TSX:CHE.DB.E - Post by User
Comment by
Bullchart1on May 03, 2021 10:42am
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RE:RE:Research Report: Desjardins increases price target
RE:RE:Research Report: Desjardins increases price targetChe was and is so oversold we will see the market show many what is sustainable. No use fighting the tape as recovery continues. I think 12.00 is low. We will see others come out with higher targets.
Kherson wrote: anon314 wrote: By David Newman and Chi Le
The Desjardins Takeaway
CHE reports 1Q21 results on May 10 after market close. We forecast EBITDA of C$64m (vs consensus of C$66m), including SPPC EBITDA of C$29m, WSSC EBITDA of C$24m, EC EBITDA of C$29m and corporate costs of -C$19m. While the impact should be felt on a lagged basis (eg caustic soda is priced based on the Northeast Asia index for the last month of the previous quarter), a recovery in chemicals demand and prices should translate into an acceleration in earnings toward 2H21 and 2022.
Valuation
An excellent reopening trade. We are increasing our target to C$12.00 (was C$9.00) based on 7.25x EV/2022 EBITDA (was 7.5x EV/2021 EBITDA) and our DCF. CHE currently trades at 6.3x our 2022 EBITDA estimate vs its specialty chemical peers at 13.3x and commodity chemical peers at 7.0x, including OLN and WLK at 5.7x and 8.0x, respectively.
The problem with Desjardin's 1st Quarter EBITDA forecast of $64 million is that it will still not leave enough
Distributable Cash to completely cover the
Distributions. As I have been saying for quite sometime now, the present distribution is not sustainable.
Kherson