全球化工业：化工商品步入上升通道.docx

16 August 2019/卜 HSBCGlobal ResearchGlobal ChemicalsEquitiesChemicalsGlobalSriharsha Pappu*Global Head of Chemicals ResearchHSBC Bank plcsriharsha.pappuhsbc +44 20 7991 9243Prateek Bhatnagar*, CFAAnalystHSBC Securities and Capital Markets (India) PrivateLimitedprateekbhatnagarhsbc.co.in+91 80 4555 2757Martin Evans*Head of European Chemicals ResearchHSBC Bank plcmartini .j.evanshsbc +44 20 7991 2814Thomas C. Hilboldt*, CFAHead of Resources & Energy Research, Asia PacificThe Hongkong and Shanghai Banking Corporation Limited thomaschilboldthsbc .hk +852 2822 2922Dennis Yoo*, CFAAnalyst, Asia-Pacific Oil & Gas, and ChemicalsThe Hongkong and Shanghai Banking Corporation Limited dennishcyoohsbc .hk +852 2996 6917Nikita Makhija*AssociateBangalore* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulationsIssuer of report: HSBC Bank plcView HSBC Global Research at: s :/ research, hsbc. comCommodity chemicals - upside skewIn hindsight, we weren't bearish enough on commodity chemicals; when demand is weak everything is oversupplied That said, the valuation difference between commodity and defensive names in chemicals is at an extremeIfs not clear what might cause the turn but there remains meaningful upside skew to commodity chemical returnsNot bearish enough: With the benefit of hindsight, we have clearly not been bearish enough on commodity chemicals over the last couple of years. Our primary error, we think, has been to try to identify the best positioned chains, either from a supply perspective (chloralkali) or those with raw material tailwinds (PET) or those close to an inflection point (TiO2), instead of recognizing that in a weak demand environment everything is oversupplied - and every single major commodity chemical chain has generated negative returns since the start of 2018.The difference between commodity chemicals and 'defensives' is at an extreme, both in terms of performance and valuation. Industrial gases and specialities stocks with reasonably certain high single-digit earnings growth are trading at 13-14x EBITDA for FY2019e, while there is an unwillingness in the market to play 'guess the trough* on commodity stocks such as in TiO2 (trading at 5-6x trough EBITDA), which can fall further still, especially if macro issues continue to worsen.We expect this to turn, even if ifs not clear what might catalyse the turn. Demand remains weak and investors are concerned about recessionary risks. That said, with commodity space earnings levels now 25% below normalised levels (a sharp contrast from 12 months ago, when earnings were 25% above normalised) and multiple chains at troughs, we think the upside skew from here is much more meaningful than the downside.We remain positive on the TiO2 names Chemours, Venator and Tronox. TiO2 was the first to signal the downturn and we expect it (at some point) to be one of the first chains to recover. We also reiterate our Buy rating on LyondellBasell and Hold on Dow. We adjust our target prices to reflect the recent Q2 2019 earnings and lower our estimates.Changes to target pricesCurrent TPUpside/ Market capCompanyTicker CurrencypriceOldNewRatingdownside(USDm)Chemourscc USUSD12.6045.0043.00Buy241.3%2,060TronoxTROX USUSD8.1421.0020.00Buy145.7%1,155VenatorVNTR USUSD2.1015.0013.00Buy519.0%224LyondellBasellLYB USUSD75.61121.00125.00Buy65.3%25,348Dow IncDOW USUSD46.8553.0051.00Hold8.9%34,819Source: Refinitiv Datastream, HSBC estimates. Priced as of close at 13 August 2019Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.ValuationWe value Dow based on a combination of PE, EV/EBITDA and DCF.On a normalised PE basis, we use an 11.5x multiple (in line with the historical average of its closest peers) on normalised EPS of USD4.6 (down from USD4.7 on lower estimates), implying fair value of USD53 per share (USD54 previously).On a normalised EV/EBITDA basis, we use a 6x multiple (unchanged, in line with the peers' long-term average) on our normalised EBITDA of USD8.2bn (lower than LISD8.3bn earlier on lower estimates), implying fair value of USD47 per share (down from USD48 earlier). In our DCF, we use a 9.5% cost of equity, comprising a 3.0% risk-free rate, a 5.0% equity risk premium and a beta of 1.3. We use a 4.2% cost of debt assumption and a 70/30 target equity to debt ratio, which leads us to a weighted average cost of capital of 7.9%. Our terminal value uses our estimate of normalised EBITDA and a terminal growth rate of 1 % to reflect long-term energy price inflation and little else (all unchanged).Our DCF implies USD53 per share fair value (from USD56 earlier on our reduced earnings estimates).Our rounded target price of USD51 (down from USD53 earlier) is based on the average of the three valuation methodologies. Our target price implies upside of 9%; we maintain our Hold rating, given the challenging outlook for plastics, MEG, polyurethanes and silicones in 2019-20.Key downside risks include:Extended cyclical downturns in both the polyethylene and polyurethanes businesses, driven by weaker-than-expected demand growth and higher-than-expected supplyPressure on ethane prices in North America due to fractionation and pipeline constraintsWeaker-than-expected MEG pricesNew capacity expansions and increased competition in the Silicones business.Dow: Valuation summaryValue per share (USD)475351Value per share (USD)475351Valuation methodologyNormalised PENormalised EV/EBITDADCFAverageSource: HSBC estimatesKey upside risks include:Stronger-than-expected demand growth, delays to expansions, leading to a faster-than expected recovery in PE marginsShutdowns in Chinese polyurethane capacity, resulting in a margin recovery Better-than-expected realisation of cost savings and synergiesHigher-than-expected oil prices.Valuation dataBuyFinancials & valuation: Chemours CoFinancial statementsYear to12/2018a12/2019e12/2020e12/2021 eYear to12/2018a12/2019e12/2020e12/2021 eProfit & loss summary (USDm)EV/sales0.60.90.70.6Revenue6,6385t5406,9067,460EV/EBITDA2.44.63.32.7EBITDA1,7401,0791,5081,679EV/IC1.11.21.11.0Depreciation & amortisation-284-304-301-316PE*2.24.42.52.1Operating profit/EBIT1,4567751,2071,363PB2.33.52.21.2Net interest-195-194-224-232FCF yield (%)31.26.518.830.3PBT1,1565009831,131Dividend yield (%)5.37.98.38.8HSBC PBT1,2615819831,131* Based on HSBC EPS (diluted)Taxation-159-116-197-226Net profit997384786905HSBC net profit1,033465786905ESG metricsCash flow summary (USDm)Environmental Indicators12/2017aGovernance Indicators12/2017aCash flow from operations1,1416339191,135GHG emission intensity*1.892No. of boardnembers8Capex-498-500-532-511Energy intensity*2.0521Average board tenure (years)NACash flow from investment-487-500-532-511CO2 reduction policyYesFemale boardmembers (%)11.10%DividendsChange in net debt-148215-164680-162124-170-454Social Indicators12/2018aBoard members independence (%) 66.70%FCF equity643134387624Employee costs as % of revenuesNABalance sheet summary (USDm)Employee turnover (%)NAIntangible fixed assets181181181181Diversity policyYesTangible fixed assets3,2913,4873,7183,913Source: Company data, HSBCCurrent assets3,2932,4382,6573,272* GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD *000sCash & others1,201521396850Total assets7,3626,7037,1537,963Operating liabilities1,6961,4681,6431,719Issuer informationGross debt3,9723,9723,9723,972Share price (USD)12.60Free float100%Net debt2,7713,4513,5763,122Target price (USD)43.00SectorChemicalsShareholders' funds1,0205908641,599RIC (Equity)CC.NCountryUnited StatesInvested capital3.8684,1184,5174,798Bloomberg (Equity)CC USAnalystSriharsha PappuMarket cap (USDm)2,060Contact+44 20 7991 9243Ratio, growth and per share analysisYear to12/2018a12/2019e12/2020e12/2021eY-o-y % changeRevenue7.4-16.524.78.0EBITDA22.4-38.039.811.4Operating profit26.7-46.855.712.9PBT26.8-56.796.515.1HSBC EPS50.1-49.980.215.1Ratios (%)Revenue/IC (x)1.81.41.61.6ROIC34.214.922.423.4ROE109.657.7108.173.5ROA15.97.613.914.4EBITDA margin26.219.521.822.5Operating profit margin21.914.017.518.3EBITDA/net interest (x)8.95.66.77.2Net debt/equity271.7585.3413.8195.2Net debVEBITDA (x)1.63.22.41.5CF from operations/net debt41.218.325.736.4Per share data (USD)EPS R 印(diluted)5.462.345.105.87HSBC EPS (diluted)5.662.835.105.87DPS0.671.001.051.10Book value5.593.605.6110.38Price relative63.6053.6043.6033.6023.6013.603.60Source: HSBCNote: Priced at close of 13 Aug 2019Valuation dataBuyFinancials & valuation: Venator Materials PLCFinancial statementsYear to12/2018a12/2019e12/2020e12/2021 eProfit & loss summary (USDm)Revenue2,2652,1482,2322,277EBITDA436227273292Depreciation & amortisation-132-127-132-137Operating profit/EBIT304100141154Net interest-40-41-35-35PBT-16566107119HSBC PBT26460107119Taxation8-9-16-18Net profit-1635791101HSBC net profit2725191101Cash flow summary (USDm)Cash flow from operations282251101134Capex-326-80-82-83Cash flow from investment-321-130-107-108Dividends-8000Change in net debt64-1215-26FCF equity-441712051Balance sheet summary (USDm)Tangible fixed assets994997972943Current assets1,1251,2271,2601,298Cash & others165279270292Total assets2,4852,5902,5982,607Operating liabilities535690711722Gross debt748741738734Net debt583462468442Shareholders' funds8479049941,096Invested capital1,4351,2711,2671,242Y-o-y % changeRevenue2.5-5.23.92.CEBITDA10.4-47.920.46.7Operating profit13.4-67.040.99.1PBT-185.162.911.6HSBC EPS52.7-81.479.311.6Ratios (%)Revenue/IC (x)1.51.61.8i.eROIC18.66.49.510.4ROE28.05.89.69.7ROA-4.53.64.65.CEBITDA margin19.210.612.212.8Operating profit margin13.44.76.36.SEBITDA/net interest (x)10.95.67.98.3Net debt/equity68.250.746.740.CNet debVEBITDA (x)1.32.01.71.5CF from operations/net debt48.454.221.730.4Per share data (USD)EPS Rep (diluted)-1.530.530.850.95HSBC EPS (diluted)2.550.470.850.95DPS0.000.000.00o.ocBook value7.938.469.3110.26Year to12/2018a12/2019e12/2020e12/2021 eEV/sales0.30.30.30.3EV/EBITDA1.72.72.32.0EV/IC0.50.50.50.5PE*0.84.42.52.2PB0.30.20.20.2FCF yield (%)-19.776.38.822.8Dividend yield (%)0.00.00.00.0* Based on HSBC EPS (diluted)ESG metricsEnvironmental Indicators12/2018aGovernance Indicators12/2018aGHG emission intensity*NANo. of boardnembers6Energy intensity*NAAverage board tenure (years)NACO2 reduction policyNoFemale board members (%)16.7Social Indicators12/2018aBoard membe rs independence (%)66.7Employee costs as % of revenuesNAEmployee turnover (%)NADiversity policyNoSource: Company data, HSBC* GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD '000sIssuer informationShare price (USD)2.10Free float49%Target price (USD)13.00SectorChemicalsRIC (Equity)VNTR.NCountryUnited States勖施金国山轴WeVNTR USAnalystSriharsha PappuMarket cap (USDm)224Contact+44 20 7991 9243Source: HSBCNote: Priced at close of 13 Aug 2019Valuation dataBuyFinancials & valuation: Tronox LtdFinancial statementsYear to12/2018a12/2019e12/2020e12/2021 eYear to12/2018a12/2019e12/2020e12/2021 eProfit & loss summary (USDm)EV/sales1.51.51.21.2Revenue1,8192t8023,2823,315EV/EBITDA5.56.44.74.1EBITDA513632857930EV/IC1.11.21.11.1Depreciation & amortisation-195-268-307-307PE*9.419.15.34.1Operating profit/EBIT318365550623PB1.52.92.51.9Net interest-160-200-256-250FCF yield (%)4.63.79.023.7PBT43-28194273Dividend yield (%)2.22.52.72.9HSBC PBT158165294373* Based on HSBC EPS (diluted)Taxation-13-63955Net profit-7-63203298HSBC net profit10660232295ESG metricsCash flow summary (USDm)Environmental Indicators12/2017aGovernance Indicators12/2018aCash flow from operations170272305489GHG emission intensity*1,707.9No. of boardnembers6Capex-117-230-201-215Energy intensity*2,977.4Average board tenure (years)NACash flow from investment-174-1,278-201-215CO2 reduction policyYesFemale board members (%)16.70%DividendsChange in net debt-2387-281,234-33-71-36-238Social Indicators12/2017aBoard membe rs independence (%) 66.70%FCF equity5342104274Employee costs as % of revenuesNABalance sheet summary (USDm)Employee turnover (%)NAIntangible fixed assets176176176176Diversity policyYesTangible fixed assets1,8002,8102,7042,612Source: Company data, HSBCCurrent assets2,5441,3311,6091,878* GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD *000sCash & others1,696462533771Total assets4,6424,4404,6114,788Operating liabilities278337387381Issuer informationGross debt3,1613,1613,1613,161Share price (USD)8.14Free float75%Net debt1,4652,6992,6282,390Target price (USD)20.00SectorChemicalsShare