Brenntag AG (BNR), the chemical distributor aspiring to join Germany’s benchmark DAX Index, surged in Frankfurt trading, exceeding 100 euros ($127.89) for the first time and reaching the highest level since its March 2010 initial public offering.
The stock gained as much as 4.6 percent, the biggest intraday advance since June. Brenntag was up 1.3 percent at 97.77 euros as of 11:28 a.m., bringing the gain to 36 percent this year and giving the company a market value of 5.04 billion euros, exceeding that of DAX-listed Deutsche Lufthansa AG. (LHA)
Brenntag has the potential to continue fast growth, said Heiko Feber, an analyst at Bankhaus Lampe KG. Earnings per share may rise 20 percent this year, according to the average estimate of 14 analysts in a Bloomberg survey. Brenntag has accelerated growth with acquisitions, spending at least $461 million on purchases since its listing in 2010, according to data compiled by Bloomberg.
“Chemical distribution is an area that has lots of small contractors so they can benefit through consolidation,” said Feber, who has a buy recommendation on the stock. “There is also a range of chemical companies that are outsourcing distribution.”
Last year, Brenntag bought Multisol of the U.K. for 112.1 million pounds ($179.3 million) and in 2010 it bought EAC Industrial Ingredients Ltd. in Denmark for 160 million euros. Annual sales rose more than 13 percent in 2011 as earnings per share climbed 84 percent to 5.39 euros.
“More investors are probably taking a look at the stock,” said Jesko Mayer-Wegelin, an analyst at HSBC Trinkaus & Burkhardt AG. “If they continue to do as well as they have been, they are a potential candidate for the DAX next year.”
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