Lanxess: Specialty Chemicals Leader, With Far More Profitable Future

Independent wealth manager Samuel Weber presented his investment thesis on Lanxess (Germany: LXS) at European Investing Summit 2021.

Thesis summary:

Lanxess is a leading specialty chemicals company with sales of EUR 6.1 billion in 2020. The company has 14,800 employees in 33 countries. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals, and plastics.

The company is in the middle of a multi-year transformation and should in a few years generate around EUR 1.5 billion in EBITDA from highly attractive segments that are characterized by significant barriers to entry, high returns on capital, and long-term growth potential. Furthermore, side projects may create significant value in the future.

Mr. Market values the company based on its past economic profile and systematically ignores its far more profitable future. Lanxess can be bought at around 4x 2025 EBITDA, excluding any value from the aforementioned projects. The management team is capable, honest, and shareholder-oriented and may create far more value than is envisaged even by optimistic market observers.

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About the instructor:

Samuel S. Weber is an independent wealth manager based in Zug, Switzerland. He is a passionate value investor, who is focused on generating long-term, market beating returns by investing in high-quality opportunities in the stock market (samuelsweber.com). Samuel holds a master’s degree in strategy and international management from the University of St. Gallen and is a member of the Board of Trustees of HBM Fondation.