August 21, 2025 03:42 AM GMT Chemicals | Asia Pacific M Idea Anti-Involution: China, Korea and Pushbacks Our counter-consensus bullish view on chemicals has gotten only pushback. Corporate earnings are still challenged, but free cash flows have started outperforming and got most attention in our conversations. Volume growth is being closely watched to get conviction on a cycle turn. Key Takeaways Investor expectations for the commodity chemical cycle are the most bearish we have seen in 20 years of watching ...

August 21, 2025 03:42 AM GMT Chemicals | Asia Pacific M Idea Anti-Involution: China, Korea and Pushbacks Our counter-consensus bullish view on chemicals has gotten only pushback. Corporate earnings are still challenged, but free cash flows have started outperforming and got most attention in our conversations. Volume growth is being closely watched to get conviction on a cycle turn. Key Takeaways Investor expectations for the commodity chemical cycle are the most bearish we have seen in 20 years of watching ...

Financial Performance (LTM 1Q 2016) - Westlake Chemical Corporation reported Net Sales of $4335 million[6] - The company's EBITDA was $1217 million[6] - Net Income attributable to Westlake was $623 million[6] - Olefins contributed $822 million to EBITDA, representing 67% of the total[6] - Vinyls contributed $410 million to EBITDA, representing 33% of the total[6] Strategic Advantages and Growth Drivers - The company leverages a strong ethane and other NGL advantage due to fundamental structural advances in supply[13] - Significant product integration allows the company to capture the full value chain[13] - Westlake is well-positioned for continued profitable growth due to its ongoing financial strength and flexibility[13] - Westlake has one of the highest LDPE product mix percentages in North America[30] - Global PVC demand is growing, supporting exports[45]

Financial Performance - Westlake Chemical Corporation reported Net Sales of $8,041 million for the full year 2017[6] - The company's EBITDA for the full year 2017 was $1,841 million[6] - Net Income attributable to Westlake Chemical for the full year 2017 reached $1,304 million[6] - Olefins contributed $805 million to the EBITDA, representing 42% of the total[6] - Vinyls contributed $1,096 million to the EBITDA, accounting for 58% of the total[6] Strategic Positioning and Growth - Westlake is a leading integrated plastics materials company, holding strong positions in North American and global markets for PVC and Chlor-Alkali[3, 7] - Synergy savings and cost reductions from the Axiall acquisition reached $170 million in 2017, with expectations to achieve a total of $250 million[7] - The company is expanding its global capacity with 750 million lbs of PVC, 200 million lbs of VCM, 60 million lbs of Caustic Soda, and 55 million lbs of Chlorine[13] - Westlake's ethylene plants are fully capable of using ethane and have some NGL flexibility, providing cost advantages[22] Product Mix and Market Focus - Westlake has a unique focus on LDPE, which has a higher margin advantage compared to other PE grades[24, 25] - The company's LDPE capacity represents a significant percentage of its total PE capacity in North America[27] - Westlake/Vinnolit is a leading specialty PVC producer with a global capacity of approximately 4,000 KMT in 2016[46, 47]

Core Insights - Exxon Mobil Corporation (XOM) is trading at a premium valuation with an EV/EBITDA of 6.47x compared to the industry average of 4.05x [1][9] Group 1: Upstream Business Challenges - The U.S. Energy Information Administration (EIA) projects the West Texas Intermediate Spot Average price for 2025 at $61.81 per barrel, down from $76.60 in 2024, and further down to $55.24 in 2026, indicating a bearish outlook for crude prices [4] - Lower crude prices are expected to negatively impact XOM's earnings, as the company derives a significant portion of its income from upstream operations [5] - Other major integrated oil companies like Chevron (CVX) and BP are also facing similar challenges due to their reliance on exploration and production activities [5][6] Group 2: Chemical Business Environment - XOM has established a strong position in the petrochemical industry, manufacturing essential products like olefins and polyolefins [7] - The global market is currently experiencing an oversupply of chemical products, leading to lower prices and challenging conditions for XOM's chemicals business [8][9] Group 3: Market Performance and Outlook - Over the past year, XOM's stock has declined by 4.6%, underperforming the oil-energy sector's composite decline of 1.5% [11] - Recent earnings estimates for 2025 and 2026 have been revised downward, reflecting broader challenges faced by XOM and its peers [14] - Given the current business environment, it may be advisable for investors to consider divesting from XOM stock, as indicated by its Zacks Rank 4 (Sell) [15]