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Chemtrade Logistics (TSE:CHE.UN)
TSX:CHE.UN
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Chemtrade Logistics
(TSX:CHE.UN)
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Rating:74Outperform
Price Target:
C$14.50
â–²(8.70% Upside)
Chemtrade Logistics' stock is rated at 74, driven by strong technical indicators and an attractive valuation. The financial performance shows growth potential but is tempered by high leverage and cash flow challenges. Investors should be cautious of the overbought technical indicators, which may signal a short-term correction.
Positive Factors
Revenue Growth
Consistent revenue growth indicates strong demand for Chemtrade's products and services, supporting long-term business expansion and market presence.
Geographical Presence
A broad geographical presence in North America allows Chemtrade to leverage regional market demands, enhancing revenue stability and growth potential.
Profitability
Improved net profit margins demonstrate effective cost management and operational efficiency, contributing to sustainable financial health.
Negative Factors
High Debt Levels
High leverage can limit financial flexibility and increase risk, potentially impacting long-term stability and growth opportunities.
Cash Flow Challenges
Declining free cash flow growth suggests difficulties in cash generation, which may affect the company's ability to fund operations and investments.
Operational Challenges
Decreased EBIT margins indicate potential operational inefficiencies, which could hinder profitability and require strategic adjustments.
Chemtrade Logistics (CHE.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$1.50B
Dividend Yield5.1%
Average Volume (3M)331.17K
Price to Earnings (P/E)12.2
Beta (1Y)1.02
Revenue Growth6.31%
EPS Growth-7.95%
CountryCA
Employees1,474
SectorBasic Materials
Sector Strength58
IndustryChemicals
Share Statistics
EPS (TTM)0.09
Shares Outstanding112,725,530
10 Day Avg. Volume326,879
30 Day Avg. Volume331,165
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$15.08Price Target Upside13.04% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
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 makes money through the manufacture and distribution of industrial chemicals and services. The company operates several revenue streams, with a significant portion coming from the sale of sulfuric acid, sodium chlorate, and other water treatment chemicals. These products are essential in industries such as water treatment, pulp and paper production, and oil refining. Chemtrade also provides logistics services, including transportation and storage, which complement its chemical production business. Strategic partnerships and long-term contracts with industrial clients contribute significantly to its revenue stability, allowing Chemtrade to maintain a steady income flow. Additionally, the company's geographical presence across North America enables it to capitalize on regional demand for its products and services.
Chemtrade Logistics Earnings Call Summary
Earnings Call Date:Aug 14, 2025
(Q3-2024)
| % Change Since: |
Next Earnings Date:Nov 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 shows positive revenue growth and stable profitability in the income statement. However, the high debt-to-equity ratio and challenges in cash generation present concerns. The company needs to address leverage and cash flow issues to ensure long-term stability.Income Statement
Chemtrade Logistics shows a solid performance in its income statement with a consistent revenue growth rate of 2.65% in TTM, following a slight decline in the previous year. The gross profit margin remains stable at around 24%, indicating effective cost management. The net profit margin has improved slightly to 7.30% in TTM, reflecting better profitability. However, the EBIT margin has slightly decreased, suggesting some operational challenges. Overall, the income statement reflects a positive growth trajectory with room for improvement in operational efficiency.75
Positive
Balance Sheet
The balance sheet of Chemtrade Logistics indicates a high debt-to-equity ratio of 1.25 in TTM, which is a concern for financial stability. However, the company has improved its return on equity to 16.96%, showing effective use of equity to generate profits. The equity ratio stands at 32.57%, suggesting a moderate level of financial leverage. While the company has made progress in improving equity returns, the high leverage remains a potential risk.65
Positive
Cash Flow
The cash flow statement reveals a decline in free cash flow growth by 28.24% in TTM, indicating challenges in generating cash from operations. The operating cash flow to net income ratio is 0.49, suggesting that cash generation is not fully aligned with reported profits. Despite these challenges, the free cash flow to net income ratio of 0.51 indicates that the company is still able to convert a significant portion of its profits into cash. Overall, the cash flow position shows some weaknesses that need to be addressed.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.88B | 1.79B | 1.85B | 1.81B | 1.37B | 1.38B |
| Gross Profit | 456.24M | 430.55M | 420.65M | 353.90M | -3.85M | 33.73M |
| EBITDA | 433.76M | 417.42M | 562.33M | 445.83M | 92.91M | 119.51M |
| Net Income | 129.12M | 126.91M | 249.32M | 109.11M | -235.21M | -167.48M |
Balance Sheet | ||||||
| Total Assets | 2.23B | 2.28B | 2.11B | 2.16B | 2.05B | 2.50B |
| Cash, Cash Equivalents and Short-Term Investments | 20.08M | 25.50M | 21.52M | 72.57M | 13.91M | 12.51M |
| Total Debt | 1.03B | 899.26M | 863.95M | 1.04B | 1.19B | 1.38B |
| Total Liabilities | 1.50B | 1.47B | 1.40B | 1.59B | 1.67B | 1.89B |
| Stockholders Equity | 725.88M | 818.36M | 707.14M | 566.21M | 379.85M | 605.82M |
Cash Flow | ||||||
| Free Cash Flow | 130.68M | 162.00M | 235.07M | 253.75M | 132.90M | 184.87M |
| Operating Cash Flow | 338.24M | 347.80M | 401.46M | 369.19M | 219.04M | 261.95M |
| Investing Cash Flow | -207.56M | -185.80M | -118.46M | -108.88M | 96.53M | -74.79M |
| Financing Cash Flow | -145.63M | -159.30M | -333.53M | -203.00M | -314.12M | -187.86M |
Chemtrade Logistics Technical Analysis
Positive
13.34
Price Trends
12.18
Positive
11.47
Positive
10.59
Positive
Market Momentum
0.28
Positive
70.86
Negative
79.29
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 13.34 is above the 20-day moving average (MA) of 13.00, above the 50-day MA of 12.18, and above the 200-day MA of 10.59, indicating a bullish trend. The MACD of 0.28 indicates Positive momentum. The RSI at 70.86 is Negative, neither overbought nor oversold. The STOCH value of 79.29 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 (61)
Financial Indicators
Performance Comparison
TSE:CHE.UN
Chemtrade Logistics
13.34
3.03
29.39%
MEOH
Methanex
39.76
-1.10
-2.69%
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.