Re CC - I looked at this briefly. Their EV value is ~$6B consisting of $2B in equity and $4B in debt. EBITDA this year is $1-1.5B. I don’t know what their environmental liabilities will be, bit note that in their worst year 2016, they paid $330M, which would be less than 1/3 of their. EBITDA. The current valuation implies that they would pay out $330M every year, at which CC would trade at 8x EBITDA, which is still fairly cheap.
Business wise, I note that Fluorpolymers has ENITDA margins north of 25% and TiO2 even higher than that. TiO2 needs a lot of Capex though.
To me $2B in market cap is too cheap. CC almost trades like and equity stub, but it doesn’t seem distressed. I also think they have a point that Dupont lowballed the environment liabilities at spinoff. Make no mistake, this is a “crappola” spin-off, where DuPont wanted to get rid of some unwanted liabilities and business, but those business seem to be of a quite high quality. especially fluorochemicals isn’t that economically sensitive, I think. Might be a candidate to buy leap calls. |
