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

RE:Scotia's Take

[Kherson]

GregC24 wrote: OUR TAKE: Mixed. We have reduced our target price to $7, with more downside than upside risk. Why: (1) leverage remains high and is likely to climb, although recent covenant relief measures may ease investor concerns; (2) CHE expects no meaningful improvement in the caustic market for the balance of the year; (3) while the stock is trading at discount multiple of 7x to its five-year average of 8x, we think non-COVID factors have proven why the forward multiple should be 1 to 2 turns lower (we use 6.5x). HCl and regen services remain a particular concern, while the water business continues to perform well. We remain a Sector Perform until we have better visibility as to how the portfolio performs over the next 12 to 18 months.