- Calculating spot earnings seem superfluous after the oil and share price decline the company saw during the week. The market is pricing in a high probability of a liquidity event – a covenant breach and lenders calling their money back. Our views are here (link).
- We nevertheless estimate spot earnings for FY20 at R9.03/share and at a loss of R3.06/share for FY21. The drop in the oil price obviously drive earnings lower. While naphtha prices have fallen at the same rate as oil, chemical prices will only react in coming weeks and we expect spot earnings will decline further.
Global Chemical News
- PTT Global Chemical has allocated $5bn for a US cracker in Ohio. The venture is a 50:50 joint venture with Daelim Industrial (i.e.the total project cost is $10bn) (link).
- Lyondel confirmed a $2.6bn investment to take a 50% stake in a 1.1 million ton naphtha cracker in North East China with Bora Enterprise Group (link).
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