N.A. Chems and Pkg'g: Plastics Monthly "June Plastics: Lower from here" Spector

Research evidence excerpt

N.A. Chems and Pkg'g: Plastics Monthly "June Plastics: Lower from here" Spector

Valuation Method and Risk Statement

Dow Inc:

Our price target for Dow is based on an EV/EBITDA multiple relative to the local market.

Escalating oil and natural gas costs could hurt consumer spending and, hence, demand for

Dow's products. Weaker-than-expected cash flow generation could slow improvement in

credit quality metrics. Earnings for commodity chemical companies are sensitive to swings in

energy costs, especially oil and natural gas. Commodity chemical margins are influenced by

market supply and demand dynamics that individual companies cannot control. As

technology evolves, existing assets and businesses can become less competitive as newer,

low-cost processes are developed. Historically, valuations for commodity chemical companies

tend to be volatile.

LyondellBasell Industries:

Our price target is based on an EV/EBITDA multiple relative to the local market. While we

expect the spread between ethane and oil prices to tighten, there will likely be periods when

the spread widens, positively affecting Lyondell's earnings. Swings in the prices of other raw

materials and the company's products could also create sizable earnings volatility.

Olin Corp.:

Our Price target is based on EV/EBITDA multiple relative to the local market. Olin is highly

leveraged to its chlorine, EDC, and caustic products that have in the past proven to be quite

volatile in terms of pricing and profit margins, and sensitive to the global economic cycle. We

believe the company's business model is sustainable and Olin has been able to sustain its

relatively high dividend over a long period of time.

Westlake Corporation:

Our price target is based on an EV/EBITDA multiple relative to the local market. Higher-than-