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Chemtrade Logistcs (TSE:CHE.UN)
:CHE.UN
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Chemtrade Logistics
(TSX:CHE.UN)
Rating:68Neutral
Price Target:
C$12.00
▲(8.70%Upside)
Positive Factors
Currency Impact
The stronger USD is beneficial, with each $0.01 USD appreciation adding $3-4M to earnings.
Financial Performance
CHE continues to deliver more robust earnings and appears inexpensive with ample free cash flow to pursue ongoing buybacks and other initiatives.
Pricing Strategy
CHE's earnings are more robust than some investors remember, benefiting from better pricing strategies and fewer unplanned outages.
Negative Factors
Chlorine Market
Chlorine is showing weakness, and there is likely some downtick in chlorate due to more closed pulp mills.
Chemtrade Logistics (CHE.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$1.26B
Dividend Yield6.25%
Average Volume (3M)276.22K
Price to Earnings (P/E)9.7
Beta (1Y)1.07
Revenue Growth2.31%
EPS Growth-37.58%
CountryCA
Employees1,474
SectorBasic Materials
Sector Strength68
IndustryChemicals
Share Statistics
EPS (TTM)0.42
Shares Outstanding113,753,930
10 Day Avg. Volume172,555
30 Day Avg. Volume276,221
Financial Highlights & Ratios
PEG Ratio1.85
Price to Book (P/B)1.65
Price to Sales (P/S)0.00
P/FCF Ratio7.17
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$13.50Price Target Upside22.28% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Chemtrade Logistics Business Overview & Revenue Model
Company DescriptionChemtrade Logistics Income Fund offers industrial chemicals and services in Canada, the United States, and South America. It operates through Sulphur Products & Performance chemicals (SPPC), Water Solutions & Specialty Chemicals (WSSC), and Electrochemicals (EC) segments. The SPPC segment removes and/or produces, and markets merchant, regenerated, and ultra-pure sulphuric acid, sodium hydrosulphite, elemental sulphur, liquid sulphur dioxide, hydrogen sulphide, sodium bisulphite, and sulphides. This segment also offers industrial services, such as processing by-products and waste streams. Its WSSC segment manufactures and markets various inorganic coagulants used in water treatment, including aluminum sulphate, aluminum chlorohydrate, polyaluminum chloride, and ferric sulphate; and a range of specialty chemicals, such as sodium nitrite and phosphorus pentasulphide. The EC segment manufactures and markets sodium chlorate and chlor-alkali products, including caustic soda, chlorine, and hydro-chloric acid for the pulp and paper, oil and gas, and water treatment industries. Chemtrade Logistics Income Fund was founded in 2001 and is headquartered in Toronto, Canada.
How the Company Makes MoneyChemtrade Logistics generates revenue through the manufacturing and distribution of industrial chemicals and services. The company operates through several segments, including Sulphur Products & Performance Chemicals (SPPC), Water Solutions & Specialty Chemicals (WSSC), and Electrochemicals (EC). Revenue streams primarily come from selling chemicals and providing related logistics and services. Chemtrade's financial performance is influenced by factors such as commodity prices, supply and demand dynamics, and long-term contracts with key customers. Significant partnerships with major industrial players ensure a stable demand for its products and services, contributing to consistent earnings.
Chemtrade Logistics Earnings Call Summary
Earnings Call Date:May 12, 2025
(Q3-2024)
| % Change Since: 12.31%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
Chemtrade demonstrated resilience in Q3 2024 with strong financial performance and strategic growth initiatives, despite facing challenges such as rail work stoppage impacts and segment-specific declines. The outlook remains positive with continued investments in high-growth areas.Q3-2024 Updates
Positive Updates
Solid Financial Performance
Chemtrade delivered a strong third quarter with EBITDA increased by 1.9% year-over-year, despite challenging comparisons due to record results in Q3 2023.
SWC Segment Growth
The water solutions business within the SWC segment showed year-over-year improvement driven by higher selling prices, contributing to increased margins.
Successful Mitigation of Rail Work Stoppage Impact
Chemtrade successfully minimized the financial impact of a significant rail work stoppage, limiting the effect on EBITDA to $5.8 million.
Strong Cash Flow and Balance Sheet
Chemtrade's cash flow generation remains robust, supporting a healthy balance sheet with a net debt to LTM EBITDA ratio of 1.8x and over USD 600 million of available liquidity.
Capital Allocation and Growth Investments
Continued investment in growth with about $19 million of growth CapEx in Q3, focusing on long-term unitholder value through growth initiatives and unit buybacks.
Positive Outlook for 2025
Anticipated continued strong performance in key segments, notably in Water Chemicals, and ongoing strategic investments in growth areas like ultrapure acid and water chemicals.
Negative Updates
Decline in SWC Segment EBITDA
EBITDA for the SWC segment declined by $3.5 million or 4.3% year-over-year, impacted by lower revenue and margins in the regen business.
Challenges in Sodium Chlorate Business
The sodium chlorate business faced reduced volumes due to production curtailments by a major customer, leading to manufacturing consolidation.
Impact of Rail Work Stoppage
The quarter was affected by a work stoppage at Canada's two largest railways, impacting EBITDA by $5.8 million.
Weakness in Brazil
Revenue in Brazil declined year-over-year, attributed to customer production changes.
Company Guidance
During Chemtrade Logistics Income Fund's Q3 2024 earnings call, key guidance metrics were discussed. The company adjusted its 2024 EBITDA guidance to be between $445 million and $460 million, despite challenges like a work stoppage at Canada's two largest railways. This adjustment marks 2024 as potentially the second-highest EBITDA year in the company's history, following 2023. The company maintained a strong balance sheet with a net debt to LTM EBITDA ratio of 1.8x and over USD 600 million in available liquidity. In their Sulphur and Water Chemicals segment, revenue increased by $1.4 million or 0.5% year-over-year, while EBITDA declined by $3.5 million or 4.3%. Their Electrochemicals segment saw a 5.4% increase in EBITDA, excluding the rail work stoppage impact. Additionally, corporate costs lowered by $1.7 million or 6.6% year-over-year. The updated guidance implies a payout ratio of 40%, underscoring the sustainability of their attractive monthly distribution.Chemtrade Logistics Financial Statement Overview
Summary
Chemtrade Logistics demonstrates solid financial performance with consistent revenue growth, healthy profitability margins, and effective cash flow management. The company's moderate leverage and improving equity position support its financial health, though attention to debt levels and cash management remains crucial to sustaining future growth. Overall, the company is well-positioned within the chemicals industry, with strengths in operational efficiency and shareholder returns.Income Statement
Chemtrade Logistics shows a strong income statement with consistent revenue growth, evidenced by a 2.70% increase from 2024 to 2025. Gross profit margin is healthy at 23.8%, and there's a steady net profit margin of 7.3%. The company also maintains a solid EBIT margin of 14.3% and an EBITDA margin of 23.8%, indicating good operational efficiency. However, historical fluctuations in net income and past negative figures are areas of concern.78
Positive
Balance Sheet
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 1.25, which is manageable but should be monitored. The equity ratio stands at 34.9%, showing a balanced capital structure. Return on equity is at 16.9%, indicating effective use of shareholder funds. While leverage is moderate, the company should be cautious of increasing liabilities relative to equity.72
Positive
Cash Flow
Cash flow analysis reveals a positive trajectory with a free cash flow growth rate of 12.45% from 2024 to TTM. The operating cash flow to net income ratio is robust at 2.66, suggesting strong cash generation relative to earnings. The free cash flow to net income ratio is also healthy at 1.36. Despite these strengths, the company must maintain careful management of cash flows to support ongoing investments and debt service.75
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.84B | 1.79B | 1.85B | 1.81B | 1.37B | 1.38B | Gross Profit |
| 436.65M | 430.55M | 420.65M | 353.90M | -3.85M | 33.73M | EBIT |
| 262.42M | 243.39M | 315.38M | 219.15M | -142.69M | -131.14M | EBITDA |
| 436.02M | 417.42M | 562.33M | 445.83M | 92.91M | 119.51M | Net Income Common Stockholders |
| 134.02M | 126.91M | 249.32M | 109.11M | -235.21M | -167.48M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 25.50M | 25.50M | 21.52M | 72.57M | 13.91M | 12.51M | Total Assets |
| 2.28B | 2.28B | 2.11B | 2.16B | 2.05B | 2.50B | Total Debt |
| 899.26M | 899.26M | 863.95M | 1.04B | 1.19B | 1.38B | Net Debt |
| 873.76M | 873.76M | 842.42M | 970.32M | 1.18B | 1.37B | Total Liabilities |
| 1.47B | 1.47B | 1.40B | 1.59B | 1.67B | 1.89B | Stockholders Equity |
| 818.36M | 818.36M | 707.14M | 566.21M | 379.85M | 605.82M |
| Cash Flow | Free Cash Flow | ||||
| 182.11M | 162.00M | 235.07M | 253.75M | 132.90M | 184.87M | Operating Cash Flow |
| 357.02M | 347.80M | 401.46M | 369.19M | 219.04M | 261.95M | Investing Cash Flow |
| -174.91M | -185.80M | -118.46M | -108.88M | 96.53M | -74.79M | Financing Cash Flow |
| -181.57M | -159.30M | -333.53M | -203.00M | -314.12M | -187.86M |
Chemtrade Logistics Technical Analysis
Positive
11.04
Price Trends
10.06
Positive
9.92
Positive
10.19
Positive
Market Momentum
0.28
Positive
63.79
Neutral
22.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CHE.UN, the sentiment is Positive. The current price of 11.04 is below the 20-day moving average (MA) of 11.08, above the 50-day MA of 10.06, and above the 200-day MA of 10.19, indicating a neutral trend. The MACD of 0.28 indicates Positive momentum. The RSI at 63.79 is Neutral, neither overbought nor oversold. The STOCH value of 22.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CHE.UN.
Chemtrade Logistics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Performance Comparison
TSE:CHE.UN
Chemtrade Logistics
11.07
2.66
31.63%
MEOH
Methanex
35.05
-13.67
-28.06%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.