Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures T.CHE.DB.E

Alternate Symbol(s): T.CHE.DB.H | T.CHE.UN | CGIFF | T.CHE.DB.F | T.CHE.DB.G

Chemicals Basic Materials

Chemtrade Logistics Income Fund is a Canada-based company that operates a diversified business providing industrial chemicals and services to customers in North America and around the world. The Company's segments include Sulphur and Water Chemicals (SWC), and Electrochemicals (EC). SWC segment markets, removes and/or produces merchant, Regen and sulphuric acid, sodium hydrosulphite, elemental sulphur, liquid sulphur dioxide, hydrogen sulphide, sodium bisulphite, and sulphides, and provides other processing services. This segment also manufactures and markets a variety of inorganic coagulants used in water treatment, including aluminum sulphate, and a number of specialty chemicals, including sodium nitrite. EC segment manufactures and markets sodium chlorate and chlor-alkali products including caustic soda, chlorine and HCl, largely for the pulp and paper, oil and gas and water treatment industries. These products are marketed primarily to North American and South American customers.

TSX:CHE.DB.E - Post by User

Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures

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Post by anon314on Oct 13, 2021 8:21am

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Post# 34000084

Desjardins Research Report, Oct 12, 2021

Prepared by David Newman and Chi Le

3Q preview—heating up the Bunsen burner with a surge in chemicals prices (a caustic hockey stick); moving to a Buy

The Desjardins Takeaway

We are maintaining our 3Q adjusted EBITDA of C$65m (in line with consensus), including C$24m SPPC, C$25m WSSC and C$31m EC, offset by Corporate. We are moving to a Buy (from Hold) despite some near-term challenges (impact of the Vale strike, transitory margin pressure on water solutions) given the strong rally in chlor-alkali (caustic soda and HCl/chlorine) and sulphuric acid prices, rising industrial production, increasing refinery utilization rates and secular tailwinds in the semiconductor market.

Valuation

We are raising our target to C$10 (was C$8) based on 7.5x EV/2022 EBITDA (was 7.0x) and our DCF. CHE trades at 6.7x our 2022 EBITDA estimate vs its specialty chemicals peers at 12.6x and commodity chemicals peers at 5.6x, including OLN and WLK at 5.2x and 5.7x, respectively.

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