Event in Progress:
Discover the latest content that has just been published on Research Tree
BASF’s Q1 has two main points worth a closer look after the preliminary release. Surface Technologies and the effect for Dea of the impairment on its Russian-related operations. The former was somewhat unexpected in terms of its the magnitude and the latter was more moderate than had been anticipated. Looking forward, BASF is closely monitoring developments regarding any gas limitations, which would negatively impact production, especially at the Ludwigshafen site. Guidance maintained.
Companies: BASF SE
AlphaValue
It remains to be seen, how the war in Ukraine directly or indirectly impacts BASF’s global business. The company has combined sales of <€1bn in these countries. On the other hand, there is a sizeable orderbook, which made management positive for H1 and there is hope in the pick-up in demand from automotive. The miss to our profitability expectations (-1.4%; consensus: -0.6%) came mainly from the steep price increases in December, which can not be passed on fast enough.
Once again BASF is a perfect proxy for volume and pricing development along the value chain. The strong Q3 development has forced the company to raise its guidance again, which looks quite cautious to us. Consensus was beaten by +10% at the top line and by +2% at the EBITDA level, which could be explained by increasing raw material prices along the value chain and higher logistics costs.
With the release in hand, it became even clearer that the typical stops and starts had paused. In our long career, we have never seen such quarterly volume and price growth, whereas the drop was not that clear in Q2 20. In other words, BASF took full advantage. Despite the lifted guidance, a crucial question will be how long this period of satiation might last? Currently, it looks for a while. The spread of the Delta variant might stand against it.
BASF beat our as well as street expectations by +11% at the top line, but less at the profitability level (EBIT: +3%). The recovery story continued with an extra push from China. Here to the effects from extreme weather events and other unpleasant ones (the pandemic) limited availability as exchanges between regions remained somewhat constrained. BASF’s pricing power could be seen in the rise of the profitability lines of the divisions in the early steps of the value chain.
BASF’s FY were finally stronger at the profitability level than expected by us after the release of some preliminary figures at the end of January. Despite more details, the stronger net working capital outflow seems to foil management’s quite cautious FY guidance. The start into the year might have not been a perfect one due to the weather conditions in some regions (e.g. US).
Santa Claus seems to be dressed in BASF’s colours and bringing strong end-of-year ‘presents’. The earlier steps of the chemicals’ value chain came in above consensus expectations in Q4. This end-year push lifted profitability above the previous quarter’s level, which brought FY EBIT before one-offs closer to FY 2019’s, but above our own guidance. The reported preliminary figures were above our more cautious expectations and above consensus.
BASF’s official wording for the justification of the impairments taken in Q3 is that they expect continued oversupply of basic chemicals and weaker demand from certain end-customer industries. We find the idea of preparing the company for a BASF 2.0 quite compelling. Nevertheless, Martin Brudermueller still has a long way to go as impairments could be only be a signal. The management could see the pandemic as an opportunity for a fundamental shift.
Companies: BAS BASEUR BAS 0BFA BASF BAS 1BAS BFFAF BASN
Unlike Bayer, BASF’s agro-related impairment was not triggered by a write-down on the purchase price, only on the adoption of the production network. We believe the individual share for Surface Technologies, due to former Chemetall, and Chemicals as well Materials (no split provided) will be higher. We take the impairment as a kind of tidying up as the company ‘sells’ as a consequence of the pandemic’s weaker expectation in automotive and aerospace.
One can look at BASF’s figures and see what is going on in the (large volumes) chemicals industry. The drivers at the group level guide to lower volumes, but prices seem to be stable. Looking into divisional performances, the picture becomes less clear as the drivers of early steps (volumes: up; prices: down) of the value chain look different to those of later ones (volumes: down; prices: doing OK). There were no material changes to the preliminary figures.
BASF’s preliminary Q2 figures were characterised by a slightly better than expected operating and earnings performance before one-offs, but were hit by the negative effect from the impairment in the oil & gas business. The latter submerged the preliminary profitability figures to below our expectations. Consensus was also not meet on net earnings.
It looks to us as if BASF plans to change its business model as the company has financed, or plans to do so, some of its stakeholders: shareholders, customers and clients. NWC outflows significantly went up and the plans to cash out ~€3bn as a dividend remain in place. Against the background of the still spreading COVID-19 pandemic and the realistic cancellation of FY 2020 guidance, management’s decisions are puzzling to us. The Q1 figures were better than expected, beating our expectations an
BASF’s reported figures showed the expected pattern, despite having beaten our quite cautious estimates, whereas consensus was broadly met. However, management manoeuvred the company through a difficult year quite well and was able to deliver its announced portfolio targets. But BASF sees future challenges ahead. Against the backdrop of the looming virus pandemic, management gave quite a cautious guidance but assuming no global spread of Coronavirus. Furthermore, it plans to be more aggressive i
German chancellor, Dr Merkel, had invited all relevant ‘players’, which are directly and indirectly involved in this complex situation. Germany is valued as an ‘honest intermediary’ in this currently-failed country. But Germany has some interest in solving this issue, which are not related to the official ones (e.g. migration to Europe): business.
Having food and feed broadly in common, Agricultural Solutions and Nutrition & Care gave BASF’s Q3 figures a nice push above our expectations and consensus, clearly supported by Surface Technologies. Interestingly, the strong volume decline in the early steps was fully compensated by the higher demand in the later steps – for the first time!
Research Tree provides access to ongoing research coverage, media content and regulatory news on BASF SE. We currently have 1 research reports from 4 professional analysts.
Companies: FOG PHC FEN BBSN ELIX
Cavendish
Supreme’s FY24 trading update confirms a record performance in the 12 months to 31 March 2024. Organic revenue and profit growth across all four divisions has driven Group revenue +45% YOY to £225m, with FY24 adj. EBITDA almost doubling to ‘at least £38m’, driving record levels of cash generation. Supreme is actively exploring complementary M&A, supported by a debt free balance sheet. Trading on an undemanding FY25 PE of just 6.7x, with a 3.4% yield, we believe downside risks are more than price
Companies: Supreme PLC
Zeus Capital
Shore Capital
Headlam Group has laid out an ambitious long-term revenue target of between £900m and £1bn, as it seeks to grow its share of the UK floor coverings distributor market. Despite a challenging backdrop due to the low level of residential housing transactions, management is seeking to expand each of its sales channels: Trade Counters, Larger Customers, Regional Distribution and Europe & Other. The FY23 results reflected the more challenging environment and the group trades at a discount to its long-
Companies: Headlam Group plc
Edison
Companies: James Latham Plc
SP Angel
The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no
Companies: AEIT ROOF DGI9 INPP GSF SEIT USFP HICL ORIT BSIF TRIG NESF SEQI HEIT GRP GCP FSFL 3IN AERI PINT RNEW BBGI GSEO DORE TENT GRID CORD HGEN AEET
Hardman & Co
In a Trading Update for the twelve months to 31 March 2024 Supreme expects to report revenue of c.£225m, and (adj.) EBITDA of at least £38.0m, in line with market expectations, which had been revised upwards during the course of the year and represents almost double the FY23 level. The Group closed the year debt free. Our outlook highlights the extent to which Supreme has expanded, through both acquisition and organic growth during the period. From 2020 to 2024E the Group will have grown sales
Equity Development
Companies: CLA STM GLN FXPO KAV GWMO CEY BHP THX EEE
Companies: Ilika plc
Liberum
Companies: Severfield Plc
Companies: Gattaca plc
Quadrise (QED LN) has provided an update on its Utah project with Valkor. Valkor’s partner (Heavy Sweet Oil LLC) has received funding and approval to commence drilling enabling production of 20-40bopd of heavy sweet oil providing QED with samples for production of test scale quantities of MSAR and bioMSAR; the company’s key fuel decarbonising emulsion fuel products. This should derisk the commercial scale ramp up. QED management has highlighted that Valkor has not yet raised the minimum of US$
Companies: Quadrise PLC
VSA Capital
22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi
Companies: ARV CTL AFRN FEN HUW TENG BBSN EAAS VAL
Hybridan
AUCTUS PUBLICATIONS ________________________________________ Tethys Oil (TETY SS)C; target price of SEK100 per share: Increasing further the size of the prize/Considering Algeria – The South Lahan area on Block 58 is estimated to hold 55-523 mmbl prospective resources (P90-P10 case) with a mean case of 251.8 mmbbl prospective resources across six prospects in the Ara Carbonate. Combined with the previously disclosed prospective resources of the Fahd area in the north-eastern part of Block 58, Te
Companies: OKEA WDS GALP RHC RHC ENW EOG UJO TRIN I3E SCIR ZPHR SDX CRCL UOG TETY CEG IOX 0EVE CNE VAR TETY VLE GALP OKEA
Auctus Advisors
Share: