Stock Analysis & Valuation Westlake Corporation (0LVK.L)

• Previous Close: £77.78
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	59.00	-24
Intrinsic value (DCF)	46.36	-40
Graham-Dodd Method	44.60	-43
Graham Formula	18.00	-77

Strategic Investment Analysis

Company Overview

Westlake Corporation (LSE: 0LVK.L) is a leading global manufacturer and supplier of petrochemicals, polymers, and building products, headquartered in Houston, Texas. Operating through two key segments—Performance and Essential Materials, and Housing and Infrastructure Products—the company serves diverse markets, including residential construction, packaging, automotive, healthcare, and water treatment. Westlake's product portfolio includes polyethylene, PVC, chlor-alkali derivatives, roofing materials, PVC pipe fittings, and consumer goods. With a strong presence in industrial and consumer markets, the company leverages vertical integration and innovation to maintain competitiveness. Formerly known as Westlake Chemical Corporation, it rebranded in 2022 to reflect its broader business scope. As a subsidiary of TTWF LP, Westlake benefits from strategic investments and operational synergies, reinforcing its position in the basic materials sector. Its global footprint and diversified applications make it a critical player in sustainable infrastructure and industrial solutions.

Investment Summary

Westlake Corporation presents a mixed investment profile. With a market cap of $9.1B and diversified revenue streams, the company demonstrates resilience across economic cycles. However, its beta of 1.029 suggests moderate volatility relative to the market. While revenue stands at $12.14B, net income of $599M and diluted EPS of $4.64 reflect margin pressures, possibly due to input cost fluctuations. Positive operating cash flow ($1.31B) and a solid dividend ($2.10/share) are attractive, but high capital expenditures ($1.01B) and total debt ($5.43B) warrant caution. Investors should weigh its sector-leading vertical integration against exposure to commodity price risks and cyclical demand in construction and industrial markets.

Competitive Analysis

Westlake Corporation’s competitive advantage lies in its vertically integrated operations, spanning petrochemicals to finished building products, which reduces supply chain vulnerabilities and enhances cost efficiency. Its dual-segment structure balances cyclicality—Performance and Essential Materials benefit from industrial demand, while Housing and Infrastructure Products capitalize on steady construction activity. The company’s focus on PVC and chlor-alkali derivatives positions it as a key supplier in North America, with pricing power in niche applications like PVC piping and siding. However, competition is intense. Larger players like Dow Inc. dominate scale in basic chemicals, while regional rivals (e.g., Olin Corporation) compete aggressively in chlor-alkali markets. Westlake’s smaller size limits R&D spending compared to giants like LyondellBasell, but its specialization in PVC and downstream building products differentiates it. ESG risks loom, as regulatory scrutiny on chlorine-based products could impact margins. Strategic acquisitions (e.g., the 2021 Boral acquisition) expand its housing segment but increase leverage. Overall, Westlake’s resilience hinges on operational efficiency and diversification, though it lacks the global scale of top-tier chemical conglomerates.

Major Competitors

• Dow Inc. (DOW): Dow Inc. is a global leader in materials science with a vast portfolio including polyethylene and packaging solutions. Its scale and R&D capabilities outpace Westlake, but Dow’s broader focus reduces its specialization in PVC and building products. Dow’s international presence gives it an edge in emerging markets, though it faces higher exposure to commodity price swings.
• LyondellBasell Industries (LYB): LyondellBasell excels in polyolefins and refining, with superior economies of scale. Its advanced recycling initiatives align with sustainability trends, but it lacks Westlake’s depth in PVC and construction materials. Lyondell’s European base diversifies its revenue but exposes it to regional regulatory risks.
• Olin Corporation (OLN): Olin is a major chlor-alkali producer, competing directly with Westlake in ethylene derivatives. Its Winchester ammunition division diversifies revenue but dilutes chemical focus. Olin’s smaller building products segment makes it less integrated than Westlake, though it benefits from defense-sector stability.
• Celanese Corporation (CE): Celanese leads in acetyl products and engineered materials, with strong margins in specialty chemicals. Its less cyclical business model contrasts with Westlake’s construction-heavy exposure, but it lacks Westlake’s vertical integration in PVC. Celanese’s acquisitions (e.g., DuPont’s Mobility & Materials) bolster growth in high-margin niches.
• Westlake Chemical Partners LP (WLKP): This MLP, spun off from Westlake, operates ethylene production assets. It provides stable cash flows via long-term contracts but lacks diversification. Its performance is tied to Westlake’s upstream operations, creating interdependency without downstream synergies.