BASF: When the Location Becomes a Burden
The water level at Kaub, the central bottleneck for Germany’s Rhine shipping, reached an all-time low of just 5 cm on Monday. The previous record low, set in October 2018, was 25 cm. This is not the first time this has had significant consequences for the Ludwigshafen site, and for BASF, it is more than just a footnote. Europe’s largest chemical company sources up to 40% of its raw materials by ship. In 2018, low water levels caused an estimated loss of EUR 200-250 million. Since then, specially designed ships with shallow drafts and a shift in transport to road and rail have largely ensured a steady supply. Nevertheless, rising logistics costs and occasional supply bottlenecks remain a recurring risk at the main German site.
Combined with high energy costs and Europe’s structural problems, these unpredictable weather conditions have long since prompted the DAX-listed company to shift its growth investments to Asia. With the new integrated site in Zhanjiang, southern China—the largest single investment in the company’s history at EUR 8.7 billion—production is primarily geared toward the Chinese market, following the “local-for-local” principle. Of the approximately EUR 13 billion in investments planned for 2026 through 2029, about 20% is also set to flow into the Asia-Pacific region, with a deliberate diversification beyond China to India and several ASEAN countries, including Vietnam. However, the bet on China is not without its question marks. Overcapacity in the Chinese chemicals market and, according to CEO Markus Kamieth, a slower payback period than originally planned are leading to mixed reactions among stock market investors.
Operationally, the second quarter of 2026 remained unfazed by these concerns. Revenue rose by 16% to EUR 17.2 billion, while earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for special items, climbed from EUR 1.6 to 2.4 billion compared to the same period last year, significantly exceeding analysts’ expectations. The earnings outlook for the full year was raised accordingly, to a range of EUR 6.9 to 7.7 billion in EBITDA before special items. However, analysts are not yet fully convinced. JPMorgan recently recommended an “Underweight” rating, and other firms also see only limited upside potential. Deutsche Bank and Bernstein Research are the most optimistic, valuing the stock at EUR 60.00 and EUR 61.00, respectively. On average, however, the price target set by all experts is only EUR 52.63—not much higher than the current level of EUR 50.86. It will likely take some time before it becomes clear whether the increasing shift of business activity toward the Far East will pay off. Until then, shareholders can take comfort in the dividend yield, which has never fallen below 5% in recent years. In addition, a EUR 1 billion share buyback program has just been launched.
dynaCERT: New Leadership, New Focus
The Canadian cleantech specialist dynaCERT is also focusing on Asia. With HydraGEN™, the company offers a solution to reduce fuel consumption and pollutant emissions from diesel engines. To do this, it relies on hydrogen—not as a propulsion technology but as an additive. In a box the size of a suitcase, which can be easily installed in trucks with minimal effort, distilled water is broken down into hydrogen and oxygen. Both gases enter the diesel engine’s intake system, where they ensure more complete combustion. This requires neither visits to hydrogen filling stations nor any other detours. The result is a reduction in fuel consumption and CO₂ emissions. Improvements of up to 55.7% were measured for soot particles—the dreaded fine particulate matter—and as much as 88.7% for nitrogen oxides. But the fuel-saving effect is not limited to trucks; diesel generators used for power generation, as well as equipment operating in ports and mines, also benefit.
There is a growing recognition that, despite manufacturers’ electric-vehicle initiatives, diesel will continue to be used for decades to come—whether in Europe, the US or Asia. So the goal is to make the best of the situation and improve existing internal combustion engines. In Vietnam, this realistic assessment is already being put into practice. In June, following the successful completion of a pilot phase, the Toronto-based company secured its first production order from a Vietnamese logistics firm; at the same time, several HydraGEN™ systems were installed on trucks and container handling equipment at one of the world’s largest port operators. Additional pilot projects are underway in the oil and gas industry and in waste management. Additional pilot installations are expected in the coming months, while initial discussions in Cambodia, Indonesia and Japan point to a possible expansion into other Asian markets.
The second quarter already marked a visible turning point. Revenue rose to CAD 169,000, up from CAD 56,000 in the same quarter of the previous year—more than a threefold increase. The first quarter had still seen a sharp decline—not only due to US tariffs but also because of high oil prices and the resulting reluctance to invest on the part of the transportation industry in Europe and in the Canadian domestic market. But the momentum has noticeably shifted in recent months. This development is accompanied by a change in leadership. In March, Kevin Unrath, previously Chief Operating Officer, was appointed CEO.
IIF host Lyndsay Malchuk conducted an interview with the CEO and board member Bernd Krüper.
https://youtu.be/hVNR4Ch5p0c?si=GPcRHxW_aaNFUicR
The realignment was explicitly justified by a stronger focus on the commercial implementation of the company’s research activities to date. In other words, the new man at the helm is expected to put the horsepower on the road. To raise brand awareness and engage directly with potential customers, the company will significantly step up its presence at key trade fairs and industry events in the coming months, with expert teams and information booths—from Singapore to North and South America, and from IAA Transportation in Hanover to the 24-hour Le Mans truck race, a major highlight on the calendar for manufacturers, suppliers and transport operators.
In Toronto, the stock is trading at around CAD 0.10; in Germany, between EUR 0.06 and 0.07. The market capitalization of approximately CAD 50 million does not even begin to reflect the potential offered by dynaCERT’s immediate solution for CO₂ reduction. In addition to selling the systems, the company has a second ace up its sleeve: a telematics unit called HydraLytica™, which logs the fuel saved and, by extension, the emissions avoided. The underlying methodology is certified according to the standard set by the climate protection organization Verra. This enables the generation of emission credits that promise additional revenue—a source of income that has also helped the electric vehicle pioneer Tesla grow into a major player. Analysts at GBC Research set a price target of CAD 0.75 (EUR 0.48), corresponding to a price potential of 600%!
Andritz: Proof That It Can Work
The Austrian plant manufacturer Andritz demonstrates what a similar strategic pivot toward Asia might look like at a later, more established stage. In the second quarter, revenue rose by 8.5% to more than EUR 2 billion, and earnings per share increased from EUR 1.04 to 1.11. The highlight of the half-year report, however, was the 25.2% increase in order intake to EUR 12.6 billion, driven by a particularly strong first quarter. This also bodes well for near-term revenue growth. Specific projects underscore this momentum. In India, the company received a major order from Tata Power for the 1,000-MW Bhivpuri pumped-storage plant, part of a portfolio of seven projects totalling more than 11 GW of installed capacity. In Vietnam, modernization and capacity expansion projects were completed at paper mills in the provinces of Bac Giang and Ninh Binh.
The company’s outlook reveals notable differences across regions: while concrete prospects are outlined for India and Southeast Asia, the outlook for China refers only to “sustained investments”, and for the US, the company hopes only for “new momentum”. According to the company, growth in Asia is driven by electrification, renewable energy, and resource efficiency—topics that are particularly in demand in emerging markets with significant catch-up potential.
Unlike BASF and dynaCERT, the new momentum in Asia is also reflected in the share price. Following the quarterly results, the share reached an all-time high of EUR 84.40. The upward trend remains fully intact despite a slight correction to EUR 80.00, and the majority of analysts see further upside potential. Deutsche Bank considers EUR 95.00 a reasonable target, while some firms even see it reaching EUR 105.00. The estimated price-to-earnings (P/E) ratio of 13.2 for 2027 leaves room for upside, as does the dividend yield of just under 3.5%.
Three Ways Out of the Location Trap
Three companies, three industries, three levels of maturity—but one common thread: Asia is no longer viewed primarily as a low-cost production location, but increasingly as an independent, high-growth sales market. Whether this shift stems more from the pressures of US tariff policies and the European economic slowdown or from management’s strategic foresight, the structural advantages of Asian markets outweigh the risks in the long term. With its investment in Zhanjiang, BASF is taking a billion-dollar gamble, but it also has the resources to cushion any potential setbacks. Andritz demonstrates how this strategy can be translated into concrete, already realized orders. And dynaCERT is at the earliest stage of this development, but if successful, it could also offer enormous upside potential. The phase in which pilot projects turn into actual orders has now begun.
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