BRASKEM SA (BAK): what the price assumes

boothcheck covers BRASKEM SA (BAK) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/BAK

Headline

FieldValue
TickerBAK
CompanyBRASKEM SA
Sector / IndustryBasic Materials
Current price$1.89/sh
CompositionPolyethylene /Polypropylene 67% / Tertiary-Butyl Ethyl Ether/Gasoline 8% / Benzene/Toluene/Xylene 6% / Ethylene, Propylene 7% / polyvinyl chloride/Caustic Soda 5% / Others 4% / Butadiene 2% / Cumene 1% / Solvents 1% / Naphtha, condensate and other resales 0%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)4.7%
Operating margin (mid-cycle)8.5%
Margin compression (value-band)-3.8pp
Trailing margin (depressed year)-1.4%
Multiple paid8x mid-cycle operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 3.6% sits below it).

How unusual the bet is: n/a

ReferenceValue
vs own history+1.03σ

Valuation X-Ray

The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset—0—
Earnings0.05x1justifies
Relative0.05x2justifies
Growth0.05x3justifies

Families that justify the price: Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.

Per-Model Detail (n=6)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$37.800.05xyesReference only (OCF-based, capex excluded): OCF $0.5B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$37.800.05xyesP/S fallback (negative EPS): Sector P/S 1.5x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset——no—
Two-Stage Excess ReturnAsset——no—
Discounted Future Market CapGrowth$1.811.04xyesRev $15.2B, growth 14% (input: historical growth; tapered), Terminal P/S: 0.0x / 0.0x / 0.0x (bear / base = today's held flat / bull, cap 15x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth$37.800.05xyesMargin ramp: -16% → 12% over 7yr, rev growth 14% (input: historical growth; tapered)
Earnings Power ValueEarnings$37.800.05xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.03B × (1−21%) / WACC 9.3% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$37.800.05xyesRevenue $15.18B × sector P/S 1.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$9.5b
Net debt / NOPAT (after-tax)9.37x
Net debt / operating income (pre-tax)7.40x
Interest coverage1.0x
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 8.5%); the trailing year was depressed.

Bullet Takeaways

Bull Case

Twenty-eight industrial units sit inside four petrochemical complexes in Brazil, and they cannot be replicated. The 20-F describes a Brazil Segment that mainly use naphtha, ethane/propane, refinery off gas (ROG), and ethanol as feedstock to produce ethylene, propylene, green ethylene and their respective chemical co-products. Ethylene is the starting point for most of the plastics economy, and the filing is direct about its centrality: it is the most widely used organic compound in the chemical industry, cracked from naphtha and natural gas liquids and converted mostly into polyethylene. Whoever owns the crackers in a country owns the entry point to that country's plastics chain. Permitting, capital cost and time make that position close to unbuyable.

The earnings the assets produce through a full cycle are the strongest argument available. Measured on the company's own through-the-cycle margins applied to current revenue, this business generates operating profit near 8.5% of a roughly 15.2 billion dollar revenue base. The trailing year is nothing like that: on the record's annual basis the operating result is slightly negative, around 1.4% of revenue in the red. Petrochemicals is the textbook case where recent earnings and normal earnings are different numbers, and the gap between them here is roughly ten points of margin.

The whole enterprise, borrowings included, is currently valued at roughly 6.6 times what the business earns in a normal year. For an asset base of this scale and irreplaceability, that is a low number. It is low for a reason, and the bear case explains it, but the operating business underneath is not the reason.

Two things happened recently that change the shape of the situation rather than the assets. The controlling stake changed hands: Novonor's holding, 50.1% of voting shares and 34.3% of total capital, was sold to a fund advised by IG4 Capital, with closing disclosed in June 2026. And operations improved off a low base, with consolidated recurring EBITDA, a company-defined measure, of US$192 million in the first quarter of 2026, up 76% from the fourth quarter of 2025, helped by stronger results in Brazil and in the United States and Europe plus roughly US$32 million of cost benefit from expanded REIQ tax credits.

Management has also been explicit that the current legal process is about money owed to lenders, not about the business: the 6-K states that The Injunctive Relief and the Mediation have a limited scope, strictly financial, and do not encompass any obligations of the Company and its subsidiaries with their suppliers, customers, and other stakeholders, which remain in full force and effect and continue to be performed in the ordinary course. Resins keep shipping while the capital structure gets argued over.

None of this makes the equity safe, and pretending otherwise would be dishonest. What it does establish is the nature of the bet. This is not a company whose products stopped selling. It is a company whose lenders now have more claim on the outcome than its shareholders do, holding assets that would be worth building if they did not already exist.

Bear Case

The valuation methods here do not disagree politely. Most of them look at a 15.2 billion dollar revenue base and a through-the-cycle operating profit near 8.5% of it and conclude the business is worth many times its share price. One does not. The difference between them is a single question: do you subtract the borrowings before you decide what the shares are worth? The methods that skip that step are valuing a company. The one that includes it is valuing a claim that stands behind roughly 7.0 billion dollars of net debt, and it lands close to where the stock actually trades. When the conservative method is the one that accounts for who gets paid first, the conservative method is not being pessimistic. It is being complete.

Follow that thread and the picture hardens. The market value of the equity is under a billion dollars while the debt sits at several times that. Even measured on through-the-cycle operating profit rather than the depressed trailing figure, net debt runs near 5.57 times operating profit and interest is covered roughly one time over. Coverage of one means the entire normal-year operating profit is consumed by the interest bill, in a normal year the company is not currently having.

The credit market has already reached its verdict. Following Precautionary Injunctive Relief proceedings filed by the company and certain of its subsidiaries, disclosed in material facts on June 25 and 26, 2026, Fitch revised its global rating to C and S&P to D. Those are not ratings that describe a cyclical trough. On the company's own first-quarter reporting, leverage stood at 16.81 times and adjusted net debt at US$8.48 billion.

The near-term cash calendar leaves little slack. The 20-F lists among its cash requirements the Cash requirements related to the obligations arising from the Geological Event in Alagoas, Credit rating downgrade, and the Maturity of the US$1.0 billion stand-by facility in December 2026, requiring a significant cash outflow, if not renewed. The Alagoas obligations are large and not finished: agreements signed with the Municipality of Maceió provide payment of R$ 1.7 billion as indemnity, compensation and full reimbursement for any property and non-property damages, a further total amount of R$1.2 billion as compensation, indemnification and/or reimbursement to the State of Alagoas was agreed on November 10, 2025, and the filing concedes that the company cannot eliminate the possibility of future developments related to all aspects of the geological event in Alagoas and that expenses may differ significantly from its estimates.

The cycle is not coming to the rescue on any visible schedule. LYB, operating the same product chains at greater scale, recorded $782 million of non-cash impairment charges related to a prolonged downturn in, and outlook for, the global automotive industry and a separate $400 million non-cash goodwill impairment charge related to a prolonged downturn in, and outlook for, the European petrochemical industry in its 2025 accounts. Braskem's own filing is blunter about its relative position, noting that European operations face competition from European and other foreign suppliers of polypropylene more competitive than us.

The floor is negligible. Roughly 85 million dollars of interests sit outside the operating businesses, which against the debt stack rounds to nothing. In a financial restructuring the ordinary shareholder is the last claim in the queue, and the queue here is long.

Valuation

Two numbers describe this company, and only one of them is about the plants. On the operating side, applying the company's own through-the-cycle margins to current revenue produces operating profit near 8.5% of a roughly 15.2 billion dollar revenue base, against a trailing annual figure that is slightly negative, close to 1.4% of revenue in the red. On the financing side, net debt of about 7.0 billion dollars sits against an equity market value under a billion. The first number says the assets work through a cycle. The second says the shareholder is a long way down the line to collect on that.

The enterprise, borrowings included, is priced at roughly 6.6 times what the business earns in a normal year, a level below what even a five percent a year decline in operating profit would warrant. That is a boundary rather than a forecast, and for most companies it would read as deep value. Here it reads as the market pricing a restructuring probability.

The methods make that explicit if you read them for what they include. Approaches that capitalize the whole business, or that apply a sector price-to-sales multiple to more than 15 billion dollars of revenue, land far above the share price, because none of them subtract the borrowings. The single approach that lands near today's price is the one built on a terminal value equal to a fraction of sales, which is another way of saying the only method that fits reality is the one that treats the equity as a residual. That is the spread, and it is not a disagreement about the business. It is a disagreement about the capital structure.

Solvency is therefore the valuation, not a footnote to it. Even using through-the-cycle operating profit rather than the trailing loss, net debt runs near 5.57 times operating profit and interest coverage is roughly one time over. Gross borrowings are larger still, partly offset by liquid assets of roughly 3.2 billion dollars. The company reported leverage of 16.81 times and adjusted net debt of US$8.48 billion in its first-quarter 2026 disclosure, and in late June 2026 Fitch and S&P moved the global ratings to C and D respectively following the Precautionary Injunctive Relief filing.

The revenue mix is worth naming because it determines what a recovery would look like. Polyethylene and polypropylene together are 67% of revenue, with fuel-related products at 8%, aromatics at 6%, and olefins sold directly at 7%. Everything in that list is a commodity quoted on an international reference. This is a spread business, where profitability is the gap between feedstock cost and resin price, and neither side is set by the company. When that spread widens, operating profit moves violently, which is exactly why the through-the-cycle figure is the fair basis and the trailing one is not.

What the price reflects is not a view on resin spreads. It is a view on who ends up owning the assets once the financial process concludes.

Catalysts

Three dated events in June 2026 reset this situation. On June 25 and 26 the company disclosed material facts covering a Precautionary Injunctive Relief proceeding filed by Braskem and certain of its subsidiaries. On June 29 it reported that Fitch had revised its global rating to C and S&P to D in connection with that proceeding, while stating that The Injunctive Relief and the Mediation have a limited scope, strictly financial, and do not encompass any obligations of the Company and its subsidiaries with their suppliers, customers, and other stakeholders. Separately, the long-running sale of Novonor's controlling position closed, transferring 50.1% of voting shares and 34.3% of total capital to a fund advised by IG4 Capital.

The operating trend going into that was improving from a low base. Consolidated recurring EBITDA, a company-defined measure, reached US$192 million in the first quarter of 2026, up 76% from the fourth quarter of 2025, with better results in Brazil and South America and in the United States and Europe, including roughly US$32 million of cost of goods benefit from expanded REIQ tax credits. Adjusted net debt stood at US$8.48 billion with leverage at 16.81 times.

The next hard date is on the calendar rather than in a forecast. The 20-F identifies the Maturity of the US$1.0 billion stand-by facility in December 2026, requiring a significant cash outflow, if not renewed as a cash requirement, alongside continuing payments tied to the Alagoas geological event. How the mediation resolves before that maturity, and on what terms, is the single development that matters more than any quarterly result.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Braskem Form 6-K, June 29, 2026 · Braskem material fact on closing of the Novonor stake sale, June 2026 · Braskem Q1 2026 earnings release

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