BASF SE Weekly Valuation: BASF SE (ETR: BAS) – Valutico | December 2021 Is BASF massively undervalued? For the third time this year, Germany’s largest chemical company #raises its profit forecast. Analysts see “plenty of potential” and a “massively undervalued” share. The share price has been declining for months.  Let’s have a look at the figures: – Turnover #increased by 42%to EUR19.7 billion – EBIT jumped from EUR581 million last year to EUR1.87 billion – The company achieved a profit of EUR1.25 billion – Over the first nine months of the current year, BASF increased its sales by 36%to EUR58.8 billion  – Adjusted EBIT increased by 167% to EUR6.5 billion Why the depressed share price Investors are well aware that these high growth numbers are from a low base due to the #pandemic. Long-term BASF faces major challenges which include the billions that need to be invested in CO2-neutral production and other Environmental, Social, and Governance (“ESG”) issues, increasing competition from Asia and the Middle East, and limited growth opportunities. If the global #economy flourishes, BASF’s business also flourishes, however, there are no other significant growth drivers. The battery business could become one in light of the booming Electric Vehicle trend, but it is currently at a very early stage and costing money as it is being built up from scratch. Valutico‘s fundamental analysis Based on analyst #forecasts, we have calculated a valuation of EUR108 billion, a substantial premium to the current market cap of EUR55 billion. The trading multiple #valuations based on a selected peer group are also significantly above the market cap. Do BASF’s substantial ESG and growth challenges warrant such a large discount? Please share your thoughts in the comments.

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