BASF's CoreShift Plan and €9bn China Bet Drive Stock Rally Despite Overbought Signals

BASF slashes fixed costs at home while investing billions in China’s Zhanjiang complex, boosting stock 2% despite overbought warning and mixed analyst ratings.

The chemical giant BASF is orchestrating a delicate balancing act, simultaneously slashing fixed costs at home while pouring billions into a sprawling Chinese complex. The strategy caught the market's attention on Thursday, pushing the stock to the top of the DAX as investors applauded the twin tracks of austerity and expansion.

At the heart of the restructuring is the "CoreShift" program, which targets a reduction in cash-effective fixed costs of up to 20% across four core segments — Chemicals, Materials, Industrial Solutions, and Nutrition & Care — by 2029 relative to 2024 levels. Those divisions collectively generate roughly €40bn in revenue. The cuts are falling heaviest on global service units and the company's flagship Ludwigshafen site, where around 2,800 positions have already been eliminated since early 2024, though operational dismissals are contractually barred until the end of 2028.

While the domestic workforce faces the squeeze, Chief Executive Markus Kamieth is chasing growth in Asia. He is set to join German Economy Minister Katherina Reiche on a delegation trip to China later this month, with raw-material resilience and economic realignment on the agenda. The backdrop is BASF's recently inaugurated €9bn complex in Zhanjiang, which opened in March. That expansion is already forcing the group to pass on external cost pressures: prices for ingredients used in cleaning products have been raised by as much as 30% due to higher raw material, transport, and packaging costs stemming from the Iran conflict, hitting big clients like Unilever and Henkel.

Investor sentiment got an additional lift from a new analysis by DZ Bank, which reiterated its buy recommendation and raised the fair-value estimate to €63. Jefferies, however, remains cautious with a "hold" rating. The stock itself traded at €52.20 on Thursday, a gain of roughly 2% on the day but still about 4.6% below its 52-week high of €54.70. Over the past twelve months the shares have climbed nearly 23%, underscoring the structural upward momentum. Yet the Relative Strength Index has surged to 84.5, flashing a clear overbought warning that could invite short-term volatility.

Management is betting its own money on the turnaround. BASF recently repurchased nearly one million of its own shares, a signal that the board considers the equity undervalued. This buyback complements the operational overhaul being overseen by the newly created "Core Transformation Office," headed by Julia Raquet. The unit is tasked with streamlining the core segments to ensure competitiveness, moving beyond simple cost-cutting toward process efficiency. For the current fiscal year, the board has stuck to its guidance of operating earnings before special items coming in between €6.2bn and €7.0bn.

The first-quarter numbers already offered a taste of the recovery. Earnings per share rose to €1.06, compared with €0.91 a year earlier, even though sales slipped nearly 8% to €16.02bn on persistently weak demand. Full-year consensus among analysts points to EPS of €2.73 and a dividend of around €2.28. The next major checkpoint arrives in July, when BASF releases its second-quarter report and provides investors with a clearer view of whether the transformation is truly taking hold.