• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Research
    • Markets & Technologies
    • Raw Materials
    • Top Companies
    • Directories
    • Jobs
    • Events
    • Microsites
    • More
  • Magazine
  • News
  • Research
  • Markets & Technologies
  • Raw Materials
  • Top Companies
  • Directories
  • Jobs
  • Events
  • Microsites
  • Current / Back Issues
    Features
    Business Corner
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Subscribe Now
    Advertise Now
    World Reports
    eBook
    Top Features
    Aerospace Coatings Market

    Energy Curing and Coil Coatings

    Lab/Testing Equipment Update

    High Performance and Special Effect Pigments

    The Wood Coatings Market
    Breaking News
    Online Exclusives
    Distributor News
    Financial News
    Paint & Coatings Manufacturer News
    People In the News
    Price Increases
    Product News
    Raw Materials & Equipment
    Video Bites
    Suppliers News
    Live From Shows
    Top News
    ABC: Tariffed Construction Materials Prices Rise in May

    BASF Coatings Looks to Sell Coatings Business: Bloomberg News

    Two New Directors Add Expertise to ChemQuest Team

    Nor-Shipping Reaction from AkzoNobel

    BASF Starts Up New Plant for Hexamethylenediamine in Chalampé, France
    Top Companies report
    Market Research
    White Papers / Tech Papers
    Technical Papers
    Product Spec Sheets
    World Reports
    Adhesives and Sealants
    Aerospace Coatings
    Architectural Coatings
    Automotive Coatings
    Automotive Refinish
    Business Operation
    Color Trends & Forecast
    Construction Chemicals
    Corrosion Control
    Industrial Coatings
    Laboratory Equipment
    Marine Coatings
    Market Trends & Forecast
    Powder Coatings
    Production Equipment
    Radcure Coatings
    Special Purpose Coatings
    Wood Coatings
    "Green" Coatings

    Nor-Shipping Reaction from AkzoNobel

    Linseed Paint Expert Launches Online AIA Training Course

    The Powder Coating Institute Announces 2025 Hall of Fame Inductees

    Powder Coating Institute Announces Executive Director Kevin Coursin’s Retirement

    Behr Unveils Second Annual Commercial Color Forecast
    Additives
    Binders
    Pigments
    Solvents

    Münzing Expands U.S. Operations with New Production Facility in South Carolina

    Aditya Birla Acquires Cargill Specialty Chemical Facility in Georgia

    Evonik Coating Additives Launches TEGO Foamex 8051

    BASF Introduces Reactive Polyethylene Glycol Pluriol A 2400 I in Europe

    International Carbon Black Association Releases Industry-Average Product Carbon Footprint
    Company Capabilities
    Buyers Guide
    Distributor Guide
    Add New Company
    International Buyers Guide Companies
    Vibrantz Technologies

    Shepherd Color Company, The

    Patcham USA

    Evonik Corporation

    WAB US Corp
    Industry Events
    Webinars
    Live From Show Event
    Top Events
    Coatings Expo Vietnam 2025

    West Africa Coatings Show

    ABRAFATI SHOW 2025

    Paint Bangladesh 2025

    Paint Expo Eurasia
    Companies
    White Papers/Tech Papers
    Product Spec Sheets
    Equipment
    Literature/Brochures
    Videos
    International Buyers Guide Companies
    Vibrantz Technologies

    Shepherd Color Company, The

    Patcham USA

    Evonik Corporation

    WAB US Corp
    • Magazine
      • Current / Back Issues
      • Features
      • Editorial
      • Business Corner
      • Digital Edition
      • eNewsletter Archive
      • Editorial Guidelines
      • Subscribe Now
      • Advertise Now
    • Breaking News
    • Directories
      • Buyers Guide
      • Distributor Guide
      • Corporate Capabilities
      • Trade Associations
      • Add Your Company
    • Markets & Technologies
      • Adhesives and Sealants
      • Aerospace Coatings
      • Architectural Coatings
      • Automotive Coatings
      • Automotive Refinish
      • Business Operation
      • Color Trends & Forecast
      • Construction Chemicals
      • Corrosion Control
      • Industrial Coatings
      • Laboratory Equipment
      • Marine Coatings
      • Market Trends & Forecast
      • Powder Coatings
      • Production Equipment
      • Radcure Coatings
      • Special Purpose Coatings
      • Wood Coatings
      • "Green" Coatings
    • Raw Materials
      • Additives
      • Binders
      • Pigments
      • Solvents
    • World Reports
      • Africa Report
      • China Report
      • India/Asia Pacific Report
      • Europe Report
      • Latin America Report
      • Market Research
      • Russian Report
    • Top Companies
    • Online Exclusives
    • Glossary
    • Slideshows
    • Experts Opinions
    • Blog
    • eBook
    • Infographics
    • Videos
    • Podcasts
    • Whitepapers
    • Jobs
    • Microsites
      • Companies
      • White Papers/Tech Papers
      • Product Spec Sheets
      • Equipment
      • Literature/Brochures
      • Videos
    • Events
      • Industry Events
      • Live From Show Event
      • Webinars
    • About Us
      • About Us
      • Contact Us
      • Advertise With Us
      • Privacy Policy
      • Terms of Use
    Expert's Opinion

    Analyst Raises PT After 3Q17 Results from Olin Corp.

    ...

    Analyst Raises PT After 3Q17 Results from Olin Corp.
    11.06.17
    Olin Corporation (OLN: Hold, $31 PT) 
    Riding Caustic Higher

    • Olin’s 3Q results suggest that our constructive thesis on US chlor-alkali is playing out. We expect caustic soda prices to continue to rise in 4Q17 and beyond, supported by steady demand growth and a dearth of global capacity additions, exacerbated by a regulatory regime change in Europe (mercury process phase out) and ongoing environmental-related supply constraints in China. As the US trade balance continues to improve, Olin now exports 20% of its caustic with room to grow to 25%. There is an offset however. As chlor-alkali producers maximize production to capitalize on higher electrochemical unit (ECU) margins, they need to “move” co-product chlorine, which has a different demand function that happens to be weaker at the moment. This “moving” of chlorine is accomplished principally in the form of derivatives, such as ethylene dichloride (EDC) and epoxies, both of which remain under pressure. Elsewhere in Olin’s portfolio, demand for Winchester’s commercial ammunition continues to trend down by 20% y-y such that profit was halved in 3Q17 on lower prices and margins. With regard to the stock, we are encouraged by improving FCF prospects in 2018+, notwithstanding an incremental $250mn earmarked for various IT projects through 2020. However, Olin will need to address its financial leverage at some point. Despite a robust cyclical upturn in caustic soda prices, net debt of $3.49bn has trended flat in the 7 quarters since Olin acquired Dow’s chlor-alkali business.
    • Top 10 takeaways: (1) adjusted 2Q EPS of $0.37 was in line with consensus, and a touch below our $0.39E; (2) EBITDA likewise trended lower than expected at $265mn in 3Q vs. our $275mn as earnings came in below our forecast in both Epoxies and Winchester; (3) hurricane Harvey was a headwind of $42.7mn in 3Q, essentially in line with the ~$40mn OLN had indicated on 29 September; (4) the company anticipates an additional $10-15mn in Harvey-related pressure in 4Q17, less than the $30mn we had expected; (5) Olin sees 4Q17 EBITDA of $280mn plus or minus 5%; (6) the company will face incremental cash flow headwinds in 2018 due to an ERP rollout which will require $250mn in capex through...
    • We shift a nickel to 2018 from 2017. We trim our 4Q17 EPS estimate modestly to $0.49E from $0.53E on incremental weakness in Winchester and Epoxies, partially offset by a lower projected tax rate. This makes $1.05E for 2017. In 2018 however, our EPS estimate rises by a nickel to $2.40E from $2.35E. The incremental $0.05 is due to higher earnings expectations in Chlor-Alkali, partially offset by diminished earnings expectations at Winchester, and somewhat higher interest expense as cash flow for deleveraging is instead directed to a new ERP system.
    • We maintain our Hold rating and raise our target by $1 to $31. Our price target suggests shares are rather fully priced at this juncture. As a reminder, our OLN price target is based on an average of two valuation frameworks; a relative EV/EBITDA multiple and a relative normalized P/E multiple. Our relative EV/EBITDA multiple for 2018 uses a 2.5x discount to the group average and suggests a warranted stock price of $33. Our normalized P/E methodology suggests a warranted value of $29, based on our normalized EPS estimate of $2.19 and a 25% discount to the group average multiple applied thereto. 
    (Please see full report for details)
    Related Searches
    • dow
    • olin
    • china
    Suggested For You
    W.R. Grace and Co., DowDuPont Inc.– What W.R. Grace and Co., DowDuPont Inc.– What's Next After Solid 3Q17 Results?
    Vertical Research Partners: Celanese Corporation 3Q17 Results Vertical Research Partners: Celanese Corporation 3Q17 Results
    AkzoNobel Expands Chemical Island to Support Growth of Fibria AkzoNobel Expands Chemical Island to Support Growth of Fibria
    Huntsman: Analyst Positive Despite Headwinds After Hurricane Harvey Huntsman: Analyst Positive Despite Headwinds After Hurricane Harvey
    Active Minerals Resumes Full Plant Operations Active Minerals Resumes Full Plant Operations
    IHS Markit Hurricane Harvey Update IHS Markit Hurricane Harvey Update
    Chemspec Distributes Dow Chemspec Distributes Dow's WALSRODER Nitrocellulose Products
    IHS Markit Hurricane Harvey Update IHS Markit Hurricane Harvey Update
    Vertical Research Partners  Offers Insight on the Impact of Hurricane Harvey on Sector Vertical Research Partners Offers Insight on the Impact of Hurricane Harvey on Sector
    Analyst Provides Continued Insight on Hurricane Harvey Impact on Chemical Stocks Analyst Provides Continued Insight on Hurricane Harvey Impact on Chemical Stocks
    More Analyst Insight on Hurricane Harvey Impact on Chemical Stocks More Analyst Insight on Hurricane Harvey Impact on Chemical Stocks
    Analyst is Cautiously Optimistic in 2Q17 Chemicals Sector Earnings Preview Analyst is Cautiously Optimistic in 2Q17 Chemicals Sector Earnings Preview
    Axalta Coating Systems Ltd.: M&A Opportunity Set Expands Axalta Coating Systems Ltd.: M&A Opportunity Set Expands
    The New Sherwin-Williams Company The New Sherwin-Williams Company
    Pelseal Introduces AFLAS-based Fluoroelastomer Resistant to Alkalis, High pH and Aminos Pelseal Introduces AFLAS-based Fluoroelastomer Resistant to Alkalis, High pH and Aminos

    Related Expert's Opinion

    • Breaking News
      W.R. Grace and Co., DowDuPont Inc.– What

      W.R. Grace and Co., DowDuPont Inc.– What's Next After Solid 3Q17 Results?

      ...
      10.30.17

    • Breaking News
      Vertical Research Partners: Celanese Corporation 3Q17 Results

      Vertical Research Partners: Celanese Corporation 3Q17 Results

      ...
      10.21.17

    • Breaking News | Suppliers Corner
      AkzoNobel Expands Chemical Island to Support Growth of Fibria

      AkzoNobel Expands Chemical Island to Support Growth of Fibria

      ...
      10.20.17


    • Breaking News
      Huntsman: Analyst Positive Despite Headwinds After Hurricane Harvey

      Huntsman: Analyst Positive Despite Headwinds After Hurricane Harvey

      ...
      10.06.17

    • Breaking News
      Active Minerals Resumes Full Plant Operations

      Active Minerals Resumes Full Plant Operations

      The company said it's back to producing the raw materials needed for hurricane recovery.
      09.13.17

    Loading, Please Wait..
    Breaking News
    • ABC: Tariffed Construction Materials Prices Rise in May
    • BASF Coatings Looks to Sell Coatings Business: Bloomberg News
    • Two New Directors Add Expertise to ChemQuest Team
    • Nor-Shipping Reaction from AkzoNobel
    • BASF Starts Up New Plant for Hexamethylenediamine in Chalampé, France
    View Breaking News >
    CURRENT ISSUE

    May/June 2025

    • Aerospace Coatings Market
    • Energy Curing and Coil Coatings
    • Lab/Testing Equipment Update
    • High Performance and Special Effect Pigments
    • View More >