BASF / BASFY indeed looks cheap, but the outlook is muddy. BASF‘s most profitable Verbund sites are in Germany ( Ludwigshafen ) and Holland ( Antwerpen) and both have exposure to rapidly rising energy costs in Europe, BASF most profitable products are chemicals and plastics, both which consume lots of NG and energy. I am somewhat concerned that BASF‘s competitiveness for those sites is permanently impaired.
Also, BASF has a lot of Capex and the FCF yield is~7.5% on equity, which isn’t bad, but it’s not super cheap either.
I have added to Henkel HENKY recently, which has a higher PE, but similar FCF yield (6%) but since it’s more special chem (adhesives, consumer products) there is less energy cost dependency. The stock has not done well either lately, but I have owned it before (bought in 2007/2008) and it worked out quite well. It trades at a traditionally low valuation, but that is because their profitability has suffered lately.
I also have a starter in AKZOY /AKZA, which is a major paint producer. AKZOY has come down on similar fears, but I consider the paint business reasonable resilient to energy input costs. |
