Sunday, April 3, 2016

Seeking Alpha: Braskem Doing Well Despite Brazil's Problems

Finally - a Brazilian stock I can look back on and not feel bad about. Although Braskem (NYSE:BAK) shares have come down hard from a recent top (down almost 20% from a week ago), the shares are nevertheless up about 40% since my last review of the company. Brazilian shares have perked up since mid-January, but Braskem has done quite a bit better than Brazilian shares in general since June, as the company has benefited from lower feedstock prices and the opportunity to leverage a weaker Brazilian currency by importing Brazilian-produced chemicals into the U.S..

Management expects spreads to tighten up in 2016, and Brazil's economy remains weak, but low oil prices are still working in the company's favor. The addition of the company's Mexican plant should boost growth and Braskem seems to be looking toward a period of solid returns on assets (solid, at least, for a chemical producer). Valuation is difficult, as the shares don't look very cheap on a long-term FCF basis but do still seem undervalued on EV/EBITDA, while the role of the company in a widespread corruption scandal centered on Petrobras (NYSE:PBR) remains unknown.

Read the full article here:
Braskem Doing Well Despite Brazil's Problems

No comments: