Desjardins Securities analyst David Newman sees Chemtrade Logistics Income Fund (
) as “an excellent reopening trade.”
After hosting a non-deal roadshow with the Toronto-based industrial chemicals and services company on June 15, he said he “walked away even more convinced by its strategic plans, with a focus on organic growth and deleveraging.”
“The main focus of our discussions was CHE’s long-term strategy to deliver sustained earnings growth and reward investors, which should be accomplished through: (1) a recovery in its end markets post-COVID-19, with numerous green shoots; (2) organic growth opportunities in ultrapure acid, water treatment and hydrogen; and (3) operational efficiencies (productivity and reliability),” he said. “While CHE has previously outlined its agenda, management provided more details and displayed greater conviction during the roadshow. In addition to the company’s long-term strategy, CHE also discussed its balance sheet expectations and corporate ESG goals.”
Though he trimmed his second-quarter 2021 earnings expectations to reflect the short-term impact of the work stoppage at Vale on its Sulphur Products & Performance Chemicals (SPPC) segment, Mr. Newman maintained a $12 target and “buy” recommendation. The current average is $9.