Intrinsic value of LyondellBasell Industries - LYB

Previous Close

$107.14

  Intrinsic Value

$325.28

stock screener

  Rating & Target

str. buy

+204%

Previous close

$107.14

 
Intrinsic value

$325.28

 
Up/down potential

+204%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of LYB stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 42.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -10.85
  14.70
  13.73
  12.86
  12.07
  11.36
  10.73
  10.15
  9.64
  9.18
  8.76
  8.38
  8.04
  7.74
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
Revenue, $m
  29,183
  33,473
  38,069
  42,963
  48,149
  53,621
  59,374
  65,403
  71,707
  78,287
  85,143
  92,280
  99,703
  107,420
  115,439
  123,773
  132,434
  141,436
  150,795
  160,531
  170,661
  181,206
  192,190
  203,635
  215,568
  228,014
  241,002
  254,563
  268,727
  283,527
  298,999
Variable operating expenses, $m
 
  23,457
  26,670
  30,092
  33,718
  37,544
  41,566
  45,782
  50,190
  54,790
  59,584
  64,521
  69,712
  75,107
  80,714
  86,541
  92,596
  98,890
  105,435
  112,242
  119,324
  126,698
  134,377
  142,380
  150,723
  159,425
  168,507
  177,988
  187,891
  198,240
  209,058
Fixed operating expenses, $m
 
  3,851
  3,947
  4,046
  4,147
  4,251
  4,357
  4,466
  4,578
  4,692
  4,809
  4,930
  5,053
  5,179
  5,309
  5,441
  5,577
  5,717
  5,860
  6,006
  6,156
  6,310
  6,468
  6,630
  6,795
  6,965
  7,139
  7,318
  7,501
  7,688
  7,881
Total operating expenses, $m
  24,123
  27,308
  30,617
  34,138
  37,865
  41,795
  45,923
  50,248
  54,768
  59,482
  64,393
  69,451
  74,765
  80,286
  86,023
  91,982
  98,173
  104,607
  111,295
  118,248
  125,480
  133,008
  140,845
  149,010
  157,518
  166,390
  175,646
  185,306
  195,392
  205,928
  216,939
Operating income, $m
  5,060
  6,165
  7,451
  8,825
  10,284
  11,826
  13,450
  15,155
  16,940
  18,805
  20,750
  22,829
  24,939
  27,134
  29,417
  31,791
  34,260
  36,828
  39,501
  42,283
  45,180
  48,198
  51,345
  54,626
  58,049
  61,623
  65,356
  69,257
  73,335
  77,599
  82,061
EBITDA, $m
  6,124
  7,383
  8,829
  10,373
  12,012
  13,745
  15,569
  17,484
  19,488
  21,582
  23,766
  26,041
  28,409
  30,872
  33,434
  36,098
  38,869
  41,750
  44,749
  47,869
  51,119
  54,504
  58,033
  61,712
  65,551
  69,558
  73,743
  78,116
  82,686
  87,466
  92,466
Interest expense (income), $m
  346
  344
  445
  554
  669
  791
  921
  1,056
  1,199
  1,347
  1,503
  1,665
  1,833
  2,008
  2,190
  2,380
  2,576
  2,781
  2,993
  3,214
  3,444
  3,683
  3,932
  4,191
  4,461
  4,743
  5,036
  5,343
  5,663
  5,997
  6,346
Earnings before tax, $m
  5,233
  5,821
  7,006
  8,272
  9,615
  11,035
  12,530
  14,099
  15,741
  17,457
  19,247
  21,165
  23,106
  25,126
  27,226
  29,411
  31,684
  34,048
  36,508
  39,069
  41,736
  44,516
  47,413
  50,435
  53,588
  56,881
  60,320
  63,914
  67,672
  71,602
  75,715
Tax expense, $m
  1,386
  1,572
  1,892
  2,233
  2,596
  2,979
  3,383
  3,807
  4,250
  4,713
  5,197
  5,714
  6,239
  6,784
  7,351
  7,941
  8,555
  9,193
  9,857
  10,549
  11,269
  12,019
  12,801
  13,617
  14,469
  15,358
  16,286
  17,257
  18,271
  19,333
  20,443
Net income, $m
  3,836
  4,250
  5,115
  6,038
  7,019
  8,055
  9,147
  10,292
  11,491
  12,744
  14,050
  15,450
  16,867
  18,342
  19,875
  21,470
  23,129
  24,855
  26,651
  28,520
  30,468
  32,496
  34,611
  36,817
  39,120
  41,523
  44,034
  46,657
  49,400
  52,270
  55,272

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,022
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  23,442
  24,576
  27,951
  31,544
  35,352
  39,369
  43,593
  48,020
  52,649
  57,479
  62,513
  67,753
  73,204
  78,869
  84,757
  90,876
  97,235
  103,844
  110,716
  117,864
  125,302
  133,044
  141,109
  149,512
  158,273
  167,411
  176,947
  186,904
  197,303
  208,170
  219,530
Adjusted assets (=assets-cash), $m
  21,420
  24,576
  27,951
  31,544
  35,352
  39,369
  43,593
  48,020
  52,649
  57,479
  62,513
  67,753
  73,204
  78,869
  84,757
  90,876
  97,235
  103,844
  110,716
  117,864
  125,302
  133,044
  141,109
  149,512
  158,273
  167,411
  176,947
  186,904
  197,303
  208,170
  219,530
Revenue / Adjusted assets
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
Average production assets, $m
  10,159
  11,649
  13,248
  14,951
  16,756
  18,660
  20,662
  22,760
  24,954
  27,244
  29,630
  32,114
  34,697
  37,382
  40,173
  43,073
  46,087
  49,220
  52,477
  55,865
  59,390
  63,060
  66,882
  70,865
  75,018
  79,349
  83,869
  88,588
  93,517
  98,668
  104,052
Working capital, $m
  5,059
  4,151
  4,721
  5,327
  5,971
  6,649
  7,362
  8,110
  8,892
  9,708
  10,558
  11,443
  12,363
  13,320
  14,314
  15,348
  16,422
  17,538
  18,699
  19,906
  21,162
  22,470
  23,832
  25,251
  26,730
  28,274
  29,884
  31,566
  33,322
  35,157
  37,076
Total debt, $m
  8,981
  10,855
  13,500
  16,318
  19,303
  22,453
  25,764
  29,235
  32,864
  36,651
  40,598
  44,706
  48,979
  53,420
  58,037
  62,834
  67,819
  73,001
  78,388
  83,992
  89,823
  95,894
  102,216
  108,804
  115,673
  122,837
  130,314
  138,120
  146,273
  154,792
  163,698
Total liabilities, $m
  17,394
  19,268
  21,913
  24,731
  27,716
  30,866
  34,177
  37,648
  41,277
  45,064
  49,011
  53,119
  57,392
  61,833
  66,450
  71,247
  76,232
  81,414
  86,801
  92,405
  98,236
  104,307
  110,629
  117,217
  124,086
  131,250
  138,727
  146,533
  154,686
  163,205
  172,111
Total equity, $m
  6,048
  5,308
  6,037
  6,814
  7,636
  8,504
  9,416
  10,372
  11,372
  12,416
  13,503
  14,635
  15,812
  17,036
  18,308
  19,629
  21,003
  22,430
  23,915
  25,459
  27,065
  28,738
  30,479
  32,295
  34,187
  36,161
  38,221
  40,371
  42,617
  44,965
  47,418
Total liabilities and equity, $m
  23,442
  24,576
  27,950
  31,545
  35,352
  39,370
  43,593
  48,020
  52,649
  57,480
  62,514
  67,754
  73,204
  78,869
  84,758
  90,876
  97,235
  103,844
  110,716
  117,864
  125,301
  133,045
  141,108
  149,512
  158,273
  167,411
  176,948
  186,904
  197,303
  208,170
  219,529
Debt-to-equity ratio
  1.485
  2.040
  2.240
  2.390
  2.530
  2.640
  2.740
  2.820
  2.890
  2.950
  3.010
  3.050
  3.100
  3.140
  3.170
  3.200
  3.230
  3.250
  3.280
  3.300
  3.320
  3.340
  3.350
  3.370
  3.380
  3.400
  3.410
  3.420
  3.430
  3.440
  3.450
Adjusted equity ratio
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,836
  4,250
  5,115
  6,038
  7,019
  8,055
  9,147
  10,292
  11,491
  12,744
  14,050
  15,450
  16,867
  18,342
  19,875
  21,470
  23,129
  24,855
  26,651
  28,520
  30,468
  32,496
  34,611
  36,817
  39,120
  41,523
  44,034
  46,657
  49,400
  52,270
  55,272
Depreciation, amort., depletion, $m
  1,064
  1,218
  1,378
  1,548
  1,728
  1,919
  2,119
  2,329
  2,548
  2,777
  3,016
  3,211
  3,470
  3,738
  4,017
  4,307
  4,609
  4,922
  5,248
  5,586
  5,939
  6,306
  6,688
  7,087
  7,502
  7,935
  8,387
  8,859
  9,352
  9,867
  10,405
Funds from operations, $m
  5,980
  5,467
  6,492
  7,586
  8,747
  9,974
  11,266
  12,621
  14,039
  15,521
  17,066
  18,662
  20,337
  22,080
  23,893
  25,778
  27,738
  29,777
  31,899
  34,107
  36,407
  38,802
  41,300
  43,904
  46,621
  49,458
  52,421
  55,516
  58,752
  62,136
  65,677
Change in working capital, $m
  374
  532
  570
  607
  643
  679
  713
  748
  782
  816
  850
  885
  920
  957
  994
  1,033
  1,074
  1,116
  1,161
  1,207
  1,256
  1,308
  1,362
  1,419
  1,480
  1,543
  1,611
  1,682
  1,756
  1,835
  1,918
Cash from operations, $m
  5,606
  4,935
  5,922
  6,979
  8,104
  9,296
  10,552
  11,873
  13,258
  14,705
  16,216
  17,777
  19,417
  21,123
  22,898
  24,744
  26,664
  28,661
  30,738
  32,900
  35,150
  37,495
  39,938
  42,485
  45,142
  47,915
  50,810
  53,835
  56,996
  60,301
  63,758
Maintenance CAPEX, $m
  0
  -1,016
  -1,165
  -1,325
  -1,495
  -1,676
  -1,866
  -2,066
  -2,276
  -2,495
  -2,724
  -2,963
  -3,211
  -3,470
  -3,738
  -4,017
  -4,307
  -4,609
  -4,922
  -5,248
  -5,586
  -5,939
  -6,306
  -6,688
  -7,087
  -7,502
  -7,935
  -8,387
  -8,859
  -9,352
  -9,867
New CAPEX, $m
  -2,243
  -1,490
  -1,599
  -1,703
  -1,805
  -1,904
  -2,002
  -2,098
  -2,194
  -2,290
  -2,386
  -2,484
  -2,583
  -2,685
  -2,791
  -2,900
  -3,014
  -3,133
  -3,257
  -3,388
  -3,525
  -3,670
  -3,822
  -3,983
  -4,152
  -4,331
  -4,520
  -4,719
  -4,929
  -5,151
  -5,384
Cash from investing activities, $m
  -2,297
  -2,506
  -2,764
  -3,028
  -3,300
  -3,580
  -3,868
  -4,164
  -4,470
  -4,785
  -5,110
  -5,447
  -5,794
  -6,155
  -6,529
  -6,917
  -7,321
  -7,742
  -8,179
  -8,636
  -9,111
  -9,609
  -10,128
  -10,671
  -11,239
  -11,833
  -12,455
  -13,106
  -13,788
  -14,503
  -15,251
Free cash flow, $m
  3,309
  2,430
  3,158
  3,951
  4,804
  5,716
  6,685
  7,709
  8,788
  9,920
  11,106
  12,330
  13,622
  14,968
  16,369
  17,827
  19,343
  20,919
  22,559
  24,264
  26,039
  27,886
  29,809
  31,814
  33,903
  36,081
  38,355
  40,729
  43,208
  45,799
  48,507
Issuance/(repayment) of debt, $m
  989
  2,470
  2,645
  2,817
  2,985
  3,150
  3,311
  3,471
  3,629
  3,787
  3,947
  4,108
  4,273
  4,442
  4,616
  4,797
  4,985
  5,182
  5,388
  5,604
  5,831
  6,070
  6,322
  6,588
  6,869
  7,164
  7,476
  7,806
  8,153
  8,520
  8,906
Issuance/(repurchase) of shares, $m
  -2,938
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,954
  2,470
  2,645
  2,817
  2,985
  3,150
  3,311
  3,471
  3,629
  3,787
  3,947
  4,108
  4,273
  4,442
  4,616
  4,797
  4,985
  5,182
  5,388
  5,604
  5,831
  6,070
  6,322
  6,588
  6,869
  7,164
  7,476
  7,806
  8,153
  8,520
  8,906
Total cash flow (excl. dividends), $m
  1,346
  4,900
  5,804
  6,769
  7,790
  8,866
  9,996
  11,180
  12,417
  13,707
  15,052
  16,438
  17,895
  19,410
  20,985
  22,624
  24,328
  26,101
  27,946
  29,868
  31,870
  33,956
  36,132
  38,402
  40,771
  43,246
  45,832
  48,534
  51,361
  54,318
  57,413
Retained Cash Flow (-), $m
  502
  -686
  -729
  -776
  -822
  -868
  -912
  -956
  -1,000
  -1,043
  -1,087
  -1,132
  -1,177
  -1,224
  -1,272
  -1,322
  -1,373
  -1,428
  -1,484
  -1,544
  -1,607
  -1,672
  -1,742
  -1,815
  -1,892
  -1,974
  -2,060
  -2,151
  -2,246
  -2,347
  -2,454
Prev. year cash balance distribution, $m
 
  1,426
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  5,639
  5,075
  5,992
  6,967
  7,998
  9,084
  10,223
  11,417
  12,664
  13,965
  15,306
  16,718
  18,186
  19,714
  21,302
  22,955
  24,673
  26,462
  28,324
  30,263
  32,284
  34,390
  36,587
  38,879
  41,272
  43,772
  46,384
  49,115
  51,971
  54,960
Discount rate, %
 
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
 
  5,391
  4,618
  5,166
  5,661
  6,093
  6,451
  6,726
  6,913
  7,007
  7,009
  6,913
  6,737
  6,480
  6,152
  5,762
  5,324
  4,851
  4,356
  3,853
  3,356
  2,875
  2,423
  2,006
  1,630
  1,299
  1,015
  776
  581
  424
  303
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

LyondellBasell Industries N.V. is a chemical company. The Company operates in five segments: Olefins and Polyolefins-Americas (O&P-Americas), Olefins and Polyolefins-Europe, Asia, International (O&P-EAI), Intermediates and Derivatives (I&D), Refining and Technology. The O&P-Americas segment produces and markets olefins and co-products, polyethylene and polypropylene. The O&P-EAI segment produces and markets olefins and co-products, polyethylene and polypropylene. The I&D segment produces and markets propylene oxide (PO) and its derivatives, oxyfuels and related products, and intermediate chemicals, such as styrene monomer (SM), acetyls and ethylene oxides. The primary product of the Refining segment is refined products made from sulfur crude oil and other crude oils of various types and sources available on the United States Gulf Coast. The Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

FINANCIAL RATIOS  of  LyondellBasell Industries (LYB)

Valuation Ratios
P/E Ratio 11.3
Price to Sales 1.5
Price to Book 7.2
Price to Tangible Book
Price to Cash Flow 7.7
Price to Free Cash Flow 12.9
Growth Rates
Sales Growth Rate -10.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 55.8%
Cap. Spend. - 3 Yr. Gr. Rate 7.5%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 138.6%
Total Debt to Equity 148.5%
Interest Coverage 16
Management Effectiveness
Return On Assets 17.7%
Ret/ On Assets - 3 Yr. Avg. 18.3%
Return On Total Capital 25.9%
Ret/ On T. Cap. - 3 Yr. Avg. 26.9%
Return On Equity 60.9%
Return On Equity - 3 Yr. Avg. 53.8%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 20.6%
Gross Margin - 3 Yr. Avg. 19%
EBITDA Margin 22.8%
EBITDA Margin - 3 Yr. Avg. 20.5%
Operating Margin 17.3%
Oper. Margin - 3 Yr. Avg. 16.2%
Pre-Tax Margin 17.9%
Pre-Tax Margin - 3 Yr. Avg. 16.5%
Net Profit Margin 13.1%
Net Profit Margin - 3 Yr. Avg. 12%
Effective Tax Rate 26.5%
Eff/ Tax Rate - 3 Yr. Avg. 27.1%
Payout Ratio 36.4%

LYB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LYB stock intrinsic value calculation we used $29183 million for the last fiscal year's total revenue generated by LyondellBasell Industries. The default revenue input number comes from 2016 income statement of LyondellBasell Industries. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LYB stock valuation model: a) initial revenue growth rate of 14.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.6%, whose default value for LYB is calculated based on our internal credit rating of LyondellBasell Industries, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of LyondellBasell Industries.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LYB stock the variable cost ratio is equal to 70.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3757 million in the base year in the intrinsic value calculation for LYB stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.1% for LyondellBasell Industries.

Corporate tax rate of 27% is the nominal tax rate for LyondellBasell Industries. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LYB stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LYB are equal to 34.8%.

Life of production assets of 10 years is the average useful life of capital assets used in LyondellBasell Industries operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LYB is equal to 12.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6048 million for LyondellBasell Industries - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 395.795 million for LyondellBasell Industries is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of LyondellBasell Industries at the current share price and the inputted number of shares is $42.4 billion.

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COMPANY NEWS

▶ What Are Analysts Signaling with LyondellBasell?   [Dec-08-17 02:30PM  Market Realist]
▶ What LyondellBasells Dividend Yield Suggests   [01:00PM  Market Realist]
▶ LyondellBasell Board Authorizes Quarterly Dividend   [Nov-15-17 06:45AM  PR Newswire]
▶ This Rumor Pushed Braskem 19.6% Higher in October   [Nov-06-17 01:03PM  Motley Fool]
▶ DowDuPont And Other Great Materials Income Stocks   [Nov-05-17 01:02PM  Simply Wall St.]
▶ LyondellBasells 3Q17 Revenues Rose on This   [04:30PM  Market Realist]
▶ LyondellBasell reportedly eyeing Braskem acquisition   [11:28AM  American City Business Journals]
▶ LyondellBasell Industries Rose on October 30   [10:45AM  Market Realist]
▶ LyondellBasell Hits 80-Plus Relative Strength Rating Benchmark   [03:00AM  Investor's Business Daily]
▶ [$$] LyondellBasell Makes Takeover Approach to Braskem   [12:32AM  The Wall Street Journal]
▶ [$$] LyondellBasell Makes Takeover Approach to Braskem   [01:46PM  The Wall Street Journal]
▶ LyondellBasell misses 3Q profit forecasts   [07:37AM  Associated Press]
▶ LyondellBasell plans its next multibillion-dollar Gulf Coast project   [Oct-25-17 01:50PM  American City Business Journals]
▶ 5 Companies Reach 52-Week Highs   [Sep-26-17 12:19PM  GuruFocus.com]
▶ Houston-based drilling co. hires former LyondellBasell, Baker Hughes exec as CFO   [Sep-25-17 05:35PM  American City Business Journals]
▶ What Eastman Chemicals Valuations Suggest   [07:37AM  Market Realist]
▶ LyondellBasell Celebrates 18th Annual Global Care Day   [Sep-11-17 06:24PM  PR Newswire]
▶ LyondellBasell: Analysts Views and Recommendations   [Sep-08-17 03:06PM  Market Realist]
▶ Analyzing LyondellBasells 3Q17 Dividend   [12:01PM  Market Realist]
▶ IBD Rating Upgrades: Lyondellbasell Ind A Nv Flashes Improved Price Strength   [Sep-07-17 03:00AM  Investor's Business Daily]
▶ [$$] Judge Dismisses LyondellBasell Creditors Clawback Lawsuit   [Sep-06-17 12:19AM  The Wall Street Journal]
▶ [$$] Judge Dismisses LyondellBasell Creditors Clawback Lawsuit   [Sep-05-17 07:46PM  The Wall Street Journal]
▶ LyondellBasell Board Authorizes Quarterly Dividend   [Aug-23-17 06:45AM  PR Newswire]
Financial statements of LYB
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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