TSX:CHE.DB.E - Post by User
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retiredcfon Jul 13, 2023 9:11am
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More CIBC CHE.UN (Outperformer, $12 Price Target) – Second Guidance Raise Highlights More Than A Caustic Story
CHE.UN’s June-end guidance raise (second raise to 2023 guidance in the past few months) indicates all business units outside of caustic are performing very well. We have raised our 2023 and 2024 estimates to reflect better HCl and Cl results, and better margins in Water Chemicals, offset partly by lower caustic prices. As shown in the right-side line chart in Exhibit 8, though caustic prices have been below expectations at the start of the year, we estimate caustic represents only ~10% of overall adj. EBITDA. The BC port strike should not materially impact operations, should the strike be contained to the month of July. With the Arizona ultrapure acid facility now put on hold, 2023E dividend payout ratios (including growth capex) should be well below 100%. Further, we expect some announcements on CHE.UN’s green hydrogen monetization opportunity to be announced in H2/23. We maintain our C$12.00 price target and Outperformer rating.