Braskem up 185% since January, on its way to R$100bn revenue
Braskem, the largest resin maker in the Americas, should end 2021 with historic performance. The company is on its way to achieving record annual net revenue of R$100 billion — almost twice the 2019 figures and 71% above last year —and has never been worth so much on the stock exchange. Since January, its shares are up 185% in the Brazilian stock exchange B3 and there is room for more, according to investment banks, if maintained the current conditions of exchange rates and petrochemical spreads.Expectation of robust dividends — for Santander, the company can distribute 40% of its profits to shareholders —, the recovery of the investment grade, potential sale and the strong operating performance since the middle of last year explain investors’ appetite.In the first half, net revenue more than doubled to R$49.1 billion and net profit reached R$9.9 billion, leaving behind two years of multi-billion losses. For the second half, the expectation is for even stronger results, since factors that dragged down performance, such as a full halt in São Paulo, will not be repeated."Braskem is too cheap to be ignored," BTG Pactual analysts wrote in a mid-August report, when they raised the target price of the class A preferred share to R$71 in 12 months. This Thursday, the stock closed the day with an increase of 2.8%, at R$67.08, very close to the all-time high of R$67.58 reached on September 1. The market capitalization grew 165% in the year, to R$51.3 billion."We reiterate our buy recommendation for Braskem, which offers a rare combination of positive revision of estimates, potential for revaluation [of the stock] and convincing dividend return in the short term," analysts Pedro Soares and Thiago Duarte wrote.On average, Alembic, Banco do Brasil, BTG, HSBC, JP Morgan, Santander, ScotiaBank and UBS have a target price of R$61.80 for Braskem shares, with a buy or hold recommendation. In addition to BTG, Santander also raised the target price of the class A preferred share to R$70 at the end of 2022.The current picture contrasts with the difficult times faced between 2018 and 2019, when the downturn of the global petrochemical industry was compounded by Braskem’s local problems with rock salt mining in Alagoas and the failed negotiations between Odebrecht (now Novonor) and LyondellBasell to sell the company.At that time, Braskem focused on key stories — Alagoas, stock valuation, image and reputation, and overcoming the downturn —, a relatively...
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