Nexam Chemical Holding AB (publ) Year-End Report 1 January – 31 December 2025

Nexam Chemical reported 2025 net sales of SEK 192.245m (down from SEK 199.577m) with full-year EBITDA of SEK 3.444m versus SEK 8.061m a year earlier and EPS of SEK -0.19 (vs -0.12). Q4 sales fell 11% to SEK 43.163m, gross margin held at 47%, Q4 EBITDA was SEK 0.133m and cash was SEK 12.168m with an unused overdraft of SEK 13.703m. The board proposes no dividend and completed an EGM approval for a fully guaranteed rights issue to raise at least SEK 51.8m, while commercial positives include >250% growth in recycling sales, a German PET series-production order and a North American distribution agreement.

Analysis

Market structure: Nexam’s +250% jump in recycling sales vs a Q4 sales decline of 11% and FY sales -3.7% to SEK 192m signals a bifurcation: recyclate/PET value chains and distributors (e.g., Palmer Holland partnership) are potential winners while legacy masterbatch customers face demand weakness (Performance Masterbatch -21% q/q). Stable gross margin at 47% implies preserved pricing power on sold volumes, but volume mix shift (more low‑margin/one-off recycling or pilot orders) will pressure headline EBITDA until scale is reached. Cross-asset: expect elevated equity volatility for the small‑cap; limited credit spread compression (higher default risk) and modest SEK weakness on further equity raises; PET feedstock commodity moves will increasingly correlate with Nexam’s recycled product economics.

Risk assessment: immediate risk (days–weeks) centers on execution of the rights issue (approved Jan 19) and real cash inflow; a failure of guaranteed underwriting or >20% issuance dilution would be high‑impact. Medium term (3–12 months) tail risks include single‑customer concentration (first German PET order) and distribution underperformance; regulatory changes favoring recycled plastics are a positive policy tail but could also raise certification costs. Key hidden dependency: reliance on guaranteed rights issue underwriters and the speed of Palmer Holland roll‑out — both binary catalysts.

Trade implications: tactical approach — size exposure small (1–3% NAV) and conditional on post‑money cash runway >12 months (operational cash + rights proceeds net >SEK 58m). Hedge with liquid sector instruments: buy XLB 3‑month 5% OTM puts (to protect 50% of position) or buy 3‑month puts on LYB as a correlated hedge if industrial demand worsens. Consider a relative trade long Nexam recycling optionality vs short a legacy masterbatch peer or materials ETF exposure if q/q masterbatch weakness continues.

Contrarian angle: the market likely underprices the structural recycling growth — if the North American distribution scales within 6–12 months, incremental volumes could re‑rate multiple despite near‑term dilution. Conversely, dilution mechanics are often over‑penalized; monitor cash post‑issue and three successive quarters of growing recycled revenues as a re‑entry trigger. Historical parallels: small chemical innovators that married distribution deals with modest capital infusions re‑rated only after 12–18 months of consistent order flow; failure mode is execution slippage rather than technology.

Key Decisions for Investors

• Conditional small long: Establish a 1–3% NAV long position in Nexam Chemical (small‑cap Nordic chemicals exposure) only after the rights issue proceeds are received and cash + net proceeds > SEK 58m (to imply ~12 months runway); target hold 6–18 months and trim if EBITDA margin falls below 30% or recycled sales growth <10% q/q for two consecutive quarters.
• Hedge the long: Simultaneously buy downside protection equal to ~50% notional of the long using liquid sector hedges — e.g., XLB 3‑month 5% OTM puts or 3‑month puts on LYB sized to cover 50% of equity exposure — to protect vs a cyclical plastics demand shock.
• Event-driven opportunistic short: If post‑issue dilution exceeds 25% and management guidance lacks 12‑month cash runway, initiate a 1–2% NAV short or buy puts against Nexam (or short comparable small‑cap Nordic chemicals) with a 3–6 month horizon; cover if management publishes a confirmed 6‑month order book >SEK 100m.
• Catalyst trade: Buy exposure (1% NAV) to larger, liquid recyclate beneficiaries (e.g., major PET processors or materials ETFs) and rotate into Nexam only after three consecutive quarters showing recycled revenue contribution >20% of group sales — expected catalyst window 6–12 months.