DCF Studio

    LYB · NYQ · Basic Materials

    LyondellBasell Industries N.V.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 17.87

    Market price

    USD 61.93

    Implied upside

    -71.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 17.87-71.1%
    Exit multiple
    USD 29.87-51.8%
    Market price
    USD 61.93

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 25.4bnUSD 21.4bnUSD 18.0bnUSD 15.2bnUSD 12.8bn-15.8%
    EBITUSD 2.0bnUSD 1.7bnUSD 1.4bnUSD 1.2bnUSD 1.0bn-15.8%
    NOPATUSD 1.6bnUSD 1.4bnUSD 1.1bnUSD 968.0mUSD 815.4m-15.8%
    Add depreciation & amortisationUSD 1.0bnUSD 870.8mUSD 733.5mUSD 617.9mUSD 520.4m-15.8%
    Less capital expenditureUSD -1.3bnUSD -1.1bnUSD -904.4mUSD -761.8mUSD -641.7m-15.8%
    Less increase in working capitalUSD 74.7mUSD 62.9mUSD 53.0mUSD 44.7mUSD 37.6m+15.8%
    Free cashflow to firmUSD 1.5bnUSD 1.2bnUSD 1.0bnUSD 868.7mUSD 731.7m-15.8%
    Discount factor0.96940.91100.85620.80460.7562-
    Present valueUSD 1.4bnUSD 1.1bnUSD 883.0mUSD 699.0mUSD 553.3m-20.8%
    Present Value Of The ForecastUSD 4.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.567Reported 0.353, pulled toward 1.0 (Blume)
    Cost of equity8.11%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 20.0bn57.8% of capital
    Total debtUSD 14.6bn42.2% of capital, book value as a proxy
    Tax rate18.5%Effective, capped at statutory
    WACC6.41%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 17.87

    73% of EV

    Forecast FCFF, final year
    USD 731.7m
    Capex at depreciation, working capital in reinvestment
    USD 815.4m
    Less reinvestment at g/ROIC (24.0% of NOPAT)
    USD -195.9m
    Capitalised
    USD 619.4m
    ROIC (reported)
    10.4%
    Terminal value, undiscounted
    USD 16.2bn
    Terminal value, discounted
    USD 12.3bn
    Enterprise value
    USD 16.9bn
    Less net debt
    USD 11.2bn
    Equity value
    USD 5.8bn

    Exit at 14.0x EBITDA

    Value per shareUSD 29.87

    78% of EV

    Terminal value, undiscounted
    USD 21.4bn
    Terminal value, discounted
    USD 16.2bn
    Enterprise value
    USD 20.8bn
    Less net debt
    USD 11.2bn
    Equity value
    USD 9.6bn

    Spread between methods: 50%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.41%42.6051.6665.4388.90138.12
    5.41%24.4128.3133.5040.8251.93
    6.41%13.6115.5117.8720.9024.94
    7.41%6.447.418.579.9711.71
    8.41%1.321.822.393.053.82

    Outlined: this model. Green text: above today's price of 61.93. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-15.8%-3.2%+12.6pp
    EBIT margin7.8%14.2%+6.3pp
    Discount rate6.4%4.5%-1.9pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.