LYB - Embedded Expectations Analysis - 2020 07 16
LyondellBasell Industries (LYB:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 26.4x Uniform P/E. However, even at these levels, the market has bearish expectations for the firm, and management may have concerns about their liquidity levels, demand pressures, and their refinery segmentSpecifically, management may have concerns about margin and demand pressures in their Refining segment and Oxyfuels & Related Products business, the reliance of their refinery business on heavy crude oil, and continued automobile production constraints through the year. Moreover, they may lack confidence in their ability to sustain Advanced Polymers EBITDA growth, sufficiently fund their dividends without compromising the balance sheet, and manage short-term debt maturities. Also, management may have concerns about maintaining compliance with their debt covenants, their capital allocation, and reducing capex. Additionally, they may be exaggerating their focus on liquidity and cash flow maximization, their feedstock flexibility, and the benefits and rising demand from changing consumer trends
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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