BASF (BASFY) Focuses on Global BDO Portfolio, Exits China JVs
BASF SE BASFY has risen 1.3% since its announcement of the divestment process for its share in two joint venture companies, BASF Markor Chemical Manufacturing (Xinjiang) Co., Ltd. and Markor Meiou Chemical (Xinjiang) Co., Ltd., situated in Korla, China on Feb 9. The process was initiated during the fourth quarter of 2023.
This strategic move reflects BASF's global approach toward 1,4-butanediol (BDO). Through comprehensive market assessment and evaluation of product carbon footprints (PCF), BASF has identified escalating competitive pressure and environmental considerations throughout BDO value chains worldwide.
Specifically, the production of carbide-based BDO and polytetrahydrofuran in Korla has resulted in significantly higher PCF due to the use of coal as a primary raw material and the energy-intensive production processes. In response, BASF aims to tailor its global BDO portfolio to offer competitive low-PCF alternatives.
BASF has always considered the situation in Xinjiang as part of its overall evaluation of joint ventures in Korla. While regular due diligence efforts, including internal and external audits, have not uncovered any evidence of human rights violations within the joint ventures, recent reports concerning BASF's joint venture partner have raised serious concerns conflicting with BASF's values. Consequently, BASF has decided to expedite the divestment process, contingent upon negotiations and approvals from relevant authorities.
BASF SE Price and Consensus
BASF SE price-consensus-chart | BASF SE Quote
It's important to highlight that, despite external reports, BASF has no indications of involvement by the employees of its joint ventures in human rights violations. The reports primarily pertain to BASF's joint venture partner, in which BASF holds no stake.
BASF remains committed to its presence in China, with no changes to its overall operations and planned investments in the country. Greater China presently contributes approximately half of the global chemical production, and it is expected to drive around 80% of global growth in chemical production from 2022 to 2030.
In the past year, BASF’s shares have lost 12.9% compared with the industry’s 21.3% fall in the same period.
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Zacks Rank & Key Picks
BASF currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, sporting a Zacks Rank #1 (Strong Buy), Eldorado Gold Corporation EGO and Hawkins, Inc. HWKN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for CRS’ current fiscal year earnings is pegged at $3.97 per share, indicating a year-over-year surge of 248.3%. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have rallied 26.4% in the past year.
Eldorado has a projected earnings growth rate of 1,040% for the current year. The Zacks Consensus Estimate for EGO’s current-year earnings has been revised 10% upward in the past 60 days. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 496%. The company’s shares have rallied 31.1% in the past year.
The consensus estimate for HWKN’s current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied 59.6% in the past year.
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