Basf Stock Is Another Cyclical Opportunity At Multi-Year LOWS!
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- เผยแพร่เมื่อ 2 ส.ค. 2024
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Badische Anilin- und Sodafrabrik (BASF - you pronounce it "Be Ah Es Eff" like a german) :P Great Video!
Some insights from someone following BASF for a longer time. In my opinion there is the possibility that they will cut the dividen. Then the Stock will be at around 32€ i guess. I think the chanches for cut are at roughly 40%. What i dont like about the last year was that they did not cut the dividend even though they were making losses. In the long run you cant do that.
The last time they were able to refinance at 4,5 %. If the rates are increased more this has to be taken into account.
One big red flag which should be mentioned is that they had to close the TDI production facility (finished in 2016) in Ludwigshafen which was 30% of the whole european market capacity. They were able to give the fault to the high gas prices but in reality they were not able to run it in a way to earn money with it. Their were structural problems. The second thing is that they have to spent a lot of capex in china. And the development in china is not clearly visible. I hope that they dont do the same misstake as with the TDI production facility. Would be nice to hear what sven thinks about the tdi desaster
Long story short if you get the stock under 40€ it might be a buy.
Once you say “pension funds”, that means do not buy this.
:-))
actually there is a national interest in keeping those companies healthy so they should be safer than others
@@merridius2006Yes, but only if you invest free money, like Buffet did in Japan.
Thank you for your analysis. It is indeed timely, as I have recently begun establishing a long-term position in chemical companies such as BASF, Bayer, Covestro, Lanxess, and Dow Inc. I believe that the chemical sector has been overlooked in recent years, despite its resilience and the essential nature of its products in various aspects of our lives. This neglect presents an opportunity for long-term investors like myself to capitalize on the sector's potential. Also I agree that assessing a company's investment versus dividend payments can provide valuable insights into its growth potential. A company's willingness to invest in its business demonstrates confidence in future growth opportunities. On the other hand, excessive dividend payouts without sufficient investments may indicate a cash-out strategy, potentially leading to stagnation or decline in the business. I always look for a balanced situation between investments and dividend payouts.
Thanks for the video! Div. cut is a real possibility, let's wait and see... Pronunciation of the company is in single letters, B A S F
Double whammy of significant China capex + unpredictable access to feedstock in Europe could be why BASF looks optically cheap? Thanks Sven as always!
My thoughts as well. I used to hold this and Covestro but sold them both after they announced big new investments in China. German businesses are making the same mistake they made with Russia - underestimating political risk.
Hi Sven, BASF biggest plant is in Ludwigshafen Germany. The entire business plan is built on cheap pipeline gas from the east. Energy is super expensive in Germany hence they have to move the entire infrastructure to other countries. If China is here the best choice i do not know. I know only that there is more than one chemical centric company outside in the world which does not have this location disadvantage. Same applies for Clariant in Switzerland.
It is not that expensive anymore. It is definitely one of the resaons the stock deflated so much. Now we have to make our own calculations and see maybe the market is too negatively on the stock exactly because of that. If they are too negative when there is no reason to be nagative, then you can make money.
Thank you for the video Sven!
As always, thanks for the amazing content Sven ❤️
It's down because it depends on Russian gas
And china
Thank you Sven 😊
You should check ALTO ingredients, i think it's an interesting case to analyze...in my opinion undervalued with good margins, stock was recently out of the russel 2000 , a lot of selloff made by mr market, now is getting a bit pricy by the day but still undervalued in my view.
Take a loot at GSK, Sven! Thank you!
Hi Sven, thank you for the video. My understanding is that BASF made a loss last year due to their subsidiary having to exit Russia after the sanctions. Without the 'write-down' for this the EPS would be around 6.4. I didn't catch if you talked about this point, is this relevant to the valuation analysis?
Thanks Sven. If you're in the chemical context, it would be interesting to see a quick check of Berry
I think part of the disinvestments failure is that those 30bln where invested in sector dependent on cheap natural gas
Thank U for covering 🙏
Great Analysis. Thx.
QUESTION: Could you compare INEOS vs BASF/chemical market, what are Ineos doing so right? that they are growing with stronger profits counter to the chemical commodity business.?
Thanks for vid. What do you think about Hudbay?
Very good! Buffet buys a Ressources company with a chemical department, while BASF is THE leading chemical company since 100 years with a ressources department aka Wintershall. So it is a good cyclical bet with a lot of tailwinds from future trends: with batteries for e-vehicles, China/EM and decarbonization and so on. But important to remember - risk is much lower under 40 Euro/ Share + long term ROE is 10%. After buying under 40€ and holding for 10 years you could get a threebagger + dividend in a best case scenario. There is also an "invisible" debt burden with the private pensions of baby boomers/ former BASF employees.
Buffet also bought BASF last year via National Indemnity together with Allianz and MunichRE. These are the 3 German stocks he talked about in last years shareholder meeting (without disclosing them).
@@robertschafer6276He just gets it. :) The risk of permanent loss is very low. But Sven ist also right, the potential gains could be really low. So if one has already a good portfolio and want to diversify for whatever reason, BASF is a good defensive play, as well as Philips or Pfizer. But the returns won't be stellar. Good but not stellar.
I am German and can hardly imagine a world without BASF.
I have bought BASF plenty times, makes ~7% of my portfolio.
The Dividend is really pretty high and that on a constant level.
I am really considerung to buy more BASF because it should be such a solid share, just that the supply with cheap russian gas is a big issue for the European sites.
I think, BASF, Bayer, Wacker.. should be in the Portfolio in general.
Danke
The BASF dividend is great, but the tax burden is pretty painful (26.375%). As a long-term value investment, they look good. They are positioning themselves for demographic growth in high profit areas, and moving away from high regulation / expense areas like Germany.
im german and i feel offended
@@nachhilfehvm 😅 No offense intended!
As a German, I feel honored@@johnwelsh1012
Hello! can you take a look also to bayer pls?? i have 24 years and love your content thanks.
BASF will invest €10 billion in China over 10 years. That's just €1,0 billion out of €4,0 yearly free cash flow or 25%. That's not too risky. Yes, not stellar but well diversified and a leading business. At one point the recent negative industry cycle might end and the stock could double. It seems like an okay investment opportunity, not too risky because the world needs BASF chemicals and will continue to do so.
*Fantastic* overview, Sven, grazie! 👌🏼
I have a question on the agricultural solutions segment of this business.
Russia and Belarus were the largest exporters of fertiliser in Europe. Does the war and consequent sanctions on basically all (Bela)Russian exports make for a gap in the market which this company could fill with its fertiliser?
Very good video
Bayer 💪 💪 💁🏻♀️🧙🏼♂️
What about Bayer?
Mining investing course Sven ?
I enjoy your channel thoroughly, any chance you would be able to do a breakdown on VF corporation?
Yes, I agree I bought the stock mainly for the north face brand. It seems popular and I wear it myself from time to time.
Thank You for the Video Sven. Can you have a look at CVS and tell us what are the risks involved in that investment.
it’s not a Sector he‘s interested in.
I can tell you so much from my side:
50 Bio. in Debt, that’s the main problem, also no Organic growth.
The Acquisitions are uncertain, how they play out.
But overall it looks good.
Hey Sven, what are your thoughts on the education sector? Strong fundamental business that could benefit from an AI tailwind in the future. Long term hold and if AI flops you still have a good cash flow business.
Well, as you see, i am all in on education!
Thank you for your analysis, this Video was great!
Thanks Sven. I was wondering why the sponsored ADR BASF has underperformed the German BASF? I guess it is due to the strong dollar?
there is a 500 million there that is capital cost that you subtract from EBITDA. but capital cost represents the return on the project - I assume some kind of mix of debt and capital and you shouldn't subtract it.
depends how you look at it, if you look at it as an investor, also calculating opportunity cost, then you get the result! If you look at it as an investment banker, then of course, you only care about your fee, not about shareholders making money:-)))
Sound is much better now 👍
interesting:)
Excellent breakdown of BASF. Thanks Sven
If they drop the div then its going to dip lower
Thanks, cyclical stocks are great, have a historical history, one day it's awful ( time to buy) then it's so great ( time to sell) wash and repeat
Would like to see an update about Pampa Energía. Thank you
Thanks Sven. Can u do a video on Covestro, which is the main competitor of BASF.
Great suggestion Sven, thank you! Sounds like a good opportunity to do more research on it, while waiting for that dividend cut! Overall, I think everything with ties to China is being undervalued presently, wouldn't you say?
i put alert at 41
Interesting, though I don't invest in European stocks because it's just a friggin mess, we're worse every year... Plus unbelievable taxes (stealing) and also I don't know why but brokers charge you more fees than when buying or selling US stocks. So it should be a really really great opportunity... even if I save the currency exchange fee. Thanks.
German dividends are a pain. You need to fill in a special form everytime to get a rebate on the 30% withholding tax. My broker asks 100EUR to do it and wont do it unless I have 50EUR net after. So I need 150 EUR dividends and will loose most to taxes. No German dividend stocks for me.
yeah...its extremely trashy !
@@luiscoelho7122 I'd be paying 25% withholdingstax in Germany and on what's left another 30% withholdingstax at home. 52.5% left of my dividend. US, Canada 15% instead of 30% thanks to double tax treaty.
In Sweden the trick is to have such dividend shares in what is known as a Capital Insurance account. That way you own the investment, but the insurance company own the shares. It sounds weird, but it works and is very popular way of investing and saving for your pension. Anyway... The outcome is that the insurance company can pool all the shares from BASF for all the individual accounts into one, big holding and apply for the tax return in one big transaction with both the foreign and local tax authorities. It can take a while, 6-12 months, but eventually the money that was incorrectly withheld will be credited to each account holder in the form of extra shares.
I am struggling with double taxation and the make it almost impossible to give me refund...
My unresearched suspicion is that BASF has lots of assets in Germany, which are not economical to operate with the electricity and gas prices available at that location. Thus they are investing outside of Germany, but all those stranded assets will for the foreseeable future generate a subpar return on investment.
Exactly the loss of Russian gas hit this company badly. That is a continuous revenue steam bam gone surprised there was zero mention of that in the analysis. That's why you need to look at more than look at the balance sheets.
Sure,however in 2023 the prices have been way lower than 2022 so far. The 2022 result of BASF were impacted by 3+billion € of additional energy costs compared to 2021. I am looking forward for the second quarter results (TTF gas futures are now at 33 €/Mwh while 1 year ago it was already 100€ and then peaked above 300€)
@@Mrtickleberries The current gas price aside, Germany has to get most of its gas by LNG, which is higher cost than a location, where no LNG step is required. That is a long term disadvantage, especially in a commodity industry. Same for electricity prices: Germany has among the highest in the world.
@@matteobellagamba Yes, there is a Russian gas problem, but there an incredible shale boom in USA where natural gas is incredibly cheap. Germany finished construction on LNG terminal in Wilhelmshaven. Might explain the reduction in the cost of gas. Furthermore, Iran/Venezuela are starting to open up and Russia is dumping fuel on the cheap for much needed cash to developing countries. It's kind of the worst case scenario if you are Saudi Arabia which explains the oil cuts. I think BASF's main concern is it's stake in China.
😮
Whole chemical sector is cheap, also PTTGC.
Thanks for another great analysis Sven. What do you think about Smurfit Kappa?
Well BASF sold part of its US Business to Sika so it’s got some uncertainty ahead of them .
Thank you Sven, what do you think about Pfizer? Grazie 😊
🗽 OMG I own this stock (minor share in the portfolio).... one of my worst investments. 🤔
FYI: You call it not Basf, you spell out the letters, like in an abbreviation. B A S F
.
I like this analisys... I see no real benefit, I still rather invest in EMN, DOW and LYB for this sector, yields do are lower, not by much tough. No deep analysis here, jus my feeling about the US vs the German economy.
Insider bought many shares
check fxpo stock
this one is also in multi year low cyclical stock
Looks like a bell curve company life cycle just with new lows then highs upticks but down trend overall
yes, especially with a recession, it won't look much better!
stoneco pls
It won't screen yet but keep a eye on $ORGN very important company
Thanks Sven, that was a good grilling about BASF. It will be wonderful to hear your opinion about UK market, inflation and intetest rate plus the stock Persimmon, the second largest builder in the UK. The stock going south, and I am expecting a dividend cut and stock buy back. Thanks 🙏🏽
Respecting your hard work but I am wondering, do you wven like 3 stocks? 2 ? Or even one?
Is it really your opinion or you are trying to show how preservative you are so you suggest none ?
Anyone knows if management is shareholder friendly and competent?
Thank you for sharing your insights and recommendations. Its great to explore various investment options, especially well-known companies like Cannafarm Ltd that are gaining popularity. Adding different ventures to our portfolio can help reduce risks in
BASF has alone as much energy usage as Switcerland. This was the main problem in 2022. The question is where the energy prices are going. Aaaand China..
BASF is leaving Germany, one of the worst countries regarding energy prices.
.
@@jonnes__4657...and going to China where your business can be dependent on however the government decides to feel that day.
China has the lowest electricity cost relative to Europe and USA.
low growth rate. But certainly not expensive? Very cyclical
So...summary?
Stay away until dividend cut?
would it make sense to follow it, so we can be ready when the dividend cut happens?
I assume yes!
Can both statements be true?
- Dividend yeld is 7.6% because they are going to cut it
- A dividend cut is never priced in the stock
yes, because when the cut actually happens, it goes lower, now what is priced in is: maybe cut
Last 5 yr they lost 47%.
I wouldn’t invest based on their divestments and investments. Management got out of oil and gas, leather chemicals, and basically all the “bad” chemicals and went heavy into battery’s, fish oil ect. They are cleaning more focused on optics then making cash
profit warning published yesterday, be careful, it's a value trap rn
thanks for sharing, after that usually comes the dividend cut
Try to call BASF by their full name: Badische Anilin- und Sodafabrik 😜
irrelevant
BASF China is not just a FOMO play. They depended on cheap Russian gas and that supply may be gone from Germany forever. China though is getting cheap Russian gas and will likely continue to do so. BASF's move is about survival.
thanks for sharing, good point!
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Thx for the info. Its very useful. Last time, I also came across cannafarm ltd, and financially, it has been very helpful for me. So thank you again!
Fix your audio please!
Value trap. Investors don't like the China risk and the Russian gas headwind doesn't help. Why not invest in Dow inc instead, much better performance recently and low risk as Natgas is plentiful in USA. Capex risk as you mentioned smells bad... No guarantee this is not a technology transfer with China learning, mastering and copying the Verbund concept and then becoming a competitor?
Cool video! Id like to add that there are other investment options in businesses like cannafarm ltd as well.
What do you think about KRAFT HEINZ? Down 16.74% since Jan 6th, PE of 18 and dividend of 4.5%. However, there have been some fluctuating quarters with regards to net revenue.
Greets from Germany. ✌️
BASF would be a great investment if it wasn‘t based in Germany haha.
BASF production is extremely dependent on gas prices and thats bad story in Germany. the government miss out one opportunity after the other to safe the supply over long term. Plus off course the green-left focused politics that fight against our industry… no good environment. So BASF is a great company that is enforced to go abroad to US and China in the long term.
Same story applies to our automotive industry, sadly.
If you want to invest in Germany, go with boring stocks. Allianz, Munich Re, Telekom, DHL…
but Germany is the country of undiscovered great small caps
This.
Thanks for the insight.
Cryptocurrency is volatile. Diversifying your portfolio is a sensible strategy. For example, I have deposits on Binance where I engage in trading, also staking on Kraken, investing in companies like Cannafarm Ltd, and I also participate in liquidity pools
interesting analysis. you didn't mention Ludwigshafen and issues with Russian gas input. i think it's one of the big risk with BASF. it will be a disaster if they have to throttle down Ludwigshafen.
Behschf
Hi Sven, good video as always! Do you have any thoughts on NorthWest Healthcare Properties REIT? I know you did a video long time ago but now the price is much lover.
BASF is investing wild sums because they have to - their german plants will not be making money for the foreseeable future until Germany fixes it's ridiculously stupid energy policy.
On the good side, BASF is big and globally diversified enough to survive without their german roots... Might be an ugly decade ahead, but in the long run, it will be fine. The Company has survived two world wars and the accompanying complete annihilation of their production facilities, so I'm reasonably optimistic they'll survive this storm, too.
Thank you for your research. I find your videos are well done. RIght now Im keeping an eye on Cannafarm ltd
You definitely have my sub. This content is next level. For me cannafarm ltd was the turning point. Please keep doing what you do and keep being you, love it.
This certainly sounds good too, but I think its still worth considering more reliable options like traditional businesses such as cannafarm ltd, for example.
10x fcf atm, get it cheaper if dividends cut round 8-9x fcf. Risk to reward ratio pretty decent for a 10-15x stock portfolio
Betting pensioner's money in China, all in!
I dont expect a dividend cut
I dont know, all of this sounds questionable, with too many potential pitfalls. I believe there are more reliable options out there. I recently found a company called Cannafarm Ltd, and Ive been consistently earning with them. I think its better to foc