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>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

Equity Analyst

Steve Zhou, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-paint-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7387:1" rel="noopener">Nippon Paint Holdings (4612 JP)</a> announced a better-than-expected 3Q23 results this week, mainly driven by a resilient China decorative paint business. </li>
<li>The company also raised 2023 operating profit guidance, expecting around 6% higher operating profit (Y168bn from Y158bn previously).</li>
<li>At 21x forward PE, the company is attractively valued given the growth profile and strong market share position in most end-markets.  </li>
</ul>



Nippon Paint Holdings (4612 JP) announced a better-than-expected 3Q23 results this week, mainly driven by a resilient China decorative paint business. 
The company also raised 2023 operating profit guidance, expecting around 6% higher operating profit (Y168bn from Y158bn previously).
At 21x forward PE, the company is attractively valued given the growth profile and strong market share position in most end-markets.  


Nippon Paint (4612 JP):  Results Beat On Resilient China 2C Business

<ul><li>WTR-CMI last week. The third quarter ended on a down note, with the S&amp;P 500 losing 3.7% and the Russell 2000 dropping 2.7%.</li><li>Our WTR-CMI index slightly underperformed the Russell 2000, declining 3.0% for the week. Coincidently, RYAM led the performance of stocks in our index, appreciating 18% last week, as news spread of one of its main competitors in commodity markets announcing the intention to shut down a major wood pulp production plant in the US</li><li>Lithium (LAC and PLL) and ag- chem stocks (FMC and AVD) were the worst performers in our index last week on lower lithium prices and signs of slowing EV demand, and a weaker farmer outlook for 2024/25 season.</li></ul>

WTR-CMI last week. The third quarter ended on a down note, with the S&amp;P 500 losing 3.7% and the Russell 2000 dropping 2.7%.Our WTR-CMI index slightly underperformed the Russell 2000, declining 3.0% for the week. Coincidently, RYAM led the performance of stocks in our index, appreciating 18% last week, as news spread of one of its main competitors in commodity markets announcing the intention to shut down a major wood pulp production plant in the USLithium (LAC and PLL) and ag- chem stocks (FMC and AVD) were the worst performers in our index last week on lower lithium prices and signs of slowing EV demand, and a weaker farmer outlook for 2024/25 season.

Mat-Chem Notes For the Week Ended September 29, 2023

<div><div><div><div><ul style="list-style-type: disc;"><li><p>WTR-CMI last week. Last week saw the market retrench, with the S&amp;P 500 losing 1.3%, while our WTR-CMI index of 30 chemicals and materials technology stocks managed to modestly outperform the broader Russell 2000 index (-3.6%) by declining 3.4%.</p></li><li><p>Only one stock in our index, SXT, managed a positive gain for the week, appreciating 3%. FMC was the worst performer in our index, losing 12.3% of its value on a short seller’s report that the company felt obliged to address.</p></li><li><p>Ag-tech portfolio shuffles continue. Privately held DLF, a global seed company, completed the acquisition of CTVA’s alfalfa seed breeding program, which was announced last month.</p></li></ul></div></div></div></div>

WTR-CMI last week. Last week saw the market retrench, with the S&amp;P 500 losing 1.3%, while our WTR-CMI index of 30 chemicals and materials technology stocks managed to modestly outperform the broader Russell 2000 index (-3.6%) by declining 3.4%.Only one stock in our index, SXT, managed a positive gain for the week, appreciating 3%. FMC was the worst performer in our index, losing 12.3% of its value on a short seller’s report that the company felt obliged to address.Ag-tech portfolio shuffles continue. Privately held DLF, a global seed company, completed the acquisition of CTVA’s alfalfa seed breeding program, which was announced last month.

Mat-Chem Notes For the Week Ended September 8, 2023

United States

The Sherwin-Williams Company manufactures, distributes, and sells paints, coatings, and related products.  The Company's products are sold to professional, industrial, commercial, and retail customers primarily in North and South America. Sherwin Williams also has additional operations in the Caribbean region, Europe and Asia.

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Sherwin Williams Co (SHW US)

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

Nippon Paint (4612 JP): Results Beat On Resilient China 2C Business

Nippon Paint Holdings reported strong 3Q23 results, mainly driven by its resilient China decorative paint business. The company also raised its...

Steve Zhou, CFA

Mat-Chem Notes For the Week Ended September 29, 2023

WTR-CMI last week. The third quarter ended on a down note, with the S&P 500 losing 3.7% and the Russell 2000 dropping 2.7%.

Water Tower Research

Mat-Chem Notes For the Week Ended September 8, 2023

Ag-tech portfolio shuffles continue. Privately held DLF, a global seed company, completed the acquisition of CTVA’s alfalfa seed breeding program,...

Water Tower Research

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52-week Range

Market Cap (USDm)

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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

Nippon Paint (4612 JP): Results Beat On Resilient China 2C Business

​Nippon Paint Holdings reported strong 3Q23 results, mainly driven by its resilient China decorative paint business. The company also raised its...

Steve Zhou, CFA

Mat-Chem Notes For the Week Ended September 29, 2023

WTR-CMI last week. The third quarter ended on a down note, with the S&P 500 losing 3.7% and the Russell 2000 dropping 2.7%.

Water Tower Research

Mat-Chem Notes For the Week Ended September 8, 2023

Ag-tech portfolio shuffles continue. Privately held DLF, a global seed company, completed the acquisition of CTVA’s alfalfa seed breeding program,...

Water Tower Research

Nippon Paint Holdings reported strong 3Q23 results, mainly driven by its resilient China decorative paint business. The company also raised its...