Nexam Chemical enters next phase of growth – with a focus on scaling its Recycling operations

Nexam Chemical reports that restructuring since 2023 has stabilized gross margins and lowered the break-even point, with quarterly cash flow in line with the prior year and EBITDA close to break-even. The company said Recycling delivered strong commercial acceleration in 2025—Q4 Recycling sales exceeded the business area’s total 2024 sales and grew >250% year‑on‑year—and announced an approximately SEK 51.8m rights issue to fund scaling of Recycling (commercial resources, additive R&D, market presence and working capital) while targeting to double Recycling sales in each of the next two years (ambition, not formal guidance).

Analysis

Market structure: Nexam’s reported >250% Q4 Recycling growth (Q4 2025 vs Q4 2024) and statement that Q4 Recycling sales exceeded full‑year 2024 signal rapid take‑up of additive-based Reactive Recycling. Winners are specialty additive/recycling enablers (Nexam, enzymatic recyclers like Carbios ALCRB.PA) and OEMs needing recycled content; losers are high‑margin short‑cycle virgin resin producers if recycled share scales to >10–20% in targeted segments. Pricing power will shift to suppliers who lock recurring formulations and technical service contracts, increasing annuity‑like revenues and raising barriers to commodity entrants.

Risk assessment: Key tail risks are (1) customer concentration — a single large customer inventory adjustment already hit High Temperature sales, (2) technical scale failures where performance does not hold at industrial throughput, and (3) dilution/rights‑issue execution risk (SEK 51.8m). Short horizon (days–weeks): market reaction to rights issue terms; medium (3–12 months): customer wins / recurring revenue cadence; long (12–36 months): whether Recycling can actually double sales two years in a row. Hidden dependency: success relies on OEM spec acceptance and regulatory recycled‑content mandates (EU/US) aligning with commercial timelines.

Trade implications: Direct long in Nexam (NEXAM.ST) or peers exposed to Reactive Recycling is a thematic play; consider shorting commodity polymer names (LyondellBasell LYB, BAS.DE) for relative exposure if recycled substitution accelerates. Options: use 9–18 month call spreads on high‑conviction names to cap premium and sell nearer‑term calls to finance. Cross‑asset: commodity crude/plastics price declines would compress margins for virgin resin makers and accelerate recycling adoption, so monitor Brent; a >15% fall in 3 months is a trigger to overweight recyclers.

Contrarian angles: Consensus assumes smooth scaling — but execution is hard: failure to convert pilot wins to plant‑level recurring contracts would rapidly reverse sentiment. The rights issue may be underpriced if investors ignore the annuity nature of recurring additive revenues; conversely, if management overpromises (double sales p.a.) and misses, short candidates emerge. Historical parallel: specialty chemical rollouts (e.g., flame retardant additives) saw rapid pilot hype then a 12–18 month validation cliff; plan to size positions to survive that validation window.

Key Decisions for Investors

• Establish a 1–2% portfolio long position in Nexam Chemical (NEXAM.ST) within 4 weeks — prefer participating pro rata in the SEK 51.8m rights issue if subscription price implies <=35% dilution vs current market cap; target 12–24 month hold, take profit at +100%, stop-loss at -35% if quarterly Recycling growth <+40% sequentially.
• Implement a pair trade: long recyclers (NEXAM.ST or ALCRB.PA Carbios) vs short commodity resin makers (LyondellBasell LYB or BASF BAS.DE) sized 1:1 notional for 6–12 months; exit if Brent moves >±15% in 60 days or if recyclers announce ≥3 new industrial recurring contracts within 6 months.
• Buy a 9–18 month call spread on NEXAM.ST (moderately OTM: ~30–60% upside strikes) sized to 0.5–1% of portfolio to leverage success while capping premium; if IV >50% prefer vertical spread financed by selling nearer ITM calls.
• Reduce direct exposure to pure virgin‑polymer producers by 2–4% and reallocate to specialty chemical ETFs/positions (e.g., XLB) or specific recycling equities; rebalance back only if Nexam misses two consecutive quarterly revenue targets or rights issue fails to close within 90 days.