We came across a bullish thesis on Braskem S.A. on Penny on the Dollar’s Substack. In this article, we will summarize the bulls’ thesis on BAK. Braskem S.A.’s share was trading at $3.7300 as of February 12th. BAK’s trailing and forward P/E were 8.44 and 9.78 respectively according to Yahoo Finance.
Braskem S.A., a CCC-rated Brazilian petrochemical giant, trades at $2.86 per ADR, giving it a market cap of $1.15 billion and an enterprise value of $8.15 billion, effectively pricing the stock as a survival option. The company operates four integrated complexes in Brazil, a state-of-the-art ethane cracker in Mexico, five plants in the U.S., and two in Germany, with replacement cost exceeding $20 billion, meaning investors can acquire world-scale, irreplaceable infrastructure at roughly 35% of its depreciated value.
Braskem’s Brazilian operations enjoy a natural moat, as tariffs and freight costs protect domestic pricing, while its Mexican Braskem Idesa joint venture has recently overcome chronic feedstock supply issues, now running at full commercial capacity after constructing an ethane import terminal. Two longstanding overhangs have suppressed the stock: the Alagoas salt mining disaster, which has largely been resolved with remaining provisions declining, and governance paralysis caused by controlling shareholder Novonor’s troubled past and Petrobras’ veto and tag-along rights.
In December 2025, IG4 Capital agreed to acquire Novonor’s 38.3% stake via distressed debt conversion, potentially removing the distressed-seller overhang and aligning management incentives, though Petrobras’ approval remains critical. Cyclical headwinds have depressed earnings, with Q3 2025 recurring EBITDA at R$818 million and net loss of R$174 million, but the balance sheet provides runway until a sector recovery.
Mid-cycle projections for 2027, incorporating Mexico’s ramp-up, REIQ tax credits, and spread recovery, imply enterprise value of R$16.8 billion, equating to 700–800% potential upside from the current market price. While risks include recession, political expropriation, Alagoas tail risk, or IG4 deal failure, Braskem represents a rare distressed equity opportunity with extreme asymmetry, trading well below replacement cost yet poised for substantial rerating if governance and cyclicality normalize.
Previously, we covered a bullish thesis on Eastman Chemical Company (EMN) by Necessary-Damage5658 in November 2024, which highlighted the company’s strong positioning amid export control changes and regulatory-compliant operations driving resilient earnings. EMN’s stock price has depreciated by approximately 21.04% since our coverage. Penny on the Dollar shares a similar but emphasizes Braskem’s distressed-equity opportunity, with replacement-cost arbitrage and governance resolution offering substantial upside.
