LATIN AMERICA EQUITY RESEARCH - LATAM FIRST TO MARKET

Research evidence excerpt

LATIN AMERICA EQUITY RESEARCH - LATAM FIRST TO MARKET

Latin America Equity Research

LatAm First to Market 30 June 2026

Top Stories

| Braskem (Milene Clifford Carvalho)

Reversing Course: Downgrading to Neutral as Petrochemical Uplift Fades and Restructuring Risk

Rises

We are downgrading Braskem to Neutral, with a new fair value and Dec-26 PT of R$7.5/sh (vs. R$15/sh prior). Additionally, we

are withdrawing our Dec-26 PT of $5.50 for the ADRs. Last month, we adopted a more constructive view on Braskem based on

two pillars beyond valuation: governance improvement and a petrochemical scenario uplift that could support more favorable

negotiating terms with debt holders. While the new bylaws and shareholders' agreement remain an improvement over the

previous structure, and petrochemical spreads continue to hold above pre-conflict levels, the latest CMA expectations were

revised downward as the ceasefire and the recent US-Iran MOU progressed - eroding the durability that was essential to a

more constructive view. In addition, the publication of the restructuring materials provides greater visibility into the ongoing

negotiations with creditors and indicates that the equity story is now primarily driven by the restructuring outcome rather than

fundamentals. While we continue to view an out-of-court restructuring (EJ) as the preferred path, creditors have explicitly called

for greater shareholder burden-sharing while rejecting management's initial proposal. As a result, we believe the range of

potential outcomes for shareholders has become less favorable than previously anticipated, with a higher likelihood that the

ultimate restructuring could require more meaningful shareholder contributions - although this remains only one of several

possible outcomes.