MS cuts Lanxess to 'equal-weight', says Europe price competition dents sales growth

Standard Lithium

14/09/2023 08:44

** Morgan Stanley cuts Lanxess AG  LXSG.DE  to
"equal-weight" from "overweight", saying the German chemicals
company's sales growth cannot make up for rising costs amid
increasing price competition in Europe
    ** There is little sign of a pick up in global end market
demand, says the broker, while a slowdown in China is causing
chemical companies there to step up exports into Europe, hurting
the advanced intermediates division in particular 
    ** MS now cuts its forecasts for Lanxess' 2023 and 2024
EBITDA by 5% and 10% respectively, 3% and 10% below consensus 
  ** Any cyclical recovery will also be diluted by rising
interest rates, Morgan Stanley says, with Lanxess' net debt to
EBITDA ratio of 5x versus peers' 1.2x likely to concern
investors and a €500m bond due in May 2025
    ** Lanxess' high leverage also limits the company's ability
to invest, the broker says, crimping a potential upside in the
company's efforts to profit from a venture with Standard Lithium
 SLI.V  
    ** Of 25 analysts who cover Lanxess, 12 say to "buy", 12 to
"hold" and one to "sell" - LSEG

 (Reporting by Louis van Boxel-Woolf)
 ((Louis.vanBoxel-Woolf@thomsonreuters.com))