Baader Helvea cautiously optimistic on European chemicals, recommends profit taking
09/02/2023 11:09
** Baader Helvea remains cautiously optimistic on European
chemicals sector but recommends profit taking citing recent
strong performance at several companies and Q4 earnings
potentially below expectations
** It notes that earnings in H1 2023 might look "disastrous"
due to high year-on-year base, but sees slight demand
improvement that could accelerate in H2
** The broker also points to a potential earnings upside
from EU's answer to the U.S. Inflation Reduction Act (IRA)
environmental package
** Early chemicals firms as Fuchs Petrolub FPEn.DE , Sika
SIKA.S , Siegfried SFZN.S and Wacker Chemie WCHG.DE would
benefit from deflation trend due to strong pricing power, it
adds
** Baader downgrades BASF BASFn.DE to "reduce" from "add"
citing potential medium-term cash conversion worsening, and
re-rating chance from the Wintershall Dea IPO
** The broker cuts Covestro 1COV.DE to "reduce" from "buy"
saying its outlook is not "rosy", earnings recovery might be
lower and later than market expectations
** It downgrades CPH CPHN.S to "reduce" from "add",
following a very strong run in the stock's share price and
fearing a normalization at the company's paper earnings
** "Whereas automotive demand seems to hold up better than
previously expected, Evonik will see headwinds from weaker
demand from the construction, consumer care and consumer & white
electronics markets," it says, cutting Evonik EVKn.DE to
"reduce" from "buy"
** The brokerage downgrades Fuchs Petrolub to "add" from
buy", noting that potential upward revision for 2023 consensus
might be partly priced in already
** "We think H&R 2HR.DE has overearned in 2021 & 2022E
because supply refinery products was tight in Europe," it says,
downgrading the company to "sell" from "reduce"
** It cuts Sika to "add" from "buy", saying the potential
gross margin improvement might be already in the stock's market
valuation
** The only company it upgrades is Bachem BANB.S , from
"reduce" to "add", as it highlights the company's ability to
quickly utilize capacity additions
(Reporting by Andrey Sychev)
((Andrey.Sychev2@thomsonreuters.com))