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Chemicals - Analysis and Modeling

What makes chemical companies distinct from other sectors, and applies a range of sector-specific techniques.

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30 Lessons (120m)

Show lesson playlist
  • 1. Chemical Sector Players

    02:35
  • 2. What Makes Chemical Companies Special

    01:30
  • 3. Scale of Chemicals Companies - Examples

    01:53
  • 4. Oversupply Problems in the Chemical Sector

    01:46
  • 5. Commodity Prices

    02:02
  • 6. Segmental Analysis

    03:53
  • 7. Segmental Analysis Workout

    12:23
  • 8. Sum of the Parts Valuation

    02:27
  • 9. Sum of the Parts Workout

    01:49
  • 10. Pensions in the Chemical Sector

    02:04
  • 11. Analyzing Chemical Companies

    01:50
  • 12. Case Study Company AkzoNobel

    02:23
  • 13. Chemicals Model - Model Intro

    03:05
  • 14. Chemicals Model - Company and Segment Intro

    02:04
  • 15. Chemicals Model - Segmental Forecasting and Bridges Discussion

    05:25
  • 16. Chemicals Model - Paint Segment Revenue

    03:32
  • 17. Chemicals Model - Paint Segment EBIT Margin

    08:15
  • 18. Chemicals Model - Performance Segment Bridges and Corporate

    07:14
  • 19. Chemicals Model - Operating Model Intro

    03:50
  • 20. Chemicals Model - Operating Model Subtotals

    04:39
  • 21. Chemicals Model - Profit and Loss

    03:14
  • 22. Chemicals Model - BASE Calculations

    05:03
  • 23. Chemicals Model - Balance Sheet

    04:56
  • 24. Chemicals Model - Cashflow Statement

    06:10
  • 25. Chemicals Model - Interest and Circularity

    05:43
  • 26. Chemicals Model - Completing the Model

    03:46
  • 27. Chemicals Model - Model Metrics

    05:59
  • 28. Chemicals Model - Sum of the Parts EV

    03:42
  • 29. Chemicals Model - Sum of the Parts Complete

    05:37
  • 30. Chemicals Tryout

Chemical Sector Players

  • Notes
  • Questions
  • Transcript
  • 02:35

An overview of the types of company in the chemicals sector.

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Chemicals Company Overviews and Valuations

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Transcript

At a very high level. Chemical companies work a lot like industrial companies, but are closer to the raw materials. If you've worked with industrial companies, this industry has a lot in common with them. Chemical companies tend to do well at high volumes as they have high fixed costs and high dependence on bulk inputs such as oil and gas. Buying power through scale can be very helpful. Here, the chemical sector is split into two main types of player, the diversified, as they're called, like Bass F, which has many activities spanning many inputs and outputs, and the more specialized companies like Air Liquid, which concentrate on fewer or one type of product. There's also a transatlantic split, which we'll explore later. Some companies arguably don't fit into either of those brackets. Shell, for example, explores and extracts oil and gas. It also uses that oil and gas to create chemicals used in plastics, and so it straddles several sectors.

As we mentioned earlier, there are many types of inputs and output for this sector. You can see Dow, a large American chemical company takes raw chemicals that would be produced by crackers. These are chemical plants that split oil into more useful hydrocarbons. It uses those to assemble plastics, resins, coatings, and other products that are useful in a wide variety of end consumer app applications. If you're a DIY or professional builder, if you're putting cars together or handling food packaging, chances are you've held a product created by DAO at some point.

Axo Noble, a smaller European chemical company, takes a slightly different approach. It uses some of the same inputs as Dao, but relies more heavily on titanium, which is commonly used to create paint. If you painted a wall in Europe, it's very likely you've used Axo Noble products.

Air liquid, as we saw before, is on the other side of the chemical spectrum. It takes gases and builds them into useful products. Hospitals in Europe often use Airli liquid products as Airli liquid as the dominant player in this niche, because the inputs in outputs of chemical companies can be very broad. There's a lot of variability within the companies. This leads to the need for detailed segmental analysis.

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