Bloomberg News

Braskem Advances to Two-Year High as Citigroup, JPMorgan Say Buy

April 24, 2013

Braskem SA, Latin America’s largest petrochemicals maker, rose to a two-year high as Citigroup Inc. (C:US) and JPMorgan Chase & Co. (JPM:US) recommended buying the stock after the government cut taxes for the industry.

Shares gained 3.2 percent to 16.70 reais at 1:38 p.m. in Sao Paulo. A close at that level would be the highest since September 2011. The Ibovespa stock benchmark added 0.5 percent.

The Brazilian government temporarily reduced a tax on raw materials used in the chemical industry to 1 percent from 5.6 percent, effective May 1. The levy will be gradually restored through 2018, Finance Minister Guido Mantega told reporters in Brasilia yesterday.

The change should boost Braskem’s earnings excluding interest, taxes, depreciation and amortization by 650 million reais ($321 million) this year, according to Citigroup, which raised its recommendation from sell. JPMorgan analysts Caio Carvalhal and Felipe dos Santos lifted their rating from hold, citing a benefit from the tax stimulus that “is not fully priced into Braskem shares, leaving room for further upside,” according to a research note to clients.

The Sao Paulo-based company’s Ebitda fell to 3.5 billion reais in 2012 from 3.6 billion reais in 2011, data compiled by Bloomberg show. The shares have gained 30 percent this year, while the Ibovespa declined 9.5 percent.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos at

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Companies Mentioned

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