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

Desjardins Research Report: Raised to Buy with a $9 Target

[anon314]

From David Newman and Chi Le of Desjardins this morning (11 Feb 2021):

The Desjardins Takeaway

CHE is scheduled to report 4Q20 results on February 23 after market close (call 10am EST on February 24; dial-in 866-211-4154). We forecast adjusted EBITDA of C$47m, driven by a more constructive outlook on merchant and ultra-pure acid, stable water solutions products, and early signs of recovery in the chlor-alkali market (especially HCl), offset by the COVID-19 impact on driving activity, specialty chemicals and sodium chlorate.

and

Valuation

We are increasing our target to C$9.00 (was C$5.75) based on 7.5x (was 6.5x) our 2021 forecast and our DCF. CHE currently trades at 6.8x our 2021 EBITDA estimate vs its closest peers at 11.6x.
 

Recommendation

We are encouraged by the brighter prospects for SPPC and EC, with demand and prices slowly improving. The share price should rally ahead of an improvement in fundamentals toward 2H21. Our rating is Buy (was Hold).

[MuttPatrollives]

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[Kherson]

David Newman? Now this is actually sad that he would in anyway compare Chemtrade to it's peers as none of them are Income Trusts! I also wonder if he factored in the $75 million a year in interest expenses that Chemtrade has over it's head? Maybe someone should also tie in those $60 million a year in lease payments, with the large intangible asset base supposedly worth $780 million? Keep

[sclarda]

Kherplunk wrote David Newman? Now this is actually sad that he would in anyway compare Chemtrade to it's peers as none of them are Income Trusts! I also wonder if he factored in the $75 million a year in interest expenses that Chemtrade has over it's head? Maybe someone should also tie in those $60 million a year in lease payments, with the large intangible asset base supposedly worth