BFFAF - BASF: Current Valuation Unjustified

2024-07-11 12:41:37 ET

Summary

• Ahead of the Q2 results, we remain optimistic about BASF's equity story over cost-cutting initiatives.
• There is a new CEO in H2 with a value-creation strategy. A new Capital Market Day might be a positive catalyst in the future.
• There is a valuation gap compared to BASF's historical average. Our buy rating is then confirmed.

Ahead of BASF's ( OTCQX:BASFY ) ( OTCQX:BFFAF ) Q2 earnings result, which is expected on 26 July, we decided to follow up on the Chemical giant. Since our last coverage ( Q1 update ), BASF's stock price has declined by 10.32% (Fig 1); however, the company reported a solid start to the year with volume and EBITDA recovery. In addition, BASF paid the dividend, and considering the exit of Wintershall Dea, the company was able to maintain a solid balance sheet. Our buy rating was backed by 1) an unjustified P/E discount, lower European gas prices, and the company's CAPEX plan in China to further diversify its worldwide earnings. ...

For further details see: