Braskem SA (BAK) AI Stock Analysis

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Braskem SA

(NYSE:BAK)

42Neutral

Braskem's overall stock score reflects significant financial challenges, including high leverage and negative equity, which weigh heavily on its prospects. While technical indicators suggest bearish momentum, recent earnings call highlights show some operational improvements and strategic initiatives. However, valuation concerns and ongoing risks limit the stock's attractiveness.

Positive Factors

Executive Leadership

Mr. Jens has vast experience including roles as a Board Member, CEO, CFO, CIO and Managing Director in different sectors, including infrastructure and petrochemicals.

Financial Performance

Braskem's 3Q24 EBITDA exceeded expectations, largely driven by stronger results in the US, Europe, and Mexican operations.

Negative Factors

Geological Event Impact

Braskem announced an increase in the provision related to the Alagoas geological event.

Leverage and Debt

Braskem's current leverage stands at 5.8x ND/EBITDA, presenting a challenging macro-environment for the new CFO.

Petrochemical Market Conditions

The outlook for petrochemical spreads will remain challenging given the weak current demand scenario and the strong capacity addition expected to come online in China.

Braskem SA (BAK) vs. S&P 500 (SPY)

Market Cap

$1.40B

Dividend YieldN/A

Average Volume (3M)943.01K

Price to Earnings (P/E)―

Beta (1Y)1.13

Revenue Growth1.97%

EPS Growth-121.00%

CountryUS

Employees8,569

SectorBasic Materials

Sector Strength58

IndustryChemicals

Share Statistics

EPS (TTM)-5.17

Shares Outstanding172,530,200

10 Day Avg. Volume1,145,709

30 Day Avg. Volume943,012

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.59

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$5.10

Price Target Upside46.55% Upside

Rating ConsensusHold

Number of Analyst Covering1

Braskem SA Business Overview & Revenue Model

Company DescriptionBraskem SA (BAK) is a leading petrochemical company based in Brazil, operating primarily in the chemical and plastics industry. The company is the largest producer of thermoplastic resins in the Americas and a significant player in the global market. Braskem's core products include a wide range of polyolefins, such as polyethylene and polypropylene, as well as other chemicals like vinyls and basic petrochemicals. The company serves various sectors, including automotive, packaging, and construction, providing essential materials for manufacturing and industrial applications.

How the Company Makes MoneyBraskem SA generates revenue primarily through the production and sale of chemical and plastic products. The company's revenue model is centered around its extensive portfolio of polyolefins, vinyls, and basic petrochemicals, which are sold to manufacturers and industrial clients worldwide. Key revenue streams include the sale of polyethylene and polypropylene, which are used in packaging, automotive components, and consumer goods. Braskem also benefits from strategic partnerships and joint ventures that enhance its production capabilities and market reach. Additionally, the company's focus on innovation and sustainability initiatives helps maintain competitive advantages and meet evolving customer demands, contributing to its earnings.

Braskem SA Financial Statement Overview

Summary

Braskem SA faces significant financial challenges, with declining profitability, high leverage, and cash flow issues. Negative equity and substantial debt levels pose risks, while recent revenue declines and net losses compound the company's financial instability.

Income Statement

Negative

Braskem SA has seen a decline in total revenue from 2021 to 2024, with significant net losses reported in recent years. The Gross Profit Margin has decreased, reflecting pressure on profitability. The EBIT and EBITDA margins have also weakened, indicating operational challenges.

Balance Sheet

Negative

The balance sheet shows negative stockholders' equity as of 2024, indicating financial instability. The debt-to-equity ratio is not calculable due to negative equity, highlighting high leverage. The company has a substantial total debt, increasing financial risk. ROE is not meaningful with negative equity.

Cash Flow

Neutral

Braskem SA's cash flow situation is concerning, with negative free cash flow reported for the past two years. Operating cash flow has improved since 2023 but remains weak compared to historical levels. The free cash flow to net income ratio is negative, indicating cash flow challenges.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
77.41B	70.57B	96.52B	105.63B	58.54B
	Gross Profit
6.00B	3.02B	11.36B	32.06B	11.21B
	EBIT
1.01B	-1.83B	4.27B	26.04B	-228.36M
	EBITDA
2.70B	3.80B	8.84B	27.28B	-1.65B
	Net Income Common Stockholders
-11.32B	-4.58B	-820.00M	13.98B	-7.02B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
16.77B	19.14B	14.76B	11.34B	16.17B
	Total Assets
101.58B	91.74B	88.05B	92.56B	86.08B
	Total Debt
73.72B	59.91B	52.78B	53.53B	59.56B
	Net Debt
58.74B	45.72B	40.32B	44.85B	45.70B
	Total Liabilities
105.85B	88.46B	81.94B	86.36B	89.95B
	Stockholders Equity
-4.78B	3.99B	7.32B	7.87B	-2.20B
Cash Flow		Free Cash Flow
-1.33B	-6.80B	4.10B	11.37B	3.53B
	Operating Cash Flow
2.44B	-2.27B	8.95B	14.79B	6.29B
	Investing Cash Flow
-3.48B	-4.53B	-4.95B	-3.38B	-2.72B
	Financing Cash Flow
469.00M	8.87B	225.00M	-16.97B	2.17B

Braskem SA Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price3.48

Price Trends

50DMA

3.93

Negative

100DMA

4.22

Negative

200DMA

5.35

Negative

Market Momentum

MACD

-0.17

Positive

RSI

45.69

Neutral

STOCH

54.95

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BAK, the sentiment is Neutral. The current price of 3.48 is below the 20-day moving average (MA) of 3.63, below the 50-day MA of 3.93, and below the 200-day MA of 5.35, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 45.69 is Neutral, neither overbought nor oversold. The STOCH value of 54.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for BAK.

Braskem SA Risk Analysis

Braskem SA disclosed 74 risk factors in its most recent earnings report. Braskem SA reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Braskem SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (47)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WLKP	81 Outperform	$792.16M	12.69	11.98%	8.39%	-4.61%	14.90%
DOW	61 Neutral	$20.01B	18.16	6.14%	9.85%	-3.72%	91.57%
CE	50 Neutral	$4.29B	6.84	-24.69%	5.55%	-6.03%	-177.29%
HUN	50 Neutral	$2.37B	―	-5.22%	7.33%	-1.23%	-277.52%
TROX	50 Neutral	$828.76M	―	-2.60%	9.56%	7.82%	84.90%
Sector *	47 Neutral	$2.53B	-3.19	-22.23%	3.49%	4.01%	-27.90%
BAK	42 Neutral	$1.40B	―	-8638.28%	―	1.97%	-121.00%

* Basic Materials Sector Average

Performance Comparison

BAK

Braskem SA

3.48

-5.23

-60.05%

Celanese

39.19

-113.33

-74.31%

HUN

Huntsman

13.72

-8.98

-39.56%

TROX

TRONOX

5.44

-9.98

-64.72%

WLKP

Westlake Chemical PRN

22.45

2.28

11.30%

DOW

Dow

28.88

-24.69

-46.09%

Braskem SA Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: -14.71% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

Braskem showed strong financial performance with significant increases in EBITDA and cash generation, and successful operations in Mexico. However, the decrease in international spreads and operational challenges in the US and Europe segments, along with increased provisions for the Alagoas event, present ongoing challenges.

Highlights

Increased EBITDA and Operating Cash Generation

Braskem reported a consolidated recurring EBITDA of US$1.1 billion for 2024, which is a 46% increase compared to 2023. Operating cash generation also amounted to approximately US$788 million for the year.

Cash Position and Debt Management

Braskem ended 2024 with a cash position of US$2.4 billion, sufficient to cover debt maturities over the next 47 months. The company's leverage decreased to 7.42 times, down from the previous quarter.

Record Sales of Green Polyethylene

The annual sales of resins from renewable sources increased by 23%, reaching an all-time high with 191,000 tons sold in 2024.

Successful Operations in Mexico

Mexico segment recorded a 5% increase in sales volume for 2024, and the recurring EBITDA for the year was US$280 million, 166% higher than in 2023.

Lowlights

Reduction in International Market Spreads

The main spreads in the international market fell in the fourth quarter, especially impacting the spreads for PE and main chemicals, leading to lower quarterly results.

Operational Challenges in the United States and Europe

The utilization rate in the US and Europe segments was 9 percentage points lower in Q4 2024 due to scheduled shutdowns, leading to a 34% decrease in recurring EBITDA compared to 2023.

Increased Provisions for Alagoas Event

Braskem increased its provision by US$1.3 billion for measures related to the Alagoas event, with a total provision balance of R$5.6 billion at the end of 2024.

Company Guidance

In the recent Braskem conference call, the company provided comprehensive guidance on its financial performance and strategic direction for 2024 and beyond. The company reported a consolidated recurring EBITDA of $1.1 billion for 2024, marking a 46% increase from the previous year, primarily driven by higher polyethylene sales and improved spreads in Brazil and Mexico. The operating cash generation was approximately $788 million, while the cash position ended at $2.4 billion, covering debt maturities for the next 47 months. The company maintained a leverage ratio of 7.42 times, reflecting a reduction of 0.7 times from the previous quarter. In terms of operational efficiency, Braskem's average global accident frequency rate improved by 16% to 0.91 events per million hours worked. Strategically, the company is focusing on optimizing its asset portfolio, including increasing the use of gas as a feedstock and expanding green ethylene production capacities. The company also highlighted its plans for capital expenditure, with a budget of $484 million for 2025, emphasizing the importance of maintaining operational safety while optimizing costs. Additionally, Braskem is committed to maintaining financial resilience, indicated by its issuance of $850 million in debt securities and partial repurchase of its hybrid bond. Looking ahead, Braskem plans to capitalize on its competitive advantages in the green business sector and continue its strategic transformation to ensure long-term sustainability and profitability.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.