight names which: (1) are likely to deleverage significantly during 2021-2022; and (2) have attractive valuations, leading to a "Buy" opportunity at current levels. These are Atento, Braskem, CSN, Embraer, InterCement, Unigel, Total Play and Volcan.
Edition: 108
- 16 April, 2021