Fundamental Analysis

Income Statement:  

Key Findings and Trends (2020-2023)

1. Revenue Growth

• Total Revenue increased by 46.77% from $27.75M in 2020 to $40.73M in 2023.

• Revenue fluctuated, peaking in 2021 at $50.45M, before declining in 2022 and stabilizing in 2023.

• Year-over-year changes:

  • 2020-2021: +82.73%

  • 2021-2022: -18.17%

  • 2022-2023: -0.92%

2. Profitability Trends

• Gross Profit grew by 41.51%, despite a decline from $8.78M in 2020 to $4.80M in 2023.

• Operating Income increased by 41.85%, though it peaked in 2021 at $7.39M and has since declined.

• Net Income grew significantly by 51.23%, but similarly, it peaked in 2021 at $5.60M before decreasing in subsequent years.

3. Earnings Per Share (EPS)

• Diluted EPS surged by 67.22%, rising from $4.24 in 2020 to $7.09 in 2023.

• EPS followed net income trends, peaking in 2021 at $16.75 before declining in 2022-2023.

4. EBITDA and Operational Efficiency

• EBITDA increased by 41.31% but followed a similar trajectory—peaking at $8.69M in 2021, then declining.

• Total Expenses rose but at a slower pace compared to revenue, indicating improved cost efficiency.

Overall Observations

• The company saw substantial revenue and profit growth between 2020 and 2021, but 2022-2023 show signs of stagnation or decline.

• Profitability and EPS remain above 2020 levels, but the recent downward trend signals challenges.

• Cost management appears effective, though external factors (e.g., economic conditions or market shifts) might have impacted recent revenue growth.

Balance Sheet:

Key Findings and Trends (2020-2023)

1. Asset Growth

• Total Assets increased by 4.51% from $35.40M in 2020 to $37.00M in 2023.

• Year-over-year changes:

  • 2020-2021: +1.04%

  • 2021-2022: -1.72%

  • 2022-2023: +1.75%

• Growth has been modest, with a small decline in 2022, followed by slight recovery in 2023.

2. Equity Growth

• Total Equity increased significantly by 61.13%, from $8.10M in 2020 to $13.06M in 2023.

• Year-over-year changes:

  • 2020-2021: +47.88%

  • 2021-2022: +6.30%

  • 2022-2023: +2.47%

• Equity has steadily increased, suggesting stronger shareholder value creation.

3. Liabilities and Debt Trends

• Total Liabilities declined by 12.30%, from $27.30M in 2020 to $23.94M in 2023.

• Total Debt decreased significantly by 25.66%, from $17.49M in 2020 to $13.00M in 2023.

• Net Debt fell sharply by 44.75%, from $14.19M in 2020 to $7.84M in 2023.

• The company has aggressively reduced leverage, improving its financial health.

4. Net Tangible Assets Growth

• Net Tangible Assets more than doubled (+102.05%), from $5.27M in 2020 to $10.64M in 2023.

• This suggests a shift towards a more asset-heavy balance sheet, potentially reflecting reinvestment in tangible assets.

5. Working Capital and Liquidity

• Working Capital declined slightly by 2.12%, from $6.13M in 2020 to $6.00M in 2023.

• Year-over-year changes:

  • 2020-2021: -18.69%

  • 2021-2022: -1.93%

  • 2022-2023: +18.02%

• Liquidity remained stable, with a recovery in 2023.

Overall Observations

• The company has focused on deleveraging, reducing both total debt and net debt significantly.

• Equity growth has been strong, suggesting that retained earnings or capital appreciation contributed to value creation.

• Tangible assets have grown substantially, possibly indicating investments in physical infrastructure or equipment.

• Despite strong equity and asset trends, liabilities and debt reductions, the small decline in working capital suggests potential liquidity management considerations.

Statement of Cash Flows:

Key Findings and Trends from the Cash Flow Statement (2020-2023)

1. Operating Cash Flow

• Increased by 11.75% from $3.40M in 2020 to $3.41M in 2023.

• Year-over-year changes:

  • 2020-2021: +25.76%

  • 2021-2022: +23.82%

  • 2022-2023: -45.01%

• Strong growth until 2022, but a sharp decline in 2023 indicates possible challenges in cash generation.

2. Investing Cash Flow

• Increased (less negative) by 61.03%, from -$4.91M in 2020 to -$1.91M in 2023.

• Year-over-year changes:

  • 2020-2021: +24.03%

  • 2021-2022: -11.25%

  • 2022-2023: -7.06%

• The company reduced investment outflows significantly, suggesting a more conservative approach to capital expenditures.

3. Financing Cash Flow

• Decreased sharply by 178.47%, from $2.27M in 2020 to -$1.78M in 2023.

• Year-over-year changes:

  • 2020-2021: -135.57%

  • 2021-2022: +74.72%

  • 2022-2023: +9.43%

• The company moved from raising capital in 2020 to repaying debt and reducing financing outflows, which aligns with deleveraging trends seen in the balance sheet.

4. Free Cash Flow

• Grew by 9.06%, from $1.46M in 2020 to $1.59M in 2023.

• Year-over-year changes:

  • 2020-2021: +35.63%

  • 2021-2022: +23.98%

  • 2022-2023: +114.66%

• Free cash flow remains strong, showing the company is still generating excess cash.

5. End Cash Position

• Increased by 44.93%, from $1.77M in 2020 to $2.56M in 2023.

• Year-over-year changes:

  • 2020-2021: -31.49%

  • 2021-2022: -36.68%

  • 2022-2023: +33.11%

• The company rebuilt its cash reserves in 2023 after a decline from 2020-2022.

Overall Observations

• Operating cash flow declined in 2023, possibly due to lower profitability or working capital changes.

• Investment outflows were reduced, showing a conservative stance on capital expenditures.

• Financing cash flow turned negative, reflecting debt repayment and reduced capital raising.

• Free cash flow remains positive, showing financial strength despite cash flow volatility.

• The company increased its cash reserves in 2023, ensuring liquidity despite reduced cash generation.

Fundamental Analysis Summary:

Financial Health, Trends, and Outlook for the Security

Overall Financial Health: Stable but Facing Headwinds

The company has stronger financial positioning compared to 2020, driven by equity growth, deleveraging, and positive free cash flow. However, profitability and operating cash flow are in decline, signaling potential challenges.

Key Financial Trends

1. Income Statement: Declining Profitability

• Total revenue grew 46.77% from 2020 to 2023, but has declined since 2021.

• Gross profit and operating income peaked in 2021 and have fallen since, indicating margin compression.

• EPS is down 58% since 2021, showing lower returns to shareholders.

• EBITDA is also declining, reflecting reduced core profitability.

→ Profitability peaked in 2021 but has been contracting, potentially due to rising costs or weaker demand.

2. Balance Sheet: Stronger Capital Structure

• Equity grew 61.13%, meaning the company is creating shareholder value.

• Debt decreased 25.66%, showing a focus on deleveraging.

• Net tangible assets more than doubled (+102%), suggesting stronger asset backing.

• Working capital is stable but slightly declining, requiring liquidity monitoring.

→ The company has improved its balance sheet by reducing debt and growing assets, making it more resilient to financial shocks.

3. Cash Flow Statement: Decreased Cash Generation

• Operating cash flow fell 45% in 2023, despite strong levels in prior years.

• Investing cash outflows have been reduced significantly, signaling a conservative stance on expansion.

• Financing cash flow is negative, indicating debt repayments and stock buybacks rather than fundraising.

• Free cash flow remains positive, but the decline in operating cash flow raises concerns about sustainability.

→ The company is prioritizing financial discipline and debt reduction but faces weakening cash generation, which may impact future growth initiatives.

Outlook: Caution Amidst Stability

• Short-term (1-2 years): Challenges in revenue and profit growth could pressure earnings. The company is in a strong financial position but must reignite profitability.

• Mid-term (3-5 years): With lower debt and higher equity, the company is in a better position for long-term expansion, assuming it can stabilize revenue and improve margins.

• Long-term (5+ years): If operating cash flow remains weak, the company may struggle to sustain investments, but if profitability recovers, strong financial foundations could drive future growth.

Investment Perspective

• Bull Case (Optimistic View): If the company stabilizes revenue, improves margins, and maintains low debt, it could unlock stronger earnings potential.

• Bear Case (Risk Factor): If operating cash flow continues to decline, it could restrict financial flexibility and reduce long-term value.

→ The company is financially sound but faces profitability concerns. Investors should monitor revenue recovery and margin trends before making long-term commitments.

Technical Analysis:

Price Projection @ 3/31/2025: 

The projected LYB (LyondellBasell Industries) stock price on March 31, 2025, based on time-series forecasting, is approximately $85.82. This estimate is subject to market conditions, commodity price fluctuations, and macroeconomic factors. Let me know if you’d like further analysis or scenario adjustments

Price Return Projection: 9.5%

Support and Resistance: 

Level Price

Support 3 73.67333333

Support 2 75.85333333 [buy point] 

Support 1 77.09666667

Pivot Point 78.03333333

Resistance 1 79.27666667

Resistance 2 80.21333333

Resistance 3 82.39333333

Fibonacci Retracement Levels:

• 0.0% (High): $79.39 (Recent high)

• 23.6% Retracement: $77.95

• 38.2% Retracement: $77.05

• 50.0% Retracement: $76.33 (Potential key level)

• 61.8% Retracement: $75.61

• 78.6% Retracement: $74.58

• 100.0% (Low): $73.27 (Recent low)

Interpretation:

• If the stock continues its downtrend, watch for support at $76.33 and $75.61 as key Fibonacci levels.

• A bounce from these levels could signal a reversal.

• If $73.27 breaks, further downside may occur.

• Upside resistance may emerge at $77.95 and $79.39, where sellers could step in.

Fibonacci Extension Levels (Future Price Projections):

• 127.2% Extension: $81.05

• 141.4% Extension: $81.92

• 161.8% Extension: $83.17 (Key bullish target)

• 200.0% Extension: $85.51

• 261.8% Extension: $89.29 (Longer-term upside potential)

Interpretation:

• If the stock reverses upward, the first major target is $81.05 to $83.17.

• A break above $85.51 could lead to a stronger rally towards $89.29.

• However, if the downtrend continues, lower Fibonacci retracement levels ($76.33 and $75.61) may act as critical support.

Trade Setup Based on Fibonacci Levels

Bullish Trade Setup (If Reversal Occurs)

• Entry Point: Near $76.33 to $75.61 (Key Fibonacci support levels)

• Stop Loss: Below $73.27 (Recent low; invalidates bullish thesis)

• Profit Targets:

  • Target 1: $81.05 (127.2% Fibonacci extension)

  • Target 2: $83.17 (161.8% Fibonacci extension)

  • Target 3: $85.51 (200% Fibonacci extension for aggressive traders)

Bearish Trade Setup (If Downtrend Continues)

• Entry Point: Near $77.95 to $79.39 (Fibonacci resistance; potential shorting zone)

• Stop Loss: Above $81.92 (141.4% Fibonacci extension; invalidates bearish case)

• Profit Targets:

  • Target 1: $76.33 (50% Fibonacci retracement)

  • Target 2: $75.61 (61.8% Fibonacci retracement)

  • Target 3: $73.27 (100% retracement; full downside target)

Key Considerations

• If volume increases near support, it could confirm a bullish reversal.

• If RSI drops below 30, the stock could be oversold, supporting a potential bounce.

If MACD remains bearish, it may indicate further downside pressure.