Chemicals industry undervaluing itself, says PwC
Chemical company executives are not telling the markets enough about their businesses leading to undervaluation, new research has revealed.
In a global survey of 28 senior executives from 27 leading chemical companies, 52 institutional investors and 30 sell-side analysts, just 2% of investors said chemical companies communicated consistently with them. A mere 13% said companies initiated contact when they had new information.
The results contrast sharply with the perception by nearly half the executives interviewed who said they were very proactive in their communications.
David Phillips, European leader of ValueReporting for PwC, said: ‘Communicating more effectively with the markets should be at the top of chemical companies’ boardroom agendas. Our research has shown that at least 80% of investors and analysts think it would enhance management credibility and improve price/earnings ratio.’
The impact of these differing perceptions between investors and executives is leading to the undervaluation of companies, according to the survey.
It reveals that despite recognition of the need for a new reporting model by some chemicals companies, few are taking the opportunity to reveal their underlying value to the capital markets.
‘Those chemical companies that actively communicate with the markets and provide them with the information they desire, will have a better chance of creating long-term value and maintaining a market capitalisation that reflects their true worth,’ said Phillips.