Report
Valens Research

LYB - Embedded Expectations Analysis - 2019 09 23

LyondellBasell Industries (LYB:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 12.1x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about their M&A strategy, capacity, and their refinery.

Specifically, management is confident about their commitment to be a solid investment-grade company, and they are confident they are adjusting for risk in making M&A decisions. Furthermore, they are confident that extraneous factors impacting their refinery are normalizing and that the light heavy differential is opening up. Additionally, they are confident recent VAT cuts in China are stimulating demand growth and that new capacity is coming on later this year.
Underlying
LyondellBasell Industries NV

LyondellBasell Industries is a chemical company. Co.'s chemicals businesses consist of processing plants that convert liquid and gaseous hydrocarbon feedstocks into plastic resins and other chemicals, and used by its customers to manufacture a range of products including food packaging, home furnishings, automotive components, paints and coatings. Co.'s refining business consists of its Houston refinery, which processes crude oil into products such as gasoline, diesel and jet fuel. Co. manages its operations through five operating segments: Olefins and Polyolefins - Americas; Olefins and Polyolefins - Europe, Asia, International; Intermediates and Derivatives; Refining; and Technology.

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Valens Research
Valens Research

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