Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>Heavy lithium. Halfway through the year, the S&amp;P 500 has appreciated 15.4% YTD, driven by the strong performance of the Magnificent Seven, even as the remaining 490+ companies saw their stock prices move more in line with the Russell 2000, which itself posted an 7.8% gain YTD.</li><li>Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of their value due to collapsing lithium and synthetic graphite prices, driven by slower growth of EVs and steel production and liquidation of excess inventories by customers, built over the course of 2022-23.</li><li><p>Sticky costs remain as pricing power wanes. Over the course of 2022-23, many companies experiencing a rapid rise in raw material costs, driven by higher petrochemical prices and rising costs of transportation and logistics aggressively raised prices in an attempt to preserve profits, if not profit margins. </p></li></ul>

Heavy lithium. Halfway through the year, the S&amp;P 500 has appreciated 15.4% YTD, driven by the strong performance of the Magnificent Seven, even as the remaining 490+ companies saw their stock prices move more in line with the Russell 2000, which itself posted an 7.8% gain YTD.Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of their value due to collapsing lithium and synthetic graphite prices, driven by slower growth of EVs and steel production and liquidation of excess inventories by customers, built over the course of 2022-23.Sticky costs remain as pricing power wanes. Over the course of 2022-23, many companies experiencing a rapid rise in raw material costs, driven by higher petrochemical prices and rising costs of transportation and logistics aggressively raised prices in an attempt to preserve profits, if not profit margins. 

Mat-Chem Notes - Between a Rock and a Hard Place - 2H24 Outlook

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Eastman delivered a decent result and is looking forward to the circular platform despite facing some operational and regulatory challenges.</li><li>The company's Kingport plant, which is focussed on recycling and is the world's largest chemical recycling facility, has been running satisfactorily with no disruptions to customer supply.</li><li>The complexity of the plant's technology and process, however, has led to some initial mechanical issues.</li></ul>

Eastman delivered a decent result and is looking forward to the circular platform despite facing some operational and regulatory challenges.The company's Kingport plant, which is focussed on recycling and is the world's largest chemical recycling facility, has been running satisfactorily with no disruptions to customer supply.The complexity of the plant's technology and process, however, has led to some initial mechanical issues.

Eastman Chemical Company: Expansion of Methanolysis Facilities and Circular Recycling Plants! - Major Drivers

<ul><li>Changes to WTR-CMI. Following the completion of Livent’s merger of equals with Allkem, the new company, with the new name Arcadium Lithium plc, is now trading under the symbols ALTM-NYSE and LTM-ASX, and has replaced LTHM in our index.</li><li>WTR-CMI last week. The S&amp;P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.</li><li>Our WTR-CMI Index declined 1.2%, dragged down by double-digit losses in lithium stocks and the continuing decline in the value of synthetic graphite maker EAF. </li></ul>

Changes to WTR-CMI. Following the completion of Livent’s merger of equals with Allkem, the new company, with the new name Arcadium Lithium plc, is now trading under the symbols ALTM-NYSE and LTM-ASX, and has replaced LTHM in our index.WTR-CMI last week. The S&amp;P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.Our WTR-CMI Index declined 1.2%, dragged down by double-digit losses in lithium stocks and the continuing decline in the value of synthetic graphite maker EAF. 

Mat-Chem Notes - For the Week Ended January 19, 2024

<ul><li>WTR-CMI in 2023. With the majority of stocks in our index finishing the year in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.</li><li>However, both indexes fell well short of the 24% growth of the S&amp;P 500 in 2023, with the WTR- CMI Index dragged down by four companies that lost more than 50% in value during the year.</li><li>Weak demand and destocking. Looking back at 2023, several themes are emerging as we head into 2024, such as declining commodity prices and weakening end-market demand, with Y/Y volume comps affected by destocking across several end-markets since mid-year, as supply chain constraints, which characterized 2022, are resolved and companies go back to just-in-time inventory management.</li></ul>

WTR-CMI in 2023. With the majority of stocks in our index finishing the year in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.However, both indexes fell well short of the 24% growth of the S&amp;P 500 in 2023, with the WTR- CMI Index dragged down by four companies that lost more than 50% in value during the year.Weak demand and destocking. Looking back at 2023, several themes are emerging as we head into 2024, such as declining commodity prices and weakening end-market demand, with Y/Y volume comps affected by destocking across several end-markets since mid-year, as supply chain constraints, which characterized 2022, are resolved and companies go back to just-in-time inventory management.

Industry Report - Chemicals & Materials Technology

<ul><li>Eastman Chemical delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.</li><li>The primary contributor to the decline in earnings this year was attributed to volume and mix, resulting in a variable margin decrease of approximately $450 million.</li><li>Eastman’s management is cautiously optimistic about market stability, particularly in non-discretionary sectors like pharma and medical, anticipating some modest growth.</li></ul>

Eastman Chemical delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.The primary contributor to the decline in earnings this year was attributed to volume and mix, resulting in a variable margin decrease of approximately $450 million.Eastman’s management is cautiously optimistic about market stability, particularly in non-discretionary sectors like pharma and medical, anticipating some modest growth.

Eastman Chemical Company: Tackling Market Instabilities – A Strategy for Success! - Major Drivers

United States

Eastman Chemical Company is an international chemical company which produces chemicals, fibers, and plastics.  The Company's operations include coatings, adhesives, specialty polymers, and Inks, fibers, performance chemicals and intermediates, performance polymers, and specialty plastics.

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Eastman Chemical Co (EMN US)

Mat-Chem Notes - Between a Rock and a Hard Place - 2H24 Outlook

Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of...

Water Tower Research

Eastman Chemical Company: Expansion of Methanolysis Facilities and Circular Recycling Plants! - Major Drivers

Eastman delivered a decent result and is looking forward to the circular platform despite facing some operational and regulatory challenges. The...

Baptista Research

Mat-Chem Notes - For the Week Ended January 19, 2024

WTR-CMI last week. The S&P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.

Water Tower Research

Industry Report - Chemicals & Materials Technology

WTR-CMI in 2023. With the majority of stocks in our index finishing the year in positive territory, the WTR-CMI Index managed to keep pace with the...

Water Tower Research

Eastman Chemical Company: Tackling Market Instabilities – A Strategy for Success! - Major Drivers

Eastman Chemical delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings...

Baptista Research

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