The Company in a Nutshell
- Chemtrade is definitely not a candidate for DSR portfolios.
- The company faces too many challenges for its very limited cash flow.
- There is no dividend growth and dividend payment is at risk.
- We do not cover Chemtrade Logistics Income Fund at the moment.
| Date Reviewed | N/A |
| Company Name | Chemtrade Logistics Income Fund |
| Symbol | CHE.UN.TO |
| Sector | Materials |
| Industry | Chemicals |
| Beta | 1.492 |
| PRO Rating | 2 |
| Dividend Safety | 2 |
Business Model
Chemtrade Logistics Income Fund is a Canada-based company, which operates a diversified business providing industrial chemicals and services to customers in North America and around the world. The Company is also a producer of high purity sulphuric acid for the semiconductor industry in North America. Its segments include Sulphur and Water Chemicals (SWC) and Electrochemicals (EC). SWC markets, removes and/or produces merchant, Regen and ultra-pure sulphuric acid, sodium hydrosulphite, elemental sulphur, hydrogen sulphide, sodium bisulphite, and sulphides, and provides other processing services. SWC also manufactures and markets a variety of inorganic coagulants used in water treatment, including aluminum sulphate, aluminum chlorohydrate, polyaluminum chloride, ferric sulphate, and sodium nitrite. EC manufactures and markets sodium chlorate and chlor-alkali products including caustic soda, chlorine and HCl, largely for the pulp and paper, oil and gas and water treatment industries.
| Current price | 11.09 |
| ROE | 39.15 % |
| ROIC | 14.35 % |
| Shareholder Yield | 0.60 % |
| 5-Yr Total Return | 53.60 % |
| 1-Yr Total Return | 36.95 % |
| Next Earnings Date |
Latest Quarter Information
What the CEO said:
The second quarter of 2024 was yet another strong period for Chemtrade, both financially and operationally. While Adjusted EBITDA was lower on a year-over-year basis, it is worth noting that this is in comparison to record quarterly Adjusted EBITDA reported by Chemtrade in the second quarter of 2023. Further, the biennial maintenance turnaround at our North Vancouver chlor-alkali plant was conducted during the current quarter. Importantly, this maintenance turnaround was well-executed, having been conducted safely, on schedule, and on budget. Normalizing for this impact, our underlying performance remained robust across our diverse product portfolio.
What we say:
09-21-2024, Chemtrade's Q2 revenues decreased by ~4.7% and AEBITDA of ~$115M was down ~20% Y/Y, due to lower revenues including the negative impact from the biennial maintenance turnaround at the North Vancouver chloralkali facility. It, however, maintained a strong balance sheet throughout the quarter with distributable cash of $47.8M and CFO of $102.2M. Revenue declined by 4.7% in SWC ($266.9M) and 4.5% in the EC ($181.2M) segment in Q2. Chemtrade raised its 2024 Adjusted EBITDA guidance and now expects it to be $430M-$460M. It also commenced an NCIB in the quarter, under which it can purchase up to 11,672,524 of its outstanding units.
Investment Thesis
Dividend Triangle
| 5-Yr Rev. Growth | 2.95 % |
| 5-Yr EPS Growth | 0.00 % |
| 5-Yr Div Growth | -12.95 % |
Potential Risks
| Debt/Equity | 1.20 |
| Financial Debt to EBITDA (TTM) | 2.10 |
| Current Ratio (Quarterly) | 0.80 |
| Credit Score | 70 |
Dividend Growth Perspective
| Dividend ($) | 0.66 |
| Dividend Yield Fwd | 6.00 % |
| Dividend Frequency | Monthly |
| Average 5-Yr Yield | 8.05 % |
| Payout Ratio (%) | 28.15 |
| Cash Payout Ratio (%) | 44.50 |
| DGR 1-Yr | 10.00 |
| DGR 3-Yr | -5.00 |
| DGR 5-Yr | -12.95 |
| DGR Streak | |
| Chowder Score | -6.95 |
| Next DVD PMT | 11-29-24 |
Valuation
(Data for `ddm_recent_annual_dividend` field are missing to build DDM tables)
Video Tutorial: How to Read the Stock Cards DDM Valuation
| Market Cap | 1 B |
| PE Ratio | 10.25 |
| Fwd PE | 11.15 |
| Price to Book Ratio | 1.75 |
| DDM Valuation | N/A |
| Average 5-Yr PE | 8.62 |
| Value Score | 93 |
- All financial metrics are updated weekly.
- The DSR PRO rating and Dividend Safety Score are updated quarterly.
- The analysis (investment thesis, risk potential, dividend growth perspective and DDM calculation) is reviewed every 6 months.
- The PDF format includes only comments (no metrics) and is reviewed every 6 months.