BAK - Braskem Strong On Soaring Resin Prices And More Operational Certainty

• Braskem beat sell-side EBITDA expectations by 16% in the fourth quarter, and soaring resin prices in the U.S. and Brazil bode very well for the company's earnings in 2021.
• A renegotiated supply agreement with Pemex may improve supply reliability for the Mexican operations, but an ethane import terminal is likely more important to the future of the operation.
• Cyclical moves, good and bad, can go further than analysts and investors expect, but I believe today's resin prices are not sustainable.
• I do still see double-digit upside on Braskem's ADRs, but I believe the long-term return potential is more muted.

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