Summary
- Macquarie upgraded Lynas Rare Earths to outperform from neutral, citing the producer’s advantage from China’s expanded export controls on dual-use materials that could delay other rare-earth projects.
- Maybank IB downgraded Petronas Chemicals to sell from hold, citing normalizing selling prices for olefins, fertilizers and methanol and the risk of new Chinese capacity coming online.
- SGH’s plan to buy back up to A$500 million in stock offers a “credible backstop” should its bid for BlueScope Steel not proceed, Macquarie said, while keeping an outperform rating.
- Brenntag raised its full-year operating Ebitda guidance to between €1.25 billion and €1.4 billion, though Deutsche Bank analyst Tristan Lamotte said the better-than-forecast results were driven more by margins than volumes.
- Syensqo’s strategic review of its performance and care segment should improve its valuation by accentuating its focus on high-growth end-markets like semiconductors and aerospace, according to Deutsche Bank Research.
- Reliance Worldwide’s closure of its Australian brass operations makes sense given reduced reliance on Australian-sourced brass, Morgans analyst Alexander Lu said, lifting the target price 11% to A$3.60.
Analysts upgraded Australian rare-earth producer Lynas Rare Earths to outperform and investment firm SGH on Tuesday, while downgrading Petronas Chemicals to sell, as a broad roundup of basic materials market talk also featured guidance increases at German chemical distributor Brenntag and a strategic review at Belgian chemical company Syensqo.
The analyst actions come as China tightens export controls on dual-use materials, benefiting the largest non-Chinese producer of separated rare earths, while chemical companies face margin pressure from normalizing product prices and new Asian capacity.
Macquarie raised its target on Lynas shares by 10% to A$22.00 and upgraded the stock to outperform from neutral. The bank said China’s expanded export controls on dual-use materials and technologies could delay efforts to expand rare-earth production elsewhere, reinforcing Lynas’s premium as the biggest non-Chinese producer of separated rare earths. China’s Commerce Ministry has added 10 U.S. industrial and defense-linked firms, including MP Materials and USA Rare Earth, to its export control list. Macquarie noted that Lynas management confirmed reagents and equipment for current operations and expansion will be sourced from outside China. Lynas shares rose 0.8% to A$18.76 on Tuesday, adding to Monday’s 2.4% gain.
In Australia, Macquarie said SGH’s planned share buyback of up to A$500 million offers shareholders clarity on how the company could allocate cash should its bid for BlueScope Steel not proceed. “A buyback is a credible backstop, but we think M&A intent remains,” Macquarie said. The bank factors in A$200 million in stock purchases in fiscal 2027, though it said that level would stretch SGH’s balance sheet if the bid continued. Macquarie expects little of the buyback will happen if the BlueScope bid gains momentum. It raised its target price to A$51.25 from A$50.35 and maintained an outperform rating. SGH shares fell 0.5% to A$44.33.
In Southeast Asia, Maybank IB analyst Jeremie Yap downgraded Petronas Chemicals to sell from hold and cut the target price to 3.92 ringgit from 5.62 ringgit. Yap said the company’s potentially strong second-quarter earnings appear unsustainable, as average selling prices of olefins, fertilizers and methanol are normalizing. He expects lower plant utilization rates, weaker margins during a major turnaround at the Kertih complex and softer urea prices. Profits may also decline over 2026–2028 as product spreads normalize and new petrochemical capacity in China comes onstream, he added. However, a potential disposal of its stake in its joint venture Pengerang Petrochemical could provide some upside. Shares fell 2.8% to 4.15 ringgit.
Meanwhile, AmInvestment Bank analyst Gan Huey Ling said Kuala Lumpur Kepong’s manufacturing segment could swing to profit in fiscal 2026, supported by demand in oleochemical products and smaller losses in its glove unit. She tips an Ebit of 169 million ringgit for fiscal 2026 compared with a loss of 25.9 million ringgit a year ago. AmInvestment Bank maintained a hold rating on the stock, citing significant exposure to Indonesia’s policy uncertainties and a weak oleochemicals sector in Europe. Shares were 1.5% higher at 21.24 ringgit.
In Europe, Brenntag raised its full-year 2026 operating Ebitda guidance to between €1.25 billion and €1.4 billion, up from €1.15 billion to €1.35 billion. Deutsche Bank analyst Tristan Lamotte said the better-than-forecast results were driven more by profit margins than volumes, as expected. Even after the raise, Deutsche Bank’s estimate sits at the top of Brenntag’s guidance range, Lamotte said. Brenntag shares closed 0.3% lower at €53.74 on Monday.
Syensqo recently announced a strategic review of its performance and care segment, which Deutsche Bank Research analysts said should improve its valuation. The review should accentuate the Brussels-based chemical company’s focus on high-growth end-markets such as semiconductors and aerospace, the analysts said. “Overall, the catalyst path looks pretty good,” they wrote, but added that it will take time for management to rebuild its relationship with markets after a loss of trust in the fourth quarter. Syensqo shares traded 0.3% higher at €67.25.
In the Asia-Pacific industrial sector, Reliance Worldwide’s decision to close its Australian brass operations makes sense, according to Morgans analyst Alexander Lu. He told clients the ASX-listed plumbing supplies manufacturer has become less reliant on Australian-sourced brass over recent years, with North American production increasing, Asia sourcing rising, and some products requiring less brass. Lu made no changes to his fiscal 2026 underlying earnings forecasts but raised his fiscal 2027 Ebitda forecast by 1% on the assumption Reliance can realize a third of the US$9 million in annual savings it expects from the closure. Morgans kept a hold rating and lifted its target price 11% to A$3.60. Shares fell 3.0% to A$3.56.
The S&P 500 stood at 7,472.79 on Tuesday, while the Dow Jones Industrial Average closed at 51,712.71.