Seeking Alpha • Oct 13

Braskem Buoyed By A Buyout Offer

Summary Braskem shares perked up on reports that Apollo has come back with a cash buyout offer that is significantly above recent prices for the shares. Braskem prospered when petrochemical supplies were disrupted by the pandemic and weather events, but the current outlook for spreads and profits is far less exciting. Cyclical downturns/troughs are a normal part of the business, but it can be hard to get investors excited about value calls on a commodity chemicals company in such times. Apollo's offer is below the long-term average forward multiple, but not unreasonable, and it should restore some confidence that a $20 fair value for BAK stock is credible. The climb down from record-high petrochemical spreads in 2021 has been a painful one for Braskem (BAK), with the ADRs of this large Brazilian chemical company down over 30% over the past year – worse than peers like Alpek (ALPKF) and LyondellBasell (LYB). Not only has Braskem taken a hit from higher feedstock prices and higher industry supply, but the company has also seen unhelpful developments in its ongoing Alagoas liabilities and from Brazilian government tax and tariff actions. As I said back in August of 2021, Braskem shares aren’t a particularly attractive option in the face of weaker spreads and weaker EBITDA, and that’s a situation that could persist for a while longer. By the same token, the shares recently hit decade-plus valuation lows (in terms of forward EV/EBITDA), and this is still a profitable, free cash flow-generating company with a respectable future. While the recently reported bid from Apollo Global Management (APO) isn’t necessarily a blockbuster offer, it could help restore confidence in the long-term outlook for this beaten-down chemicals company. A Better Bid By Apollo, If The Rumors Are True While there have been no official comments yet from either Braskem or Apollo as of this writing, multiple Brazilian news sources reported on October 11 that Apollo had made a new, higher bid for the company after reportedly bidding on 100% of the equity (including the shares held by Novonor and Petrobras (PBR)) back in July. If the reports are accurate, Apollo is offering R$50/share, or around $19/ADR, or roughly double the recent low for the shares. Apollo’s bid would certainly simplify some of the outstanding and ongoing issues that have impacted the Braskem share price – with such a deal, the question of Novonor and Petrobras selling down their stake would be resolved, as would the company’s reported efforts to get a listing on the Novo Mercado. Likewise, any concerns about further increases in liabilities tied to the Alagoas salt mining disaster, ongoing issues with Pemex supplying contracted ethane in Mexico, and Brazil’s tax and tariff policy toward the chemical industry would become Apollo’s to deal with going forward. I won’t say that the deal is a “can’t miss” prospect for investors with longer investment horizons. Apollo’s deal works out to a roughly 5x premium to my trough EBITDA estimate for this cycle against a long-term average forward EV/EBITDA multiple of around 5.5x. It’s reasonable to think that multiples will be compressed given the tougher outlook for spreads and profits over the next couple of years, but Braskem remains meaningfully free cash flow positive, has a manageable debt situation, and has very modest capex requirements over the next few years. While management is looking to add more green polyethylene capacity, built an ethane import facility in Mexico, and possibly engage in some international and/or vertical expansion, all of those projects can be handled relatively easily. Moreover, the company has amply demonstrated how they can leverage supply shocks to generate substantial free cash flow. All told, this is a credible offer and one that could drive tough choices for management and shareholders. While it’s possible to quibble with the premium Apollo is offering (at the lower end of the long-term range), it’s not that far off my normalized fair value estimate and it offers the certainty of a cash buyout as opposed to waiting potentially several years for the business and share price to resume meaningful growth. Braskem's Ongoing Challenges Are Still Meaningful The near-term outlook for Braskem is not exactly rosy. While this is a well-run petrochemicals company, there is little the company can do in the face of higher feedstock prices (the price of oil drives the price of naphtha, the company’s primary feedstock) and increasing petrochemical supplies. Polypropylene should hold up somewhat better, but supply shortages in the resins market have definitely eased, and China appears to be on a path to double its polyethylene capacity from 2019 to 2025. Domestic volumes in Brazil aren’t bad (up 6% yoy and down 4% qoq in the last quarter), and the company generates a little more than half of its EBITDA from its Brazilian operations (which includes export sales), but the Brazilian economy has been looking wobblier amid a contentious election cycle. It likewise doesn’t help that the Brazilian government recently reduced tariffs on imported resins and vinyls (from around 11% to 3%-4%), a move that will add a little extra pressure to the company’s earnings over the next 18 months. The reality, though, is that even if demand in the company’s main markets holds up (and North America and Europe dodge a recession), spreads are likely to continue declining on that combination of increased feedstock prices and improving industry supply (weakening prices). Spreads could continue to decline into 2024, and while Braskem can offset some of that with operating efficiencies, the reality is that the market is not going to be all that excited about a business where year-over-year EBITDA growth may not be meaningful until 2025. The Outlook Braskem’s business is tied to multiple global commodity markets, and the only certainty in modeling this company is that only by luck or happenstance will you accurately model the business beyond a year or two out (if that). To that end, it’s possible that economies around the world will slow even more than I expect, driving lower demand for resins and vinyls and even weaker profits for Braskem over the next year or two. It’s also possible that demand holds up better than I expect and feedstock prices ease off, leading to stronger profits. I’m expecting Braskem’s EBITDA to fall roughly 60% from 2021 to 2024, but I do think the company can see solid growth again from 2024 onward on the back of its efficient global operations and emerging opportunities like green polyethylene.

Seeking Alpha • Aug 03

Braskem: Time To Look Beyond The EU/North America?

In this article, we'll take a look at Brazil-based international petrochemical giant Braskem. The company is one of the most crucial and diversified international chemical companies out there - but often gets overlooked by investors in favor of domestic businesses. In this article, I'm going to look into Braskem - and what should cause you to be interested in the business. Dear Readers, In this article, we're going to be taking a look at Braskem (BAK). The company is an oft-overlooked international, Brazil-based petrochemical specialist company with operations spanning continents. While the company does come with a certain set of risks, its diversification and South American base means that to a higher degree it is insulated to some of the current energy and macro troubles that some of our European counterparts face. A reader asked me to take a closer look at Braskem to see if it could be a fit - and I'm happy to do so. With that said, let's see what we have in Braskem. Reviewing Braskem A high-level review of Braskem is simple. The company is the top thermoplastic resin producer in the Americas. With 36 industrial plants of massive size spread across the nations of Brazil, US, Mexico as well as Germany, the company has an overall capacity of over 15M tons of thermoplastic resins and petrochemical products, compounds and materials. This company is the world's leading producer of so-called biopolymers, which means that the company produces PE (for bags and the like) from sugarcane-based ethanol. We see these bags proudly featured in most of our grocery stores in Sweden as "made from sugarcanes". Braskem has a plant with the capacity to produce 200,000 tons of the stuff. Braskem IR (Braskem IR) The company is headquartered in Brazilian Sao Paulo and from its home serves the market of Brazil, the US, Argentina, Mexico, and Europe, with only very limited exposure to Asia. The company has an interesting set of shareholders, combining Petrobras (PBR) at 32.15%, and the Brazilian Conglomerate Odebrecht S.A, more commonly known as Novonor, a private company. This in turn is a holding company for the largest engineering and contracting company in LATAM. It is said that Odebrecht through its 38.25% shareholding controls Braskem. Braskem owns the three largest petrochemical "complexes" in Brazil. The company's feedstock is primarily naphtha, but it also uses ethylene and propylene. It is also involved in the production of benzene, butadiene, toluene, xylene, and isoprene - mostly sold to other chemical companies which use the same sort of complexes, such as Dow Chemical (DOW). The end products that Braskem is primarily known for are PE, PP and PVC - or polyethylene, polypropylene, and polyvinyl chloride, where the company has the capacity to produce 5.7M tons on an annual basis in Brazil alone. The company is also the leader in the US polypropylene market, with 1.5 million tons of production capacity. In addition, its polypropylene capacity production in Germany is 545,000 tons. Next to others in Germany, Braskem is fairly small. Braskem IR (Braskem IR) The company's history goes back to 2002 when it was the leading petrochemical company in LATAM with units across the nation, but it consolidated based on no less than six companies at the time; Copene, OPP, Trikem, Nitrocarbono, Proppet, and Polialden. The company also M&A'ed Politeno, the third-largest PE company in Brazil The company then joined Petrobras and Ultrapar the following year in the biggest merger in Brazilian history, when those three companies acquired Grupo Ipiranga for a purchase price of $4B. While Petrobras and Ultrapar shared the fuel distribution operations, Braskem took over Ipiranga Petroquímica, Ipiranga's former petrochemical operation as part of the deal. That is more or less the company we're looking at today in this article. So, to review, it's a market leader in the Americas, and on 6th place in the entire world (though a distant 6th place on a global scale, with #1 having close to double the capacity of Braskem). Braskem IR (Braskem IR) ... and its current production is located in appealing areas that don't necessarily see much of the problematic macro we're seeing in Europe at this time, with an attractive customer base and aim. Braskem IR (Braskem IR) Usually, you might say that any company with high exposure to Brazil is a danger - and you'd not be wrong. But the company has been able to successively reduce its Brazil exposure through diversification, down from 72% in 2020 to 53% of recurring EBITDA from Brazil in 1Q22 - and it's working to reduce it further. It bears noting however that over 50% is still a massive exposure to one market, one geography, and one currency, and this needs to be taken into account. The other thing the company is doing is reducing its large naphtha exposure by introducing feedstocks such as Propylene, Gas, and Ethanol. Naphtha is down from a 47% feedstock profile to a 36% feedstock profile in less than 7 years. This is the main competitive element (or one of them) in the petrochemical industry, and usually represents over 60% of a company's cost basis. The company reports its operations on the basis of three geographical segments, and these are based on geographies, but also the types of feedstocks used and the types of productions in the company. Braskem IR (Braskem IR) The company has a number of fundamental upsides across these segments, including market leadership in Brazil, where Braskem is the only integrated petrochemical company in basic chemicals and polymers with a great feedstock and supplier diversification. The company argues it has a natural hedge against FX because demand contraction on the home market tends to be followed by FX devaluation, which holds benefits for a dollarized business, which results in demand growth. The company also has a great amount of consolidation and export capacity here. In USA and Europe, the company is the largest PP producer in NA, with a brand-new facility (Delta) online. In Mexico, the company is the largest PE producer with an integrated business model for ethylene production, as well as high-and-low-density PE. The nature of the petrochemical segments and industries is the focused on the production of building blocks for the modern world. These building blocks that the company produces through the feedstocks of crude, coal, ethanol, and natgas as well as its derivatives, go into various materials such as plastics, fibers, rubber, paints, and coatings, which in turn make their way into every aspect of the modern market in the form of products in automotive, packaging, construction, medical, industrial, pharma, personal care, sports, textiles, electrical, aerospace, and electronics. The main correlation of these companies is to feedstock pricing and demand volatility. Since these prices are given internationally, the potential for volatility is high, given the high correlation between Naphtha and Crude prices. However, Braskem has an increasingly diversified feedstock mix. Braskem Feedstock Mix (Braskem IR) And the expectations for the spreads between PE and Naphtha are already at above pre-war levels when considering the Ukraine situation. The company's revenues mainly follow the overall petrochemical demand and price dynamics primarily composed of a PE/PP mix, representing around 70% of the annual revenues. This in turn is correlated strongly to economic growth. Margins in this industry are primarily driven by industry spreads and scale. Braskem has a good EBITDA margin - but it's grown even better. During the worst of the pandemic in 2021, the company managed as high as 28.8% margins due to the trends, which is now down to 18.1%, but still above the pre-pandemic 11-12% that was common to see. The company fully expects the petrochemical industry to continue to fluctuate but expects continued EBITDA recovery and margin progress going forward. it's also important to note that all geographical areas of Braskem are currently at very healthy, profitable levels. The company has also been able to generate positive amounts of free cash flow, even in the most downcycle of periods such as in 2020. In terms of debt and leverage, the company has sufficient liquidity to handle its liabilities for the next 6 years. It also has an average debt maturity of 14 years. Its weighted average cost of debt inclusive of FX is around 5.3% which is high - but not worryingly so. Most of the company's debt is in USD to hedge against FX. That being said, Braskem is viewed with a wary eye by the debt market, and has investment grade at BBB- from S&P and Fitch, all reiterated in 2021 with stable outlooks. We would like to see it better here - but it's "okay". Dividends are a bit more complex. Braskem IR (Braskem IR) In essence, net income is 5% allocated to legal reserves according to laws and bylaws, 25% is allocated to a mandatory dividend (but since 'net income' might be negative, that might actually mean zero at times), and the company can decide to do supplementary/complementary distributions of its dividend as well. The specifics of these considerations can be viewed above, but it comes to a fairly complex dividend situation that has resulted in payouts in accordance with a mixed model of annual payouts with a total Braskem payout of $2.71 on a per-share basis payout for the ticker BAK, coming to a yield of nearly 20% for the year - which based on result forecasts is not a repeatable feat for 2022. This also corresponded to almost 78% of the company's 2021 net income. Braskem IR (Braskem IR) I agree that the policy is transparent, but I wouldn't call it easily understood or forecastable to any degree - just as the company's net income and earnings are not. Still, recent results are fairly encouraging. The company managed a 15% net income margin, and the company produced a 56% YoY net income increase, though the company's recurring EBITDA was down 27% YoY, owing to the normalization of international chemical and resin spreads, lower sales volumes of main chemicals, and FX. Utilization and activity remained high at a 86% utilization rate, though the company had to provision R$11.7B for the Alagoas earthquake, R$7.2B of which was provisioned in 1Q22. Other than that, sales were strong sequentially across other sectors, with specific sales growth in Mexico, though it's fair to say that all of the company's segments saw declines in overall EBITDA. The company did generate a fair amount of operating cash flow, but most of it only remained positive ex-impairments. Due to the Alagoas incident, the company reached a negative 1Q22 cash generation of R$178M. The company's current outlook reflects some negativity, mostly stable, and some positivity in Mexico and Brazil. Braskem IR (Braskem IR) The company itself markets itself as an "interesting investment opportunity", which is curious wording. However, when you start looking at dividend and EPS performance, you start to understand some of the ambivalence that some investors have for the business. Let's look at the valuation for this business. Braskem Valuation The reason for investor ambivalence is better expressed through graphics than wording. Braskem Valuation/Earnings (Braskem IR) Braskem makes its petrochemical peers look metastable by comparison, despite this being a volatile segment. The combination of Brazilian exposure, FX, and the overall volatility of this market makes for a very interesting investment. You can go years with zero dividends or EPS, as well as declines - just look at 2019-2020 or the like. Still, this is then weighed up by the "good years", which see the company delivering double-digit yields and payouts. All of this does come to a market-beating RoR of 1,391% for a 20-year basis, but there are a lot of ups and downs there. We want to make sure that we're buying Braskem, not at its highs, but its lows. Now, we're not at COVID-19 levels where the company traded at negative P/E due to its earnings, but we're also not at highs currently. The company's average P/E is around 2.7x. This sounds incredibly low - but this sort of company is best compared to Russian or Chinese stocks - not European or North American (I'm liable to get some flak for that one, but I accept that). There are too many ups and downs here for this to be considered anything except speculative unless you're buying the company at a massive discount. Forecasts can't be trusted here - the company either misses or beats the analyst forecasts 50% of the time on a 1-year basis with a 10% margin of error. What we can try is to establish some sort of overall trend, but even this can be put into question with these sorts of track records. Because of this, I don't tend to use DCF or forecast basis for Braskem to any major degree in my forecasts. Instead, NAV and peers will be the foremost method of looking and trying to give Braskem a target. Let's start with general S&P Global targets. 8 analysts follow Braskem, and 6 of them are either at a "BUY" or an "outperform" target for the company, with average targets of $12 as a low and $23 as a high. The average target for the company here is around $20.34, which implies an overall long-term upside of 54%. Now, this is high - and these analysts do tend to have a favorable view of the company, averaging a 10-25% upside no matter when you look at Braskem. But this means that at 54%, the company is "cheaper" than when it is usually considered, causing potential interest here. On a peer basis, the company trades among giants like Dow, Sherwin-Williams (SHW), PPG (PPG), LyondellBasell (LYB), and other companies along the Petrochemical value chain. What can be said is that Braskem trades at a significant discount in terms of revenue multiples (0.59x currently), as well as EBITDA (4.5x currently), as well as NTM, and non-average P/E (currently 5x). The company's peers trade at least 7x, and up to 20x P/E. The multiples in these segments are, simply put, all over the place.

Schneeflocken-Punktzahl
Bewertung	3/6
Künftiges Wachstum	3/6
Vergangene Leistung	0/6
Finanzielle Gesundheit	0/6
Dividenden	0/6

Historische Aktienkurse
Aktueller Aktienkurs	R$1.77
52-Wochen-Hoch	R$5.40
52-Wochen-Tief	R$1.40
Beta	0.68
1 Monat Veränderung	-11.94%
3 Monate Veränderung	-39.80%
1 Jahr Veränderung	-47.63%
3 Jahre Veränderung	-80.49%
5 Jahre Veränderung	-91.85%
Veränderung seit IPO	-65.86%

	BAK	US Chemicals	US Markt
7D	-10.2%	-1.9%	-1.1%
1Y	-47.6%	2.2%	11.7%

BAK volatility
BAK Average Weekly Movement	12.0%
Chemicals Industry Average Movement	5.5%
Market Average Movement	6.9%
10% most volatile stocks in US Market	15.2%
10% least volatile stocks in US Market	2.9%

BAK grundlegende Statistiken
Marktanteil	US$739.80m
Gewinn(TTM)	-US$1.08b
Umsatz(TTM)	US$13.71b

Wichtige Rentabilitätsstatistiken aus dem letzten Ergebnisbericht (TTM)
BAK Gewinn- und Verlustrechnung (TTM)
Einnahmen	R$70.60b
Kosten der Einnahmen	R$62.47b
Bruttogewinn	R$8.13b
Sonstige Ausgaben	R$13.67b
Gewinn	-R$5.54b

Gewinn per Aktie (EPS)	-6.95
Bruttomarge	11.52%
Nettogewinnspanne	-7.85%
Schulden/Eigenkapital-Verhältnis	-490.8%

Daten	Zuletzt aktualisiert (UTC-Zeit)
Unternehmensanalyse	2026/09/16 13:49
Aktienkurs zum Tagesende	2026/09/16 00:00
Gewinne	2026/06/30
Jährliche Einnahmen	2025/12/31

Paket	Daten	Zeitrahmen	Beispiel US-Quelle ^*
Finanzdaten des Unternehmens	10 Jahre	Gewinn- und Verlustrechnung Kapitalflussrechnung Bilanz	SEC-Formular 10-K SEC-Formular 10-Q
Konsensschätzungen der Analysten	+3 Jahre	Finanzielle Vorausschau Kursziele der Analysten	Analysten Research Berichte Blue Matrix
Marktpreise	30 Jahre	Aktienkurse Dividenden, Splits und Aktionen	ICE-Marktdaten SEC-Formular S-1
Eigentümerschaft	10 Jahre	Top-Aktionäre Insiderhandel	SEC-Formular 4 SEC-Formular 13D
Verwaltung	10 Jahre	Das Führungsteam Direktorium	SEC-Formular 10-K SEC-Formular DEF 14A
Wichtige Entwicklungen	10 Jahre	Ankündigungen des Unternehmens	SEC-Formular 8-K

Braskem (BAK) Aktienübersicht

Belohnungen

Risikoanalyse

Join community and earn perks

Braskem S.A. Wettbewerber

Westlake Chemical Partners

Tronox Holdings

Mativ Holdings

Koppers Holdings

Preisentwicklung & Leistung

Aktuelle Nachrichten und Updates

Braskem: The Business Is Worth Saving, The Stock Is Anyone's Guess

Braskem S.A.(BOVESPA:BRKM5) dropped from Brazil Corporate Sustainability Index

Braskem S.A.(BOVESPA:BRKM5) dropped from Brazil Special Corporate Governance Stock Index

Braskem S.A. Announces Appointment of Alessandro De Castro Melo as Chief Engineering, Technology and Innovation Officer

Braskem S.A. Announces Board and Committee Changes

Braskem S.A. Announces Executive and Board Changes

Recent updates

Braskem: The Business Is Worth Saving, The Stock Is Anyone's Guess

Braskem S.A.(BOVESPA:BRKM5) dropped from Brazil Corporate Sustainability Index

Braskem S.A.(BOVESPA:BRKM5) dropped from Brazil Special Corporate Governance Stock Index

Braskem S.A. Announces Appointment of Alessandro De Castro Melo as Chief Engineering, Technology and Innovation Officer

Braskem S.A. Announces Board and Committee Changes

Braskem S.A. Announces Executive and Board Changes

Braskem Trading & Shipping Names Beautiful Future And Blooming Future Next-Generation Tankers

Braskem Showcases Sustainable Packaging Solutions At Interpack 2026

Braskem S.A., Annual General Meeting, Apr 29, 2026

Braskem S.A.(BOVESPA:BRKM5) dropped from FTSE All-World Index (USD)

Braskem S.A. to Report Q3, 2026 Results on Nov 11, 2026

Braskem and Balsam Hill Introduces the World's First Plant-Based Plastic Christmas Trees

Braskem S.A. Announces Resignation of Roberto Faldini as an Effective Member of the Board of Directors

Braskem Unveils Bio-Based Product Innovations At K 2025

Nelson Tanure Reportedly Seeks Majority Stake in Braskem

Braskem and Fitesa Announce the Use of Braskem's I'm Green™ Bio-Based Polyethylene Grade for Nonwovens

Braskem Q4: Challenging But Opportune Scenario For Patient Investors

Braskem S.A., Annual General Meeting, Apr 28, 2025

Why Braskem's Stock Breakout Signals A Strong Buy Opportunity

Tariffs May Not Affect Braskem, And It's A Buying Opportunity

Braskem S.A. Announces Board Changes

Braskem S.A. to Report Q2, 2025 Results on Aug 06, 2025

Braskem S.A. Announces Executive Changes

Braskem Looks To Exit A Period Of Painful Spread Compression

Braskem S.A. Announces Change in the Composition of the Statutory Compliance and Audit Committee

Braskem: A Rising Odds For ADNOC Deal, Though Declining Risk-Reward (Rating Downgrade)

Braskem S.A. to Report Fiscal Year 2023 Results on Mar 18, 2024

Braskem: Mounting Troubles Impacting Financial Performance

Braskem: Special Situations Trade With 100% Upside Potential

Braskem S.A. to Report Q3, 2024 Results on Nov 06, 2024

ADNOC Makes Fresh Bid to Buy Stake in Brazil's Braskem

Braskem: Glad I Sold After A 27.8% Negative RoR

Braskem: A Speculative Bet On A Cycle Downturn

Braskem: It's Time To Be Careful After The M&A (Rating Downgrade)

Braskem: 22% RoR Since March, Still A 'Buy' After Q1 2023

Petrobras Says Made No Decision on Acquiring Control of Braskem

Abu Dhabi National, Apollo Reportedly Offer $7.6 Billion for Braskem

Braskem S.A. to Report Q1, 2023 Results on May 04, 2023

Braskem: Second Look At This International Petrochemical Player After A ~30% Drop

Braskem S.A. GAAP EPS of $1.73 beats by $1.70, revenue of $4.83B beats by $780M

Braskem Buoyed By A Buyout Offer

Braskem: Time To Look Beyond The EU/North America?

Braskem S.A.: Undervalued Moneymaker With Game-Changing Potential

Braskem: Growth Stock Moving In Line With ESG Commitments

Record Resin Prices Leaving Braskem In Great Shape

Aktionärsrenditen

Preisvolatilität

Über das Unternehmen

Braskem S.A.'s Grundlagenzusammenfassung

Erträge & Einnahmen

Unternehmensanalyse und Finanzdaten Status

Datenquellen

Analysemodell und Schneeflocke

Metriken für Industrie und Sektor

Analysten-Quellen