Braskem (BRKM5.SA) Down grade to Sell; Liquidity Crunch and the Road to Restructuring

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Braskem (BRKM5.SA) Down grade to Sell; Liquidity Crunch and the Road to Restructuring

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25 Jun 2026 15:56:00 ET │ 15 pages

Braskem (BRKM5.SA)

Downgrade to Sell; Liquidity Crunch and the Road to Restructuring

CITI’S TAKE

We are downgrading Braskem to Sell/High Risk (from Neutral/High Risk),

Sell / High Risk ↓ from Neutral / High Risk prompted by a deteriorating outlook for petrochemical spreads and

Price (24 Jun 26 18:00) R$7.62 mounting company-specific risks. Our prior Neutral thesis, which

anticipated a cyclical recovery and a clear ownership resolution, is no Target price R$4.50↓

longer tenable as near-term fundamentals weaken, creating a negative from R$11.50

shift in the risk/reward balance. The financial outlook is challenging, with Expected share price return -40.9%

spread pressure and a working capital drag likely leading to negative FCF, Expected dividend yield 0.0%

thus straining the balance sheet. Furthermore, the material tail risk from Expected total return -40.9%

the Alagoas Geological Event cannot be overlooked; judicial restructuring

Market Cap R$5,352M becomes a realistic outcome. Ambiguity over Petrobras’s strategic

US$1,033M intentions and a potential need for a capital injection further cloud the

outlook for equity holders. Given this confluence of negative factors, we

believe the stock’s current valuation fails to compensate for its heightened

risk profile. We trimmed our target price to R$4.50/sh (from R$11.50/sh), Gabriel BarraAC

with Braskem Idesa contributing with a -R$1.00/sh. +55-11-4009-2223

gabriel.barra@citi.com

The Downgrade — From a financial standpoint, the company carries elevated Pedro Gama

leverage, alongside constrained free cash flow generation and historically