Chemtrade Renews Buyback, Signals Confidence in Undervalued Units

TORONTO, ON – April 15, 2026 – Chemtrade Logistics Income Fund (TSX: CHE.UN) today signaled strong confidence in its market valuation by renewing its share buyback program, a move that underscores its commitment to returning capital to unitholders. The industrial chemical supplier announced the early termination of its existing Normal Course Issuer Bid (NCIB) and the immediate launch of a new one, approved by the Toronto Stock Exchange.

The new program, commencing April 17, 2026, authorizes Chemtrade to repurchase up to 5,834,048 of its units over the next year. This maneuver is part of a broader, disciplined capital allocation strategy that balances shareholder returns with ambitious investments in future growth.

A Proactive Capital Strategy

Chemtrade’s decision to refresh its buyback program is not a new tactic but a continuation of a consistent capital management philosophy. The previous NCIB, which began in August 2025, was terminated early after the Fund had already spent approximately $76 million to repurchase and cancel 5,277,900 units at a volume-weighted average price of $14.55 per unit.

Under the rules of the TSX, those repurchased units are deducted from the new authorization. The new NCIB allows for the purchase of up to 10% of the public float, which stood at 111,119,484 units as of April 10, 2026. This leaves a net authorization for nearly 6 million additional units to be acquired through April 16, 2027. Purchases will be made on the open market with a daily limit of 53,231 units on the TSX, except for permitted block purchases.

In its official statement, the company’s Board of Trustees reiterated its belief that, from time to time, its units trade in a price range that “does not adequately reflect the value of the units in relation to Chemtrade’s business and its future business prospects.” By repurchasing units, the Fund reduces the total number outstanding, which can increase the earnings per unit and, in theory, boost the unit’s market price, providing direct value to remaining unitholders.

Betting on Undervaluation

The company's assertion of being undervalued is supported by several external market indicators. While the consensus rating from analysts leans towards a cautious “Hold” or “Moderate Buy,” the underlying price targets suggest significant upside. The average 12-month price target from market analysts hovers around C$18.50, substantially higher than the unit’s recent trading price near C$14.50 prior to the announcement.

Independent valuation models reinforce this perspective. An analysis by Simply Wall St on April 14, 2026, estimated Chemtrade to be approximately 21% undervalued, calculating a fair value of C$18.39 per unit. This assessment is largely based on the company's long-term earnings power and future cash flow potential. Furthermore, Chemtrade’s price-to-earnings (P/E) ratio of 12.59 is notably lower than the broader market average of 44.03 and the Basic Materials sector average of 21.74, suggesting its earnings are valued more conservatively by investors.

This buyback renewal can therefore be interpreted as management putting its money where its mouth is—investing the Fund’s capital in what it considers a discounted asset: its own equity.

Balancing Buybacks with Growth and Dividends

While the NCIB is a significant tool for shareholder returns, it is just one component of Chemtrade’s multifaceted capital allocation playbook. The Fund has demonstrated a commitment to a balanced approach that also prioritizes a reliable dividend and strategic growth investments.

Chemtrade has a history of rewarding unitholders with consistent monthly distributions, which it has increased annually since 2024, now standing at 6.00 cents per unit per month. With a healthy dividend payout ratio of around 56%, these distributions appear sustainable.

Simultaneously, the company has made impressive strides in strengthening its balance sheet. It has nearly halved its debt since 2022, bringing its net debt to LTM Adjusted EBITDA ratio down to a comfortable 2.0x at the end of the first quarter of 2025. This deleveraging provides the financial flexibility to pursue both shareholder returns and its long-term “Vision 2030” strategic roadmap, which targets 5-10% annual growth in key financial metrics.

That growth is being fueled by substantial capital injections into high-potential sectors. Chemtrade is deploying a $350 million strategic investment through 2027 to expand its production capacity for ultra-high-purity sulfuric acid, a critical chemical for the booming semiconductor industry. Another $120 million is earmarked to increase chlor-alkali capacity on the U.S. Gulf Coast, alongside ongoing investments in its water treatment chemicals business.

Market Navigates Mixed Signals

The timing of the NCIB announcement is particularly noteworthy. On April 14, the day before the news broke, Chemtrade’s units fell sharply, dropping over 18% to close at C$14.40. The decline was attributed to recent analyst downgrades and investor concerns over a potential rezoning issue affecting a key chlor-alkali plant in North Vancouver.

However, the market responded positively to the buyback announcement on April 15. The unit price rebounded, climbing over 5% to C$15.27 in active trading. This reversal suggests that the company’s decisive action to renew its buyback program provided a powerful counter-narrative to recent pessimism, reaffirming management’s confidence and potentially setting a floor for the unit price.

By establishing an automatic purchase plan with its broker, Chemtrade has also ensured it can continue repurchasing units even during self-imposed blackout periods, providing consistent support in the market. This structured approach, combined with discretionary purchases, gives the Fund a flexible yet powerful tool to manage its capital and enhance unitholder value as it navigates both market headwinds and its ambitious growth trajectory.