Strong Start for Lanxess in 1Q, but Not Sustainable; Shares Overvalued
We are maintaining our EUR 55 fair value estimate for no-moat Lanxess after reviewing first-quarter results. At current levels, shares look overvalued. Lanxess burst out of the gate with EBTIDA up 25% year over year, but we see some temporary factors, such as restocking, that will dissipate over the course of the year. Furthermore, margins declined in three of the four segments as price increases lagged raw material increases, in line with our view. This effect will likely have a larger negative...Lanxess is a management holding company, engaged in chemicals enterprise with a portfolio ranging from polymers to industrial, specialty and fine chemicals. Co. has three segments, which comprise 14 business units. Co.'s Performance Polymers segments include five units, Butyl Rubber, Performance Butadiene Rubbers, Keltan Elastomers, High Performance Elastomers, and High Performance Materials. Advanced Intermediates segments include two units, Advanced Industrial Intermediates, and Saltigo. Performance Chemicals segments, include seven units, Material Protection Products, Inorganic Pigments, Functional Chemicals, Leather, Rhein Chemie, Rubber Chemicals, and Liquid Purification Technologies.
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