LYB

Lyondellbasell Industries N.V.

Industrial/Transportation


Presented:03/28/2017
Price:$90.90
Cap:$37.00B
Current Price:$92.07
Cap:$29.93B

Presented

Date03/28/2017
Price$90.90
Market Cap$37.00B
Ent Value$41.83B
P/E Ratio9.99x
Book Value$14.97
Div Yield0.03%
Shares O/S407.00M
Ave Daily Vol2,800,089
Short Int2.22%

Current

Price$92.07
Market Cap$29.93B
LyondellBasell Industries NV engages in the refinery and production of chemicals and plastics. It operates through the following segments: Olefins and Polyolefins-Americas (O&P-Americas), Olefins and Polyolefins-Europe, Asia, International (O&P-EAI), Intermediates and Derivatives (I&D), Refining, and Technology. The O&P-Americas segment produces and markets olefins which includes ethylene and ethylene co-products, and polyolefins. The O&P-EAI segment produces and markets olefins including ethylene and ethylene co-products, polyolefins and polypropylene compounds. The I&D segment produces and markets propylene oxide and its co-products and derivatives, acetyls, and oxygenated fuels. The Refining segment produces gasoline and diesel fuel. The Technology segment develops and chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts. The company was founded in December 2007 and is headquartered in London, the United Kingdom.

Publicly traded companies mentioned herein: LyondellBasell Industries NV (LYB) 

Highlights

The presenter is long LyondellBasell (LYB) shares at $90 and believes concerns about feedstock price increases (i.e., ethane) and an oversupply in end markets are overblown. It is true that there is an oversupply of ethylene and polyethylene, but with roughly one third of the global build out occurring in the US there may be a perception issue biasing market participants. Another third of the new supply is expected to be coal-based production out of China, and there is a high likelihood of delays due to environmental regulations and lackluster IRRs on coal-to-olefin projects. Overall, the market could be tighter than people expect looking out to 2018, which could be the trough year, and LYB is cheap at 8.8x his [2018] EPS forecast (versus 9.7x the consensus estimate). Additionally, the FCF yield is attractive at roughly 8%, and assuming the multiple can expand to 11x he sees the potential for the stock to trade up to $112 over the next 12-18 months.

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