BASF SE: A healthy Q1 despite high uncertainty; maintain BUY

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BASF posted detailed Q1 2022 results. As highlighted in our previous report on its preliminary release, the company’s revenues and adj. EBIT beat market and AlsterResearch expectations, primarily driven by increased pricing. This demonstrated that BASF still has the ability to pass through input cost inflation. However, the company reported a 29% yoy dip in its net profits in Q1, dragged by impairments related to its Russian exposure. While management reaffirmed its guidance for 2022, it had a cautionary tone, largely due to uncertainties associated with inflationary pressure on raw material, logistics costs, and the Russia-Ukraine armed conflict, which could lead to further impairments. Nevertheless, we believe these risks seem more than reflected in the valuation. We reiterate our BUY rating. However, we reduce our PT to EUR 80.00 (EUR 87.00), reflecting the dividend paid and some finetuning of estimates.

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