Braskem Buffeted By Challenges On All Sides

Not much has gone right for Braskem (OTCPK:BRKMY) since I last wrote about Brazil’s leading basic chemical producer. Not only have the buyout talks between LyondellBasell (LYB) and Braskem’s controlling shareholder (Odebrecht, or ODB) collapsed, but Braskem is facing collapsing spreads as its products go through a cyclical downturn, an environmental problem with a salt mining operation in Brazil, and compliance issues that have led to the shares being delisted from the NYSE for the time being.

I’d previously written that a collapse in the LYB talks could push the shares back down in the low-to-mid $20’s, and with the added pressures of the environmental problem and the cyclical downswing, Braskem’s ADRs are now around $20. I do believe that the environmental issue is manageable, that management will get back into compliance and get the shares relisted on the NYSE, and that the business will likely bottom out in 2020, but what will happen with ODB’s bankruptcy remains a major open question. I do believe the shares are undervalued now below the low-to-mid $20’s, but there are a lot of issues for investors to digest, and I can understand why most investors would steer clear.

Follow this link for the full article:
Braskem Buffeted By Challenges On All Sides