LXS GR

Lanxess AG

Industrial/Transportation


Presented:07/01/2024
Price:€23.08
Cap:$2.22B
Current Price:€28.81
Cap:$2.77B

Presented

Date07/01/2024
Price€23.08
Market Cap$2.22B
Ent Value$5.31B
P/E Ratio5.12x
Book Value€52.75
Div Yield0.43%
Shares O/S86.35M
Ave Daily Vol393,928
Short IntN/A

Current

Price€28.81
Market Cap$2.77B
Lanxess AG is a specialty chemicals company, which engages in the development, manufacture, and marketing of chemical intermediates, additives, and consumer protection products. It operates through the following segments: Advanced Industrial Intermediates, Specialty Additives, and Consumer Protection. The Advanced Industrial Intermediates segment includes basic and fine chemicals, organometallics, and inorganic pigments for the coloring of construction materials, paints, and coatings. The Specialty Additives segment provides additives for the rubber, plastic and paint industries, construction, and electrical industry, such as lubricants, flame retardants, plasticizers, and bromine derivatives for various applications. The Consumer Protection segment offers disinfectant, hygiene and preservative solutions, flavors and fragrances, technologies for the treatment of water and other liquids, and precursors and intermediates for the agrochemicals, pharmaceuticals, and specialty chemicals industries. The company was founded on July 1, 2004 and is headquartered in Cologne, Germany.

Publicly traded companies mentioned herein: Lanxess AG (LXS GR)

Highlights

The presenter is bullish on the European chemicals industry after destocking headwinds led to earnings well below mid-cycle levels, and expresses this view with a long position in Lanxess AG (LXS GR). Since the mid-2010s, the company has substantially improved its portfolio quality by divesting some cyclical businesses and replacing them with consumer protection and general consumer product businesses (e.g., IFF’s microbial control business), ultimately reducing overall cyclicality. More recently, several headwinds (input cost inflation, chemical industry destocking, capacity utilization declines) caused EBITDA to fall 40% and the stock price to halve in 2023. The presenter now sees signs of a recovery underway, and the combination of that cyclical recovery and an underappreciated JV stake creates his €60 – €70 share price target from the current €23.

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