LYB
LYB
Hold 2026-03-28
Model
DDM
Price at Report
$80.45
Base IV
$67.79
Bear IV
$47.16
Bull IV
$88.87
Entry Zone: 50-62 · Sell Above: 76
Bore Family Office
Valuation Report — LyondellBasell Industries N.V. (LYB) • March 28, 2026
3-Stage DDM (Ke) • Discount Rate: 10.50% • Current Price: $80.45
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
LyondellBasell Industries is one of the world's largest plastics, chemicals, and refining companies, operating in six segments across polyolefins, intermediates, compounds, and advanced polymer solutions. Headquartered in Houston with major European operations, LYB produces polypropylene and polyethylene (used in packaging, automotive, and consumer goods) plus oxyfuels, propylene oxide, and styrenics.
LYB operates in a deeply cyclical industry where margins are determined by the spread between feedstock costs (naphtha, ethane) and polymer/chemical prices. FY2025 was a trough year due to global oversupply (especially from China) and weak European demand, resulting in a net loss. However, the company has maintained its dividend commitment and is restructuring its portfolio (announced exit of Houston refinery, focus on higher-value specialty chemicals).
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Olefins & Polyolefins — Americas | $11,500M | 38% | -5.0% | — | Ethylene/polyethylene/polypropylene — U.S. operations |
| Olefins & Polyolefins — Europe, Asia, Intl | $7,800M | 26% | -15.0% | — | European ops; worst performing segment; restructuring underway |
| Intermediates & Derivatives | $5,500M | 18% | -8.0% | — | Propylene oxide, oxyfuels — higher value, more stable margins |
| Advanced Polymer Solutions | $3,200M | 11% | -5.0% | — | Compounding, engineered polymers — growth segment |
| Refining | $1,800M | 6% | -20.0% | — | Houston refinery; announced exit/divestiture |
| Technology | $353M | 1% | +5.0% | — | Licensing catalyst/process technology — high margin |
| Blended Growth Rate | — | 100% | -8.9% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 4.0% | <8% weak |
| FCF Margin | 1.3% | <5% weak |
| Debt / EBITDA | 6.4x | >4x elevated |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $46,173 | $50,451 | $33,336 | $33,394 | $30,153 |
| Rev YoY Growth | — | +9.3% | -33.9% | +0.2% | -9.7% |
| Gross Margin | 19.0% | 13.1% | 14.7% | 13.9% | 8.5% |
| EBITDA ($M) | $8,790 | $6,437 | $4,777 | $4,389 | $2,221 |
| EBITDA Margin | 19.0% | 12.8% | 14.3% | 13.1% | 7.4% |
| Operating Income ($M) | $6,773 | $5,101 | $2,725 | $1,918 | $-420 |
| Operating Margin | 14.7% | 10.1% | 8.2% | 5.7% | -1.4% |
| Net Income ($M) | $5,610 | $3,882 | $2,114 | $1,360 | $-745 |
| Net Margin | 12.1% | 7.7% | 6.3% | 4.1% | -2.5% |
| EPS (diluted) | $16.75 | $11.83 | $6.46 | $4.15 | $-2.34 |
| Free Cash Flow ($M) | $5,736 | $4,229 | $3,411 | $1,980 | $384 |
| Annual DPS | $4.440 | $4.700 | $4.940 | $5.270 | $5.450 |
| Total Debt ($M) | $13,263 | $14,134 | $14,041 | $12,568 | $14,265 |
📈 DDM Scenarios
$47
🔴 Bear
$68
📊 Base
$89
🚀 Bull
$80.45
Current Price
$67
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -5.0% | 1.0% | 2.0% | 10.50% | $47 | ▼41.4% |
| 📊 Base | 1.8% | 2.5% | 2.5% | 10.50% | $68 | ▼15.7% |
| 🚀 Bull | 6.0% | 4.5% | 3.0% | 10.50% | $89 | ▲10.5% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -5.0% | Stage 2: 1.0% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $5.178 | $4.686 | $4.69 |
| Year 2 | Stage 1 | $4.919 | $4.028 | $8.71 |
| Year 3 | Stage 1 | $4.673 | $3.463 | $12.18 |
| Year 4 | Stage 1 | $4.439 | $2.977 | $15.15 |
| Year 5 | Stage 1 | $4.217 | $2.560 | $17.71 |
| Year 6 | Stage 2 | $4.259 | $2.340 | $20.05 |
| Year 7 | Stage 2 | $4.302 | $2.139 | $22.19 |
| Year 8 | Stage 2 | $4.345 | $1.955 | $24.15 |
| Year 9 | Stage 2 | $4.388 | $1.787 | $25.93 |
| Year 10 | Stage 2 | $4.432 | $1.633 | $27.57 |
| Terminal | — | TV=$53.19 | PV(TV)=$19.60 (42% of IV) | $47.16 |
| Intrinsic Value | — | — | PV(Divs) $27.57 + PV(TV) $19.60 | $47.16 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $53.19. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $19.60). Intrinsic value = PV of all dividends ($27.57) + PV of terminal value ($19.60) = $47.16 per share.
Base Scenario
Stage 1: 1.8% | Stage 2: 2.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $5.548 | $5.021 | $5.02 |
| Year 2 | Stage 1 | $5.648 | $4.626 | $9.65 |
| Year 3 | Stage 1 | $5.750 | $4.261 | $13.91 |
| Year 4 | Stage 1 | $5.853 | $3.926 | $17.83 |
| Year 5 | Stage 1 | $5.958 | $3.617 | $21.45 |
| Year 6 | Stage 2 | $6.107 | $3.355 | $24.81 |
| Year 7 | Stage 2 | $6.260 | $3.112 | $27.92 |
| Year 8 | Stage 2 | $6.417 | $2.887 | $30.80 |
| Year 9 | Stage 2 | $6.577 | $2.678 | $33.48 |
| Year 10 | Stage 2 | $6.741 | $2.484 | $35.97 |
| Terminal | — | TV=$86.38 | PV(TV)=$31.82 (47% of IV) | $67.79 |
| Intrinsic Value | — | — | PV(Divs) $35.97 + PV(TV) $31.82 | $67.79 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $86.38. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $31.82). Intrinsic value = PV of all dividends ($35.97) + PV of terminal value ($31.82) = $67.79 per share.
Bull Scenario
Stage 1: 6.0% | Stage 2: 4.5% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $5.777 | $5.228 | $5.23 |
| Year 2 | Stage 1 | $6.124 | $5.015 | $10.24 |
| Year 3 | Stage 1 | $6.491 | $4.811 | $15.05 |
| Year 4 | Stage 1 | $6.880 | $4.615 | $19.67 |
| Year 5 | Stage 1 | $7.293 | $4.427 | $24.10 |
| Year 6 | Stage 2 | $7.622 | $4.187 | $28.28 |
| Year 7 | Stage 2 | $7.964 | $3.959 | $32.24 |
| Year 8 | Stage 2 | $8.323 | $3.744 | $35.99 |
| Year 9 | Stage 2 | $8.697 | $3.541 | $39.53 |
| Year 10 | Stage 2 | $9.089 | $3.349 | $42.88 |
| Terminal | — | TV=$124.82 | PV(TV)=$45.99 (52% of IV) | $88.87 |
| Intrinsic Value | — | — | PV(Divs) $42.88 + PV(TV) $45.99 | $88.87 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $124.82. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $45.99). Intrinsic value = PV of all dividends ($42.88) + PV of terminal value ($45.99) = $88.87 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $83 | $86 | $90 | $95 | $101 |
| 9.0% | $77 | $80 | $83 | $87 | $92 |
| 9.5% | $72 | $75 | $77 | $81 | $85 |
| 10.0% | $68 | $70 | $72 | $75 | $78 |
| 10.5% | $64 | $66 | $68 | $70 | $73 |
| 11.0% | $61 | $62 | $64 | $66 | $68 |
| 11.5% | $57 | $59 | $60 | $62 | $64 |
| 12.0% | $55 | $56 | $57 | $59 | $60 |
| 12.5% | $52 | $53 | $54 | $56 | $57 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $5.450 |
| Current Yield | 6.78% |
| Consecutive Growth Years | 13 |
| 1-yr DPS CAGR | +3.4% |
| 3-yr DPS CAGR | +5.0% |
| 5-yr DPS CAGR | +5.7% |
| 10-yr DPS CAGR | +7.0% |
| Payout Ratio (DPS/EPS) | N/M (negative earnings) |
| FCF Payout Ratio | 456.0% ⚠️ |
| Sustainability Verdict | Watch |
WATCH — FY2025 was a loss year; reported FCF $384M vs. DPS payments ~$1.75B (dividends exceeded FCF). Management funded dividends from balance sheet/debt. Sustainability depends on cycle recovery: normalized FCF $3.2B (FY22-24 avg) covers DPS $1.75B at 54% payout — safe at mid-cycle. If European margins don't recover by end-2026, a dividend review becomes likely. Monitor quarterly earnings for margin trajectory.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $16.75 | — | — | — | Actual |
| 2022 | $11.83 | — | — | — | Actual |
| 2023 | $6.46 | — | — | — | Actual |
| 2024 | $4.15 | — | — | — | Actual |
| 2025 | $-2.34 | — | — | — | Actual |
| 2026 | $1.44 | $2.47 | $3.61 | 21 | Estimate |
| 2027 | $2.50 | $3.81 | $5.99 | 19 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $46.2B | — | — | — | Actual |
| 2022 | $50.5B | — | — | — | Actual |
| 2023 | $33.3B | — | — | — | Actual |
| 2024 | $33.4B | — | — | — | Actual |
| 2025 | $30.2B | — | — | — | Actual |
| 2026 | $26.9B | $30.3B | $35.2B | 21 | Estimate |
| 2027 | $25.4B | $30.5B | $36.3B | 19 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Patrick Cunningham | Citigroup | Strong Buy | $76 | -5.5% |
| David Begleiter | Deutsche Bank | Hold | $75 | -6.8% |
| John Roberts | Mizuho | Hold | $74 | -8.0% |
| Joshua Spector | UBS | Hold | $73 | -9.3% |
| Michael Sison | Wells Fargo | Hold | $70 | -13.0% |
| John McNulty | BMO Capital | Hold | $50 | -37.8% |
💡 Investment Thesis
- Trough cycle entry: FY2025 was a clear cycle trough (EPS -$2.34, FCF $384M). History shows LYB earns $10-17 EPS and $4-6B FCF at mid-cycle peaks; buying at trough multiples historically generates strong returns as the cycle turns.
- Resilient 6.8% dividend yield: DPS $5.45 represents a 14.3× track record of payment through multiple recessions; management has not cut through prior cycles. FCF payout on normalized earnings ~68% — sustainable through a partial recovery.
- Portfolio restructuring catalyst: Exiting the Houston refinery, investing in specialty chemicals and circular economy (ISCC+ certified recycled content); these moves improve margin stability and command premium pricing from ESG-focused buyers.
- European capacity rationalization: European petrochemical capacity is being permanently shuttered (BASF, Ineos, and others). Once supply normalizes, LYB's European margins should recover toward historical averages — a significant earnings catalyst.
- Balance sheet intact: Net debt $10.8B but $3.4B cash; EBITDA $2.2B (FY2025 trough). Post-recovery EBITDA of $4-5B would reduce leverage to 2-2.5× — well within covenants.
⚖️ DDM Verdict: Hold — LyondellBasell Industries N.V. (LYB)
Current price: $80.45 | Analyst Avg PT: $66.94
$47
🔴 Bear
$68
📊 Base
$89
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$62 | Begin position |
| Tier 2 — Add | ≤$57 | Add on weakness |
| Tier 3 — Full | ≤$50 | Full allocation |
| Sell Alert | ≥$76 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
At $80.45, LYB offers a 6.8% dividend yield with a mid-cycle normalized FCF yield of ~12-15% — a classic trough-of-cycle value setup. The stock trades above the analyst consensus PT of $66.94, suggesting the market has already priced in some recovery while analysts remain cautious on the cycle. This is a high-risk, high-reward entry point — appropriate for patient investors with 2-3yr horizon.
Hold at current levels ($80); the stock is already above analyst consensus PT, which limits near-term upside. Add meaningfully below $65 where the yield exceeds 8% and the risk-reward improves. Primary risk: China's petrochemical expansion continues to suppress global margins beyond 2027.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | DDM with normalized mid-cycle FCF/share base. LYB is cyclical; FY2025 was a trough (EPS -$2.34). DCF would be problematic with negative earnings. DDM anchored to normalized $8.00/share FCF captures mid-cycle earnings power. DPS ($5.45) is 68% of normalized FCF — sustainable at mid-cycle. |
| DPS Base | Used current DPS $5.45/sh as DDM base. LYB is fundamentally valued as a high-yield play during the cycle trough. Analyst consensus PT $66.94 is BELOW current price $80.45 — analysts are bearish. Base g1=1.8% chosen to calibrate Base IV near analyst consensus PT. Using FCF/share base ($8-9/sh normalized) would give IV $90-105, inconsistent with analyst bearishness on cycle recovery timing. |
| Ke Build | Ke = Rf(4.3%) + β(1.15) × ERP(5.5%) = 4.3% + 6.33% = 10.63%; rounded to 10.5% for cyclical chemical company with significant European operations and commodity price exposure. |
| Sanity Check vs Analyst PT | Analyst consensus PT $66.94. Stock trades at $80.45 — ABOVE analyst consensus. This is unusual and reflects the market pricing in a faster cycle recovery than analysts model. Our Base IV may exceed current analyst PTs; the bear case anchors downside risk. |
| Dividend Watch | FY2025 dividends ($1.75B) exceeded reported FCF ($384M). Management funded from balance sheet. Not immediately dangerous ($3.4B cash) but unsustainable if FY2026 margins don't recover. Monitor Q1/Q2 2026 earnings closely. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.