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1、Top picks,Buy,Buy,Deutsche BankMarkets Research,North AmericaUnited StatesIndustrialsChemicals/Commodity,PeriodicalChemicalsScorecard,Date8 November 2012David Begleiter,CFA,October ScorecardM 4%)with its smoothintegration of recently acquired specialty chemicals company Solutia.TiO2 and Fertilizer s
2、tocks lagged.For companies levered to TiO2,2H12 is proving to be challenging as TiO2fundamentals have continued to deteriorate with prices down 5%,14%and20%from their peaks in North America,Europe and Asia,respectively.Priceweakness and elevated inventory levels are causing customers to deferpurchas
3、es.Notable underperformers for the month with exposure to TiO2 are,Research Analyst(+1)212 250-Ramanan SivalingamAssociate Analyst()212 250-Jermaine BrownResearch Associate(+1)212 250-3624jermaine-Ashland(ASH.N),USD72.23LyondellBasell(LYB.N),USD52.78,DuPont(DD;Buy;-11%)and Kronos(KRO;Hold;at-11%).Co
4、mpanies levered to potash experienced weakening fundamentals asunabsorbed supply,stemming from unsettled contracts in China and India,created an oversupply in North American potash(39%above the 5-year avg).Notable underperformers with exposure to potash are Mosaic(MOS;Hold;-9%)and PotashCorp(POT;Hol
5、d;-7%).IRS ruling and MLP implications for olefin producers.Other notable performers for October were companies that stood to gain froma recent IRS ruling which allows olefin-related income to qualify for MLPtreatment including Westlake(WLK;Hold;+4%),LyondellBasell(LYB;Buy;+3%)and Dow Chemical(DOW;H
6、old;+1%).A private letter ruling(PLR),requested by Williams Companies(WMB;NR)concluded that“income derivedfrom processing NGLs into olefins will constitute qualifying income”for MLPpurposes.While this ruling may be beneficial to some commodity names,eachPLR is company specific and,even if qualified,
7、the asset may not necessarilybe suitable for MLP status.However with the opportunity now available to putolefin-producing assets into MLPs,this is a potential EPS tailwind in 13E.Absolute valuations look reasonable,but macro weakness may limit upsideTodays 12x fwd P/E multiple for US Chemicals(ex-ag
8、)is 19%below the 15-yravg.While we view relative valuation(currently 14%below the S 3)our calculation of cash return on cash invested and the strongcorrelation(R270%)we have found between chemical sector valuations andreturns on capital.Risks to forecasts include rises in energy,raw materials,n-tint
9、erest rates or sharp improvement in end-market demand(see p.73-75)._Deutsche Bank Securities Inc.All prices are those current at the end of the previous trading session unless otherwise indicated.Prices are sourcedfrom local exchanges via Reuters,Bloomberg and other vendors.Data is sourced from Deut
10、sche Bank and subjectcompanies.Deutsche Bank does and seeks to do business with companies covered in its research reports.Thus,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a sing
11、le factor in making their investment decision.DISCLOSURES ANDANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,8 November 2012Chemicals/CommodityChemicals ScorecardTable Of ContentsStock performance.3Current valuations.6Forward company valuations.15Growth&profitability.29Leverage,
12、liquidity&capital.49Valuation&Risks.73,Page2,Deutsche Bank Securities Inc.,WLK,21%,ECL,CMP,CYT,ALB,WLK,EMN,LYB,PX,AGU,PPG,DOW,HUN,CE,VAL,FUL,ASH,ROC,Chemicals,S&P500,CBT,GGC,FMC,(0%),(1%),(1%),(2%),(2%),(2%),(2%),(2%),(3%),SHW,OLN,MON,RPM,APD,POT,MOS,KRO,DD,FOE(23%),(4%),(5%),(5%),(6%),(6%),(7%),(9%
13、),(11%),(11%),3%,2%,2%,2%,1%,1%,0%,4%,4%,5%,5%,6%,7%,ARG,8%,28%,LYB,20%,14%,13%,12%,12%,11%,10%,8%,8%,7%,6%,5%,4%,3%,3%,3%,3%,2%,1%,1%,1%,0%,(2%),(3%),(5%),(8%),HUN,EMN,ARG,CYT,VAL,AGU,CMP,GGC,PPG,ECL,SHW,ROC,FUL,OLN,Chemicals,DOW,PX,S&P500,RPM,ASH,MON,CE,FMC,APD,ALB,CBT,POT,(8%),MOS,(9%),DD,(10%),F
14、OE,(14%),KRO(20%),8 November 2012Chemicals/CommodityChemicals ScorecardStock performanceFigure 1:Ranking by October performance15%10%5%0%(5%)(10%)(15%)(20%)(25%)(30%)Source:Deutsche Bank,Factset;include dividendsFigure 2:Ranking by 3-month performance(August,2012-October,2012)40%30%20%10%0%(10%)(20%
15、)(30%)Source:Deutsche Bank,Factset;include dividends,Deutsche Bank Securities Inc.,Page3,GGC,97%,LYB,AGU,WLK,SHW,MON,PPG,EMN,VAL,ECL,ASH,CYT,HUN,CMP,RPM,S&P500,OLN,GGC,MOS,Chemicals,ARG,FMC,POT,FUL,PX,APD,DOW,ALB,DD,ROC,CBT,CE,KRO,FOE,(43%),(49%),(0%),(2%),(3%),(4%),(7%),(7%),(8%),(12%),(15%),(15%),
16、(16%),(16%),(21%),14%,12%,11%,10%,10%,9%,9%,8%,4%,2%,1%,1%,0%,0%,19%,19%,21%,30%,LYB,86%,75%,63%,55%,54%,43%,39%,37%,36%,32%,31%,31%,29%,26%,23%,21%,20%,14%,13%,9%,7%,6%,5%,1%,(4%),(7%),(9%),(12%),(14%),93%,WLK,SHW,VAL,CYT,EMN,FUL,PPG,FMC,ASH,HUN,ARG,ECL,AGU,Chemicals,RPM,CBT,MON,OLN,S&P500,DOW,PX,C
17、MP,ALB,ROC,DD,APD,MOS,CE,POT,KRO,(38%),FOE,(59%),8 November 2012Chemicals/CommodityChemicals ScorecardFigure 3:Ranking by 6-month performance(May,2012-October,2012)50%30%10%(10%)(30%)(50%)(70%)Source:Deutsche Bank,Factset;includes dividendsFigure 4:Ranking by 12-month performance120%100%80%60%40%20%
18、0%(20%)(40%)(60%)(80%)(100%)Source:Deutsche Bank,Factset;includes dividends,Page4,Deutsche Bank Securities Inc.,Jan-99,Jan-00,Jan-01,Jan-02,Jan-03,Jan-04,Jan-05,Jan-06,Jan-07,Jan-08,Jan-09,Jan-10,Jan-11,AGU,LYB,ALB,ARG,VAL,CYT,ASH,APD,OLN,CE,GGC,DOW,MOS,ROC,SHW,WLK,CMP,FMC,HUN,EMN,PPG,FOE,CBT,ECL,FU
19、L,DD,Jan-12,8 November 2012Chemicals/CommodityChemicals ScorecardFigure 5:Chemicals sector index 10-year performance(January 1999-Present)30025020015010050,S&P Chems Index,XLB Materials Select Sector SPDR,S&P 500,DB U.S.Chemicals Universe Index,Source:Deutsche Bank,FactsetNote:S&P Chems Index includ
20、es:APD,ASH,DD,DOW,ECL,EMN,HPC,IFF,MON,PPG,PX,ROH,SIAL(as of Oct 2006).DB U.S.Chemicals Universe includes 45 chemical names covered by team and selected ascomps contact team for further detailsFigure 6:Chemicals short interest as of days volume and%of float,25%,16,1420%12,15%10%,1086,45%2,0%Source:Fa
21、ctset First Call estimatezsDeutsche Bank Securities Inc.,Days Short Interest(RHS),%of Float(LHS),-,Page5,12.9,12.5,11.7,11.5,11.5,10.5,10.4,10.1,10.0,SHW,CYT,ECL,MON,CMP,SHW,ARG,PX,VAL,WLK,DOW,FMC,PPG,RPM,APD,FUL,FOE,DD,GGC,ALB,ROC,MOS,POT,14.6,14.2,14.1,13.6,12.9,12.6,12.2,11.8,11.7,11.5,11.2,CBT,O
22、LN,11.1,EMN,ASH,LYB,CE,HUN,KRO,7.1,6.2,11.0,10.6,10.3,10.1,14.7,15.4,15.7,16.5,17.1,19.1,21.7,22.1,23.0,23.2,23.3,25.5,CMP,ECL,PX,MON,ARG,VAL,FMC,CYT,9.3,8.8,8.7,8.7,8.4,8.4,8.2,8.1,8.1,7.6,7.6,7.3,6.9,6.8,6.3,6.2,6.1,5.8,5.5,5.5,4.8,4.5,PPG,FUL,RPM,AGU,DD,APD,CBT,POT,ALB,EMN,DOW,WLK,ROC,CE,ASH,MOS,
23、OLN,FOE,GGC,LYB,HUN,KRO,8 November 2012Chemicals/CommodityChemicals ScorecardCurrent valuationsFigure 7:Ranking by 2012E P/E302520151050Source:Deutsche Bank Securities Inc.estimates and company informationFigure 8:Ranking by 2012E EV/EBITDA14121086420Source:Deutsche Bank Securities Inc.estimates and
24、 company information,Page6,Deutsche Bank Securities Inc.,20.0,19.6,19.6,18.4,17.1,16.3,15.6,15.3,14.2,13.8,13.4,13.4,13.2,12.5,12.2,11.9,11.7,11.1,11.1,10.3,9.8,9.7,9.5,9.4,9.1,9.0,8.9,7.4,7.2,HUN,ARG,VAL,CYT,APD,ALB,ASH,OLN,LYB,WLK,MON,GGC,CMP,FMC,CE,DOW,RPM,MOS,ROC,EMN,SHW,AGU,SHW,MON,PPG,PX,10.9,
25、10.6,10.6,10.6,10.4,9.8,9.6,9.6,9.5,9.3,9.1,8.3,7.8,7.7,7.6,7.4,7.4,7.2,6.9,6.5,6.4,6.3,6.1,6.0,5.9,5.1,KRO,PPG,5.0,4.9,4.3,FOE,DD,PX,FUL,POT,CBT,ECL,5.8,VAL,ASH,ALB,ROC,CYT,LYB,ARG,WLK,CMP,FMC,KRO,APD,OLN,POT,DOW,RPM,MOS,EMN,HUN,FOE,DD,CBT,ECL,FUL,CE,4.2,8 November 2012Chemicals/CommodityChemicals
26、ScorecardFigure 9:Ranking by 2013E P/E222018161412108642Source:Deutsche Bank Securities Inc.estimates and company information;based on month-end share priceFigure 10:Ranking by 2013E EV/EBITDA12111098765432Source:Deutsche Bank Securities Inc.estimates and company information;based on month-end share
27、 price,Deutsche Bank Securities Inc.,Page7,10.9%,10.5%,10.4%,9.4%,9.1%,7.1%,7.0%,6.7%,6.3%,5.5%,5.4%,5.2%,5.0%,4.9%,4.8%,4.7%,4.6%,4.5%,3.7%,3.4%,2.5%,2.4%,2.1%,1.6%,1.4%,1.4%,1.0%,(0.3%),LYB,ALB,VAL,ASH,APD,GGC,ARG,MON,WLK,CMP,CYT,CE,HUN,RPM,FMC,DOW,MOS,ROC,EMN,KRO,SHW,31.4%,23.0%,18.8%,17.6%,14.7%
28、,14.6%,13.9%,13.7%,PPG,13.3%,12.0%,11.9%,10.4%,11.2%,9.7%,8.4%,8.0%,8.0%,7.6%,7.2%,7.1%,7.1%,6.9%,6.7%,5.1%,4.9%,4.8%,4.0%,3.2%,CMP,OLN,-2.2%,ASH,VAL,FOE,LYB,DD,ALB,ROC,KRO,SHW,ARG,CYT,CBT,APD,CE,POT,DOW,MON,WLK,RPM,FMC,HUN,PPG,MOS,EMN,FUL,ECL,PX,FOE,DD,POT,CBT,ECL,FUL,PX,(3.4%),8 November 2012Chemi
29、cals/CommodityChemicals ScorecardFigure 11:Ranking by 2012E free cash flow yield(defined as free cash flow per share divided by share price)12%10%8%6%4%2%0%(2%)(4%)(6%)(8%)Source:Deutsche Bank Securities Inc.estimates and company information.Based on month end share price.Figure 12:Ranking by 2012E
30、free cash flow yield II(defined as EBITDA-capex divided by share price)35%30%25%20%15%10%5%0%-5%-10%Source:Deutsche Bank Securities Inc.estimates and company information.Based on month end share price,Page8,Deutsche Bank Securities Inc.,DD,ARG,SHW,CMP,MON,FMC,PPG,PX,5.5,8.5,5.4,4.7,4.6,4.1,4.0,3.9,3
31、.8,3.5,3.4,3.4,3.4,3.0,2.7,2.5,2.5,2.4,2.3,2.1,2.0,1.9,1.8,1.7,1.6,1.4,1.4,1.4,1.4,VAL,ASH,ALB,LYB,ROC,APD,CYT,OLN,GGC,WLK,7.8%,4.5%,4.4%,3.9%,3.8%,3.4%,3.1%,2.7%,2.5%,2.5%,2.2%,2.2%,2.2%,2.0%,1.4%,1.4%,1.4%,1.4%,1.2%,1.2%,1.1%,1.1%,0.8%,DOW,RPM,MOS,EMN,0.8%,0.7%,KRO,HUN,0.6%,CE,LYB,ALB,VAL,ARG,MON,
32、ASH,OLN,APD,CMP,CYT,DOW,RPM,HUN,FMC,DD,PX,SHW,MOS,ROC,KRO,CBT,CBT,PPG,POT,ECL,FUL,0.5%,FOE,POT,CBT,CE,ECL,FUL,0.4,8 November 2012Chemicals/CommodityChemicals ScorecardFigure 13:Ranking by 2012E price/book9876543210Source:Deutsche Bank Securities Inc.estimates and company information.Based on month e
33、nd share priceFigure 14:Ranking by 2012E dividend yield9%8%8%7%7%6%6%5%5%4%4%3%3%2%2%1%1%0%Source:Deutsche Bank Securities Inc.estimates and company information;based on month end share price,Deutsche Bank Securities Inc.,Page9,4.2,3.5,3.3,2.8,2.2,2.2,2.2,2.2,1.9,1.9,1.6,1.6,1.8,1.5,1.5,1.4,1.3,1.3,
34、1.3,1.1,1.1,1.1,1.0,0.9,0.9,0.9,0.6,0.7,VAL,ASH,ALB,ARG,ROC,SHW,MON,WLK,CMP,KRO,CYT,APD,FMC,OLN,LYB,POT,25.7%,22.6%,11.6%,12.6%,10.6%,9.9%,9.6%,9.2%,9.2%,8.0%,7.4%,7.3%,6.6%,6.6%,7.8%,5.9%,5.9%,5.7%,5.3%,5.1%,4.9%,3.7%,DOW,MOS,RPM,EMN,3.6%,2.0%,PX,3.6%,HUN,PPG,ASH,FOE,DD,LYB,ROC,ALB,KRO,ARG,CBT,OLN,
35、SHW,GGC,DOW,MOS,WLK,HUN,RPM,EMN,FMC,APD,POT,CE,PPG,FUL,ECL,0.9%,FOE,PX,ECL,DD,CBT,CE,FUL,0.3,8 November 2012Chemicals/CommodityChemicals ScorecardFigure 15:Ranking by 2012E EV/Sales543210Source:Deutsche Bank Securities Inc.estimates and company informationFigure 16:Ranking by 2013E free cash flow yi
36、eld(defined as free cash flow per share divided by share price)30%25%20%15%10%5%0%Source:Deutsche Bank Securities Inc.estimates and company information,Page10,Deutsche Bank Securities Inc.,34.8%,31.5%,20.7%,30.6%,19.6%,17.6%,17.3%,15.5%,15.3%,16.7%,13.2%,13.1%,11.1%,11.1%,10.9%,10.6%,10.6%,10.3%,12.
37、4%,9.6%,9.3%,8.5%,8.4%,8.4%,7.0%,6.3%,6.0%,7.1%,5.4%,APD,FOE,0.4,ALB,LYB,ASH,VAL,OLN,GGC,ARG,WLK,MON,CYT,CE,DOW,MOS,CMP,FOE,RPM,FMC,HUN,DD,EMN,FUL,ROC,KRO,CBT,5.1,5.0,4.7,7.3,4.5,3.8,3.6,3.3,3.6,3.2,2.8,2.8,2.4,2.3,2.6,2.2,2.2,2.1,2.1,2.1,2.1,1.9,1.4,1.3,1.3,1.7,SHW,POT,PPG,ECL,1.3,1.2,VAL,ASH,DD,AR
38、G,SHW,CMP,MON,FMC,PPG,PX,LYB,ALB,CYT,ROC,GGC,WLK,DOW,RPM,MOS,EMN,KRO,OLN,APD,POT,HUN,CBT,CE,ECL,FUL,1.2,PX,5.3%,8 November 2012Chemicals/CommodityChemicals ScorecardFigure 17:Ranking by 2013E free cash flow yield II(defined as EBITDA-capex divided by share price)40%35%30%25%20%15%10%5%0%Source:Deuts
39、che Bank Securities Inc.estimates and company information.Based on month-end stock priceFigure 18:Ranking by 2013E price/book876543210Source:Deutsche Bank Securities Inc.estimates and company information,Deutsche Bank Securities Inc.,Page11,3.6,KRO,DOW,DD,OLN,RPM,LYB,APD,ROC,PPG,CMP,HUN,CBT,PX,MOS,A
40、RG,MON,EMN,ALB,VAL,POT,ASH,SHW,ECL,CYT,FMC,FUL,CE,2.3%,2.2%,1.9%,1.8%,1.7%,1.7%,1.5%,1.4%,1.4%,1.3%,1.2%,1.1%,0.9%,0.9%,0.8%,0.6%,3.1%,3.0%,3.0%,2.8%,2.7%,2.7%,3.9%,3.9%,3.6%,4.3%,4.5%,POT,3.4,3.1,2.6,2.2,2.2,2.0,2.0,1.8,1.7,1.6,1.5,1.4,1.3,1.3,1.3,1.2,1.2,1.1,1.1,1.0,0.9,0.9,0.9,0.8,0.8,0.8,PX,MON,
41、CMP,APD,FMC,ECL,ARG,ALB,MOS,SHW,CYT,ROC,VAL,PPG,DD,EMN,CE,WLK,RPM,ASH,OLN,FUL,CBT,DOW,KRO,LYB,HUN,0.6,FOE,0.3,8 November 2012Chemicals/CommodityChemicals ScorecardFigure 19:Ranking by 2013E dividend yield5%5%4%4%3%3%2%2%1%1%0%Source:Deutsche Bank Securities Inc.estimates and company informationFigur
42、e 20:Ranking by 2013E EV/Sales43210Source:Deutsche Bank Securities Inc.estimates and company information,Page12,Deutsche Bank Securities Inc.,POT,3.6,MON,POT,MON,PX,CMP,MOS,FMC,CYT,ALB,ECL,APD,SHW,ARG,WLK,VAL,PPG,DD,EMN,ROC,CE,RPM,OLN,1.7,1.5,1.5,1.3,1.3,1.2,1.1,1.1,1.1,1.0,0.9,0.8,FUL,0.8,KRO,CBT,A
43、SH,LYB,DOW,GGC,HUN,FOE,0.4,0.3,0.1,0.8,0.7,0.7,0.7,0.6,1.8,1.8,1.9,2.0,2.1,2.5,2.9,3.4,4.0,3.2,2.7,2.3,2.0,2.0,1.8,1.6,1.5,1.5,1.4,1.4,1.2,1.2,1.2,1.1,1.0,1.0,0.9,0.9,0.8,0.8,0.7,0.7,0.7,0.6,PX,CMP,MOS,FMC,ALB,APD,SHW,ECL,ARG,CYT,VAL,WLK,PPG,DD,EMN,ROC,CE,RPM,OLN,LYB,KRO,FUL,ASH,CBT,DOW,0.6,GGC,0.4,
44、HUN,0.3,FOE,0.1,8 November 2012Chemicals/CommodityChemicals ScorecardFigure 21:Ranking by 2012E Price/sales543210Source:Deutsche Bank Securities Inc.estimates and company informationFigure 22:Ranking by 2013E Price/sales43210Source:Deutsche Bank Securities Inc.estimates and company information,Deuts
45、che Bank Securities Inc.,Page13,POT,HUN,RPM,POT,MON,OLN,FMC,MOS,GGC,PPG,EMN,ROC,SHW,ASH,KRO,VAL,LYB,APD,ECL,DD,CE,ALB,CMP,ARG,DOW,PX,WLK,CBT,FUL,FOE,CYT,(0.4%),(0.7%),7.6%,7.5%,7.3%,7.2%,7.2%,6.9%,6.5%,6.4%,5.9%,5.4%,5.2%,4.7%,4.0%,3.2%,3.0%,2.8%,1.9%,1.7%,1.1%,7.6%,8.4%,9.6%,9.6%,9.9%,17.9%,18.2%,1
46、8.9%,21.4%,26.4%,25.0%,16.8%,15.4%,14.8%,13.2%,11.0%,9.0%,8.9%,8.5%,8.0%,7.5%,7.3%,6.7%,6.6%,6.5%,5.9%,5.6%,5.4%,5.3%,5.3%,5.3%,4.7%,4.4%,4.2%,3.8%,3.0%,2.2%,1.5%,MOS,HUN,OLN,RPM,MON,ARG,ALB,EMN,KRO,LYB,DD,FUL,VAL,PPG,FMC,CMP,ROC,ECL,CE,PX,ASH,SHW,GGC,WLK,DOW,FOE,CBT,APD,CYT,(2.1%),8 November 2012Ch
47、emicals/CommodityChemicals ScorecardFigure 23:Ranking by 2012E free cash flow/sales25%20%15%10%5%0%(5%)Source:Deutsche Bank Securities Inc.estimates and company informationFigure 24:Ranking by 2013E free cash flow/sales30%25%20%15%10%5%0%(5%)(10%)Source:Deutsche Bank Securities Inc.estimates and com
48、pany information,Page14,Deutsche Bank Securities Inc.,Jan-90,Jan-91,Jan-92,Jan-93,Jan-94,Jan-95,Jan-96,Jan-97,Jan-98,Jan-99,Jan-00,Jan-01,Jan-02,Jan-03,Jan-04,Jan-05,Jan-06,Jan-07,Jan-08,Jan-09,Jan-10,Jan-11,Jan-12,12,10,8,6,4,8 November 2012Chemicals/CommodityChemicals ScorecardForward company valu
49、ationsFigure 25:DB U.S.Chemicals Universe P/E ratio,January(1991-Present),24,300%,Average NTM P/E,222018,15yr avg.=14.7,Oct-12=12.1,250%200%,Current:12.13-year:12.95-year:12.9,1614,150%,10-year:14.2,15yr avg.vs.S&P=85%,Oct-12=94%,100%50%0%,Average Relative P/ECurrent:94%3-year:97%5-year:96%,10-year:
50、95%,Chemicals NTM P/E vs.S&P 50015-year average NTM P/E,Chemicals NTM P/E15-year average NTM P/E vs.S&P 500,Source:FirstCall Consensus,FactsetNote:NTM EPS based on FirstCall consensusFigure 26:S&P 500 NTM consensus P/E(1991-Present),353025,Average NTM P/ECurrent:13.03-year:13.25-year:13.3,10-year:15
