LYB – Market expectations are for material declines in Uniform ROA, but management is confident about M&A, capacity, and their refinery

• LyondellBasell Industries N.V. (LYB:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 12.1x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about their M&A strategy, capacity, and their refinery
• Specifically, management is confident about their commitment to be a solid investment-grade company, and they are confident they are adjusting for risk in making M&A decisions. Furthermore, they are confident that extraneous factors impacting their refinery are normalizing and that the light heavy differential is opening up. Additionally, they are confident recent VAT cuts in China are stimulating demand growth and that new capacity is coming on later this year.