* Less destocking in Q4 – good start to 2014
Based on information from non-listed and listed companies, we have
formed the impression that seasonal destocking in Q4 2013 was
significantly less pronounced than in past years and that orders for Q1
2014 continued the sequential positive momentum. Several private
companies say that order amounts have increased (but not yet the number
of orders), possibly signalling the start of a restocking trend, in our view.
* After several profit warnings, Q4 should be okay
In our view, Akzo’s, Arkema’s and Kemira’s profit warnings had mainly
company-specific causes. Only DSM’s warning represents a negative
read-across for the global nutrition market. More important than Q4 will
be the outlook, where we expect companies to become more positive.
* Top picks Clariant and Solvay; top avoids Akzo and Syngenta
Despite Clariant’s fantastic performance, we still see 25% upside. Solvay
is among the least loved EU chemicals and therefore expectations are low;
in contrast, we expect positive news flow on the EU PVC JV approval soon
and recovery signs at its troubled units (Polyamides, Rare Earth, Guar,
Electrochemistry). We would still avoid Akzo and Syngenta as we think
consensus is still far too optimistic.