Braskem S.A. (BAK): A Bull Case Theory

Yahoo

19 hours ago

We came across a bullish thesis on Braskem S.A. on Lasse's Substack by Lasse. In this article, we will summarize the bulls' thesis on BAK. Braskem S.A.'s share was trading at $3.2000 as of August 8th. BAK's trailing and forward P/E were 8.44 and 9.78, respectively according to Yahoo Finance.
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Braskem presents a compelling 'cycle + overhang' investment opportunity at fire-sale levels, offering significant upside if polyolefin spreads mean-revert or if there is binding environmental clarity or credible strategic interest. The company's mid-cycle EBITDA is estimated at $1.9–$2.0 billion, supported by normalized polyolefin spreads and utilization rates, implying an enterprise value of roughly $11.4–$12.0 billion at a 6x multiple.
With adjusted net debt around $8.7 billion, this translates into an equity value of $2.7–$3.3 billion, or approximately $6.7–$8.2 per ADR, compared to current prices near $3. Braskem's earnings are highly sensitive to polyolefin spread changes, with every $50/ton increase potentially adding $450–$500 million in EBITDA, translating to a material EV and share price uplift. Two main catalysts could unlock value: binding environmental resolution that limits cash outflows related to the Alagoas disaster, and a strategic sale or stake transaction that could reset earnings expectations and valuation multiples.
While Brazil's import tariff increases on chemicals provide some tailwind, the thesis does not rely on this. The downside scenario assumes prolonged weak spreads and higher-than-expected environmental liabilities, potentially pushing equity values toward $2.0–$2.5 per ADR, whereas a bull case with faster normalization and a binding cap could push values above $11 per ADR, though governance and country risk temper this upside.
Key triggers include sustained spread and utilization improvements, environmental settlement clarity, and M&A developments. Risks include prolonged commodity weakness, environmental cost overruns, and liquidity stress. Overall, Braskem is a through-cycle cash generator priced as if recovery is impossible, presenting an attractive risk/reward for disciplined investors prepared to act on validated catalysts.
Previously, we covered a bullish thesis on Rayonier Advanced Materials Inc. (RYAM) by Value Degen in June 2025, which highlighted its cyclical nature and insider buying as key drivers. The company's stock price has appreciated by approximately 17.5% since our coverage, reflecting growing investor confidence. Lasse shares a similar thesis on Braskem, focusing on environmental clarity and strategic catalysts in a different industry, presenting a distinct opportunity.
Braskem S.A. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 11 hedge fund portfolios held BAK at the end of the first quarter which was 13 in the previous quarter. While we acknowledge the potential of BAK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None.