Baader says 'too late to sell' European chemicals amid lower 2023 prospects
19/10/2022 14:35
** Baader Helvea cuts 2023-2024 estimates for European
chemicals following the Baader Investment Conference, saying
conversations there felt like a throwback to September 2008
** It says the companies mentioned risks including an abrupt
stop in orders and demand, double-digit EU demand drop in 2023,
and inventory devaluation and impairment risks on
energy-intensive assets
** Baader adds Q4 2022 and Q1 2023 might see further profit
warnings, and dividend payments might be at risk
** However, despite the broker's very negative view on 2023
earnings, it thinks it is "too late to sell the sector in
general, but also yet too early to buy it"
** December might be the earliest point to buy the sector,
Baader says, but it is likelier that the bottom will be reached
in March-April 2023
** The brokerage downgrades Ems Chemie EMSN.S and H&R
2HR.DE to "reduce" from "add", and CPH CPHN.S to "add" from
"buy"
** Conversely, it thinks Covestro 1COV.DE , Evonik
EVKn.DE , Fuchs FPEn.DE , K+S SDFGn.DE and Lanxess LXSG.DE
have fallen too much and upgrades them to "buy"
** It notes the sector has already reached "trough valuation
levels", with several stocks below book value
** It also flags a significant risk of impairments for BASF
BASFn.DE ("add"), and possible smaller impairments for
Covestro and H&R
($1 = 0.9814 euros)
(Reporting by Ozan Ergenay and Tristan Chabba)
((ozan.ergenay@thomsonreuters.com))